How to beat the insurance premium tax hike
Commenting on how consumers may be able to beat the 58% hike in insurance premium tax, which comes into effect on 1st November, Rod Jones, insurance expert at Uswitch.com, says: “The insurance premium tax hike from 6% to 9.5% will see consumers paying the price – especially young drivers who could see their policy increase by £40. However, some savvy consumers may be able to avoid the hike by taking out a new policy by the 31st October.
“Similar to the trick employed by cash-strapped commuters renewing their season tickets a few days early to avoid fare increases, drivers may be better off taking out a new policy before their existing one expires. If your policy is due for renewal in the first 12 days of November, you could be better off cancelling the existing policy and starting a new one on the 31st October before prices go up – even though you won’t get any money back for the remaining days of cover.
“And it’s not just drivers who will see costs go up. The increase will hit home insurance policies too. Anyone with contents and/or building insurance could also be better off taking out a new policy on the 31st October if their current one expires within the first 12 days of November.
“However, it’s important that you look at your policy carefully to see how long is left and if you’ll face any exit fees before deciding to cancel – as well as ensuring you’re not double covered. It’s also worth noting that you may not benefit from gaining a full year’s no claims bonus – which could help keep your new premium down. But, with the tax increase undoubtedly pushing up premiums, switching to a new provider early could not only help you avoid the hike, but it could also be a good opportunity to save money by shopping around.”
Tips for avoiding the insurance premium tax hike:
Check your existing policy renewal date – if it’s before the 12th November, consider taking out a new policy on the 31st October
Contact your provider to check any exit fees
If you do take out a new policy, make sure you’ve cancelled your existing one, so that you’re not double covered
Bear in mind that you won’t benefit from a full year of no claims bonus if you cancel before the end of the year
Take the opportunity to shop around. You should get your renewal quote 30 days before your policy ends – so use this price and the information to find the best price for the next year.
For more information visit www.Uswitch.com or call 0800 093 06 07
FOR MORE INFORMATION
Katherine Moss
Phone: 020 3021 5893
Email: katherine.moss@uswitch.com
Twitter: @uswitchPR
Notes to editors
All figures based on average insurance premiums from the AA British Insurance Premium Index.
Average premium for drivers aged 17-22 in 2015 Q2 was £1,241.81. Without the 6% tax this would be £1,171.53, and with the 9.5% tax this would increase to £1,282.81. This is an increase of £41.
Average premium for car insurance for 2015 Q2 was £549.46. Without the 6% tax this figure would be £518.36, therefore with a 9.5% tax rate, this would increase to £567.60 - £18.14 more than a current premium. Based on a policy lasting 365 days, an annual premium of £549.46 costs £1.51 per day. Therefore, 12 days cover would cost £18.06 – which is less than the projected increase.
Average premium for contents insurance for 2015 Q2 was £61.18. Without the 6% tax this figure would be £57.72, therefore with a 9.5% tax rate, this would increase to £63.20- £2.02 more than a current premium. Based on a policy lasting 365 days, an annual premium of £61.18 costs 17p per day. Therefore, 12 days cover would cost £2.01 – which is less than the projected increase. Average premium for buildings insurance for 2015 Q2 was £108.15. Without the 6% tax this figure would be £102.03 therefore with a 9.5% tax rate, this would increase to £111.72 - £3.57 more than a current premium. Based on a policy lasting 365 days, an annual premium of £108.15 costs 29.6p per day. Therefore, 12 days cover would cost £3.56 – which is less than the projected increase. Average premium for buildings and contents insurance for 2015 Q2 was £152.27. Without the 6% tax this figure would be £143.65, therefore with a 9.5% tax rate, this would increase to £157.30 - £5.03 more than a current premium. Based on a policy lasting 365 days, an annual premium of £152.27 costs 41.7p per day. Therefore, 12 days cover would cost £5.01 – which is less than the projected increase.
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