Car insurance premiums fell by a record 14.1 per cent over the last year, according to the latest AA British Insurance Premium Index.
The average quote for annual fully comprehensive car cover is now £533, down from £559 last year and £663 two years ago.
Simon Douglas, director of AA Insurance, said: "The falls are a combination of both the fiercely competitive nature of the market as well as the anticipation that law changes will weed out costly fraudulent whiplash injury claims."
However, the AA fears that premiums are falling too quickly. Mr Douglas said: "It's as if premiums are on a helter-skelter slide, and I fear the downward spiral will end with a bump.
"Yet while I expect the fall to continue at a slower rate over the first quarter of 2014, I think they will then level off.
"But my biggest fear is that the falls are too great, and premiums will bounce sharply up again later in the year."
The cheapest area in the UK in which to insure a car is Scotland, where the average premium is just £389.68. Conversely, the most expensive area is the North West, where the average quote is £809.62.
Younger drivers are still paying more for their car insurance than other drivers; however, drivers in this age group saw the biggest drop in premiums, with 5.4 per cent fall. The average quote for 17-22 year olds is £1,187.75, with 23-29 year olds paying £683.30 on average. The age group which pays the lowest premiums is the 60-69 bracket, with prices averaging £302.66.
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