Car Insurance Premiums Set to Rise for Millions of Drivers in 2018

Are you a driver in the UK? If so, you may want to brace yourself for some potentially bad news. According to new analysis, car insurance premiums for millions of drivers could rise by £60 to £360 a year by the beginning of 2018. This increase is due to a combination of tax hikes, higher repair bills, and a recent European court ruling.

One of the key factors behind this 29% rise in premiums is the cut to the ‘discount rate’ by the Ministry of Justice earlier this year. This adjustment affects lump sum compensation payments for individuals who suffer life-changing injuries, and the industry was caught off guard by the rate being slashed from 2.5% to -0.75%.

In addition to the discount rate cut, there are other looming changes that will contribute to the rise in premiums. The Insurance Premium Tax is set to increase from 10% to 12% on June 1, resulting in an extra £5 for standard drivers and £45 more for commercial drivers. Reinsurance costs are also expected to rise, adding over £15 to a standard policy and nearly £200 to an average taxi driver’s policy over the next year.

Higher repair costs will further impact premiums, with a standard policy increasing by £15 and a taxi driver facing an additional £127. And let’s not forget about the European Court of Justice’s ruling in the case of Damijan Vnuk, which could mean compulsory insurance must cover accidents involving a vehicle’s ‘normal function’ – potentially leading to a 1% increase in motorist’s policies.

Ian Parker, chief executive of ERS, warns that these factors will translate to higher premiums for every motorist, with price increases of up to 29% expected. This news may come as a bitter pill to swallow for many drivers who were hoping for a decrease in their annual motor policy costs.

So, if you’re a driver in the UK, it may be a good idea to start budgeting for potentially higher car insurance premiums in the near future. Stay informed and be prepared for these changes that could impact your wallet.