Budget Announcement Increases Car Insurance Premiums

Some of you may not be aware that due to an announcement in the Budget a few days ago you are likely to see a rise in your car insurance premiums later on this year. As you will no doubt know, those people paying car insurance are charged insurance premium tax (IPT) on their premiums.

Due to an increase in Insurance Premium Tax you are likely to see your car insurance premiums rise from 1st November 2015

At the moment, you pay 6% in IPT meaning that on an average annual premium of say £360 you would pay around £21.60 pa. With effect from the 1 November 2015, the insurance premium tax is to rise to 9.5%. This would increase the amount you would pay in IPT on the above premium to £34.20 pa – an extra £12.60 pa. This is an additional cost that most people would no doubt rather not be paying.

The additional cost faced by a young motorist who is often paying a four-figure sum each year for their car insurance is likely to be even greater.

Perhaps this latest announcement will encourage more car owners to shop around to try to get a cheaper deal on their car insurance when they receive their renewal notice or are looking for cover for the first time. Unfortunately, not enough motorists do this with many happy just to continue to stay with their existing insurer who they have been with for years or make enquiries of just one insurance company when first arranging car insurance.

By using the likes of a price comparison website, you are more likely to obtain a cheaper car insurance deal. Such websites usually provide you with access to many car insurance companies that are competing for your business. They are simple and quick to use as you should only need to key in the details requested once to then usually be provided with a range of quotations from insurers prepared to provide you with the cover you are looking for.