Average car insurance premiums in the UK have increased by 11 per cent over the last year, hitting a new record high.

This is about four times the rate of inflation and the biggest year-on-year rise since 2012 when the Association of British Insurers' Motors (ABI) began tracking premiums for private cars.

The car insurance premiums have gone up by an average of £48 compared to this time last year, resulting in a new average of £484 according to the ABI.

The rapid increase in premiums follows the recent Government decision to drastically cut the personal injury Discount Rate. The figure is used to help set compensation pay-outs when people suffer serious injuries.

The effect has been to increase pay outs to accident victims and those who suffer lifelong injuries with a subsequent rise in premiums.

Director General of the ABI, Huw Evans said "This dramatic increase drives home how important it is the Government press ahead with a new framework for the Discount Rate and call a stop to further hikes in Insurance Premium Tax.

"Most younger and older drivers are likely to face increases even higher than this, hurting people who can least afford it."

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