Fraudulent claims have pushed car insurance premiums up by 40% in the last 12 months and further increases are inevitable, according to the insurance industry. Recent research by the AA showed that over 12 months to the end of September, the average cost of an annual comprehensive car insurance policy had risen by 39.3% to £792, the biggest annual jump recorded on its benchmark Insurance Premium Index

Young drivers are being hit with the biggest increases. Over the past 12 months the average cost of insurance has jumped by 51% for those aged between 17 and 22: after shopping around for their cover, men of this age can now expect to pay an annual premium of around £2,500 and women £1,400.

Last week, insurance trade body the British Insurance Brokers' Association told the government's transport select committee that a sharp increase in fraudulent claims – now estimated to add just over £80 to every motor policy – and in personal injury claims for whiplash, a condition that can be hard to demonstrate or dispute, were to blame for hikes in insurance costs.

"If somebody runs into the back of you, you are an extremely valuable property," said Nick Starling, director of general insurance and health at the Association of British Insurers, which estimates that 10% of every motor premium now goes to the legal profession. "It is a dysfunctional system – people have to 'play' the system as it exists."

For most ordinary customers shopping for the best price, "playing the system" involves ignoring your insurer's renewal quote, shopping around via a comparison website, then calling your existing insurer to see whether it will lower your original quote to something more sensible. But even that may no longer spare you a hefty rise.

I'm a case in point. Last December, I paid £388 to Admiral for fully comprehensive cover for my wife and I to drive our five-year old Ford Focus diesel estate. I'm a reasonably careful driver with 10 years' no-claims bonus – OK, I have a speeding penalty to declare, but as it was over four years ago it is no longer on my driving licence.

To my surprise, running a price comparison on moneysupermarket.com, unearthed a best-price quote of £559 – from Admiral. That's 44% up on the previous year, and above even the level mentioned to the select committee.

I called Admiral, who – hey presto – lowered it to around £432 – a mere 11% higher than last year, albeit with a higher excess. "We may have had more claims in your area and writing prices up accordingly," my adviser, a cheerful Welshman called Lee, told me. "If, last year, we had zero claims in your area, and this year we had 50,000, that might be reflected in the price of your policy."

Last time I looked, the residential south London side street I live on did not exactly resemble the set of The Fast and the Furious.

But it's not just me. Susanna Clapham, director of FLASC, a small architectural practice in east London, called Admiral in October expecting the premium for her V-registration Toyota Yaris to be around the same £320 mark she'd paid last year. Instead, she was quoted approximately £450 for equivalent cover – an increase of around 37%.

"I thought it would be cheap because I'd had 10 years' no-claims bonus," says Clapham, 35. She immediately ran a price comparison which generated a best price of £370 – an improvement, but still £50 higher than last year. Then she called again to point out the anomaly.

"They put me on hold – I don't know what they do when they do that ... go off and look out of the window, maybe? When they came back they were somehow able to lower the price to a similar level to the £370," she says.

Shopping around on comparison sites may be one of the few options left to beleaguered consumers, but Ian Crowder, a spokesman for AA Financial Services, says it's important to look carefully at what is actually being offered. "You need to understand what you're being quoted for," he warns. "Many companies on comparison sites will strip out certain elements of cover and raise excesses to keep quotes down."

Crowder has the following tips to keep premiums down:

■ Always tell your insurer if your personal circumstances change. "If you've changed jobs, or are no longer driving as many miles to work, you may become less of a risk and this can have a big effect," he says.

■ If you use your garage for storage, clear it out and put your car in it. "You could also make a few extra quid selling off your old stuff at a car boot sale," suggests Crowder. Secure parking is viewed so favourably by insurers that it may even be worth looking into the cost of renting a lock-up and seeing how it could affect your premiums.

■ If you are a young driver, consider adding a parent. Naming a parent on your policy may help lower the price. Likewise, if you are male, consider adding your girlfriend, but be aware that this may not have the desired effect if applied the other way round, as young male drivers are considered the highest risk.

■ Keep your nose clean. "The best way to get your premiums down is to drive carefully, don't make claims and don't pick up speeding offences," Crowder says. "If you are young, at the end of the first year you could typically expect your premium to drop by a third, the point being that you are then picking up no-claims bonus years."

■ Never "front" your policy ie don't say you are not the main driver of a car if you are. "This is illegal; if you are caught you will face prosecution," warns Crowder. "Insurance companies actively look out for this and will catch people who do it."