Insurance tax could cause car insurance premiums to skyrocket
22 July 2010
Government increase in IPT to hit car insurance
customers
On 22 June, the UK Government announced that tax on car insurance
premiums would increase from 5% to 6%, effective 4 January
2011.
The average car insurer will now be expected to pay £18 a year
in tax on a typical £300 premium. Young drivers will be hit hardest
by this, as they can expect a premium increase of £15 a year from
next year onwards. This hike comes after policyholders have already
seen a significant rise in insurance costs over the past 12
months.
Insurance companies have expressed their concern, highlighting
the importance of adequate insurance and the inevitable negative
impact on lower income households' ability to secure adequate cover
for their vehicles. This is especially concerning as these families
are least likely to have extra finances to fall back on should
their policy not provide adequate financial cover due to inadequate
cover.
The increase is not only a concern for families but for
transport companies too. Fleet owners may be forced to settle for
less coverage and therefore run inordinate financial risks or risk
claims against their white van insurance policies being
declined.
Compare car
insurance quotes online to find a policy that suits both your
driving needs and pocket. Submit a motor insurance online quote to find a
better vehicle insurance deal today.