It’s not just car owners who have been hit with insurance price hikes. Van drivers are also facing steep increases thanks to the rise of insurance premium tax (IPT) and the government’s overhaul of compensation rules.
The average premium for a van is now £1,636 – that’s an average annual increase of 29.5%, with the bulk of that rise happening in the past few months. In contrast, while car premiums have also increased, the average car insurance policy costs £800.
IPT – a tax payable on most insurance policies – increased by 2% in June, bringing it up to 12%. As if that wasn’t enough the Ogden rate, which contributes towards determining insurance payouts, was also slashed in March 2017.
The Ogden rate (sometimes known as the discount rate) is a percentage that insurance providers can reduce compensation payouts by. A reduction in the rate ultimately means that anyone receiving compensation will get a bigger upfront payment. While it’s good news for anyone involved in an accident, those bigger payments have to be paid for somehow, which contributes to why premiums have increased.
But not all van drivers are created equal in the eyes of insurance providers. Those who only use their vans for work and have a policy for the ‘carriage of own goods’ saw an annual rise of 28.4%. However, drivers using their vans as a car substitute, with a social, domestic and pleasure policy, saw an average annual increase of 33.5%. The discrepancy is probably down to the fact that in the eyes of insurance providers, vans used only for work tend to be driven more carefully (as they’re vital for work) and, therefore, pose less of a risk to insure.
It’s not just van use though. Age also plays its part, with van drivers over the age of 50 seeing average policies increase by 38%; those aged 25-49 saw average premiums rise by just over a quarter (27.5%).
The double whammy of the IPT increase and reduction of the Ogden rate means van drivers have to be even more savvy when it comes to searching for insurance policies. Auto-renewing in the age of price hikes simply won’t do.
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