One of the UK's biggest car insurers, Norwich Union had stated that in 2007 premiums would have to rise by 16% in order to cover the cost of increased claims. However, the latest AA British Insurance premium index indicates a rise of only 5.9% in comprehensive car insurance cover throughout the year.

The reason given for the halt in premium rates was the much fiercer competition engendered between the UK's top online insurance companies.

Typically, the report stated, UK drivers paid an average of ?594 for fall comprehensive car cover in the previous year. The Index also reveals that those who shopped around in search of cheaper car insurance when it came time to renew the policy, paid on average ?194 less, an indicated saving of upwards of 33 percent.

The data also revealed that car insurance for third party, fire and theft could also be cheaper when switching companies on renewal, achieving savings of as much as ?225 a year below the average industry quote.

However there are other factors, which may have affected the accuracy of these statistics.

According to a recent article in The Guardian Money Column, the exact circumstances of each driver must be compared in order to reach a true comparison of what is actually the cheaper insurance option. For instance, some insurers will not offer cover for business or commercial use, and other insurers will not offer any kind of policy for younger drivers.

It has also been noted that often the cheapest of the insurers can subsidise their premiums by applying other costs and charges. An example of this can be found in the APR charged when the premiums are paid in monthly instalments. Extra costs have soared by as much as 39% when this has been applied. Also regular drivers abroad are offered free European cover by some insurers, whilst others may charge as much as an additional ?20 for a two-week visit to France.

Interestingly, the consumer body icon Which? Discovered that insurance premiums could reduce by as much as 25% by buying directly from the designated company's website online.

The organisation also suggests that even if only third party, fire and theft is being considered, it would be beneficial to also get quotes for comprehensive cover, as often

this type of cover may not cost much more, and it may be well worth paying the difference in order to secure additional security and peace of mind.