Premium tax increases will affect vehicle insurance policies
Motorists could be facing hikes in insurance bill following premium tax increases.
Consumers across the board looking to obtain insurance on homes, vehicles, medical care, and travel could be incurring much higher prices in the wake of the Government’s announcement that the premium tax will be increased. Currently, households maintaining general insurance policies pay five per cent in levy taxes as part of the entire price for IPT - insurance premium tax - but beginning 4 January 2011, that number will rise to six per cent.
Younger motorists will see the highest rise in costs, with an 18 year old student seeing premiums rise from £2,668.81 to £2,801.99, a difference of over £133.18. Whereas a 40 year old male for example will see his annual premium go from £423.39 to £444.52, a difference of just £21.13.
Insurance experts are now warning that the rise in prices could lead to a rise in more drivers foregoing coverage altogether. Eric Galbraith, of the British Insurance Brokers’ Association, said that the tax is on protection. He added that consumers have already had to reduce coverage during the recession. Experts are now concerned that more premium costs will only leave those who cannot afford them without proper coverage.
Adrian Webb, of insurance company Esure, said that the UK’s emerging compensation culture has already pushed premiums quite high. He warned that more hikes in the IPT will force the margins of those who are uninsured even higher.
In the current economic climate, motorists and homeowners are already having to cut back on essentials. Many fear that tax increases will force families to go without valuable needs like motor insurance, home insurance, and medical care.