Cash-strapped drivers are having to find inflation-busting increases to pay for car insurance, especially young motorists.
The latest AA British Insurance Premium Index shows a comprehensive car insurance policy rose by a record 40% over the 12 months to 30 March.
It leaves the average cost at £892.
Drivers aged 17 to 22 faced increases of 64% over the same period, with bills of £2,431 for a year's cover.
Young men can expect to pay more than £3,000, as they are the greatest statistical risk and that is the reason for more than 50% of firms refusing to offer them cover.
The biggest rise was to third party, fire and theft cover, policies that are often taken out by young drivers who cannot afford comprehensive cover, with premiums soaring by 82.1% to £1,533.
The survey of quotes from more than 50 insurance companies and brokers suggests that motorists who play by the rules are paying a high price for soaring levels of fraud and personal injury claims.
The AA has found that despite fewer accidents on UK roads, the number of claims for whiplash injuries is rising with more than 200 claims submitted a day, often for accidents that happened up to three years ago when no mention of injuries was made at the time.
It believes Government proposals to curb the costs associated with "no-win, no-fee" claims should improve the situation.
Motorists are also suffering as a result of reduced competition in the insurance market and through car insurers continuing to make a loss.
Simon Douglas, director of AA Insurance, said: "The record rises in fuel costs coupled with spiralling car insurance premiums is disappointing news and is making driving unaffordable for many, especially cash-strapped young drivers.
"Despite the sharp premium increases, insurers are still making losses, although the large underwriting of deficits from 2009 have probably now been halved."
The AA believes the steep increases in premiums will slow over the remainder of this year, with price hikes for the whole of 2011 unlikely to exceed 20%.
The Association of British Insurers has called for a a ban on referral fees - where details of potential personal injury claimants are sold on to solicitors and claims management firms.