Will Your Car Insurance Premium Increase By 50%?
Drivers are being warned that car insurance premiums could be set to soar by as much as 50% if plans to increase compensation payouts get the green light.
Law firms which specialise in injury compensation, often referred to as ‘ambulance chasers’, are lobbying minsters to oblige insurers to give bigger payouts to victims of serious accidents.
Lobbyists want Justice Secretary Liz Truss to introduce a new rate which would significantly increase compensation given to people left permanently disabled and unable to work. The compensation paid to victims of life-changing injuries is partly funded by the money made from selling premiums to customers. The proposed plans could see insurers rectifying their accounts by adding more than £230 a year to a typical drivers’ premium.
Car insurance premiums rose by 4.9% in the final three months of 2016, adding £22 to the average premium. The average driver currently pays a premium of £462, a record high – so a 50% rise could add on an extra £231 per year.
It is feared that if the plans were to go ahead young drivers and small business owners would be worst hit. The Association of British Insurers (ABI) said that young drivers, whose premiums are often well above £1,000, could be hit hardest – with most young driver premiums covering the cost of a major accident or whiplash claim. The changes would also apply to workplace-related injuries, affecting small business owners.
If you have any questions about your car insurance premium, talk to your usual adviser who will be happy to help.