Revealed: the cheapest and most expensive places to insure your car

The average cost of annual car insurance in London stands at £922, according to AA Insurance, who compiles an index of the typical cost of car insurance.

The Isle of Man postcode was found to be the cheapest place to insure a car, with the average quote there standing at £231.

The AA Index also shows that the annual cost of comprehensive car insurance cover has fallen by around £120 over the last year, landing at around £504 typically. This comes amid Government moves to tackle fraudulent and exaggerated motor insurance claims, particularly for whiplash injuries.

However, the AA believes that the downward trend will come to an end towards the end of 2014.

Car insurance tends to cost more in urban areas because there's a greater risk of accidents and crime. There are a number of factors that are taken into account when you're given a quote, including:

• The type of car
• The experience and age of the driver
• Where the car is normally kept - such as parked outside your house or in a garage
• What it's used for - social use or to travel to work.

Here are the cheapest and most expensive places to insure a car in Britain according to the AA Index, with the average annual cost of a premium and the percentage increase or decrease in the cost seen since May.

Top 10 cheapest postcodes

1. IM (Isle of Man) £231 -3.3%
2. KW (Kirkwall), £252 -1.9%
3. TR (Truro) £279 -1.8%
4. AB (Aberdeen) £286 -0.5%
5. DT (Dorchester) £286 -1.9%
6. PH (Perth) £286 -2.4%
7. EX (Exeter) £289 -1.3%
8. TA (Taunton) £292 -3.1%
9. LD (Llandudno) £293 -3.3%
10. ZE (Lerwick) £296 -4.8%

Top 10 most expensive postcodes

1. London £922 -5.0%
2. IG (Ilford) £912 4.5%
3. M (Manchester) £821 -4.1%
4. UB (Southall) £807 3.6%
5. OL (Oldham) £795 -7.2%
6. HA (Harrow) £765 0.1%
7. BL (Bolton) £737 -4.4%
8. L (Liverpool) £720 - 2.4%
9. BD (Bradford) £662 0.2%
10. CR (Croydon) £661 1.3%

Find out how to get the best car insurance deal and read the Money Advice Service guide to buying, selling and running a car.

This article is provided by the Money Advice Service.