The AA Insurance is urging budget-conscious motorists not to cancel their car insurance.

It is receiving calls from customers considering canceling their insurance as living costs continue to rise.

AA Insurance spokesman Martin Fox says people should think about more than just the value of their car. He says if people have comprehensive insurance and want a cheaper deal, then they should consider the third party option. Mr Fox says it is still the cheapest form of insurance and protects a car owner if they hit another vehicle, particularly if it is worth a lot of money.

"It's not really until people realise that it's the cost that you may cause to other people's property or other people's cars that insurance is so necessary to cover that cost."