“The chancellor’s announcement yesterday that there is to be a 2% rise in premium tax on insurance means this tax has now doubled from 6% in 2014 to 12% now, and this is not good news for those already struggling to afford insurance premiums – particularly those on lower incomes.
We already have a situation in this country where around a quarter of people do not have home contents insurance and almost half don’t have any life cover1. And when it comes to car insurance, many drivers, particularly young people are really struggling to afford premiums as it is.
For example, the average car insurance premium is now £737, and this latest rise will take it to £751.74 and it is even worse for younger drivers – following a 2% rise, the average motor insurance policy for a 17 year old will now be a staggering £2,124!2
Car insurance is a legal requirement, so people do not have a choice if they want to drive, but the 2% rise will see the average home and buildings policy go up to almost £3003 and £100,000 of life cover rise by around £2.50 4. These rises, though they may seem minimal, could result in many people underinsuring - which is already a problem as amongst those who have life insurance, one in ten know that they do not have enough* - or worse, not insuring at all, leaving them completely unprotected.
What the chancellor should be doing is encouraging people to protect themselves, their families and their belongings not making it even more difficult for the most vulnerable people to get insurance.
“If the worst happens – a house fire, flood, car accident or illness or death in the family, it is always families on lower incomes that struggle the most. By making insurance even more expensive, many of the ‘Jams’ may have no choice but to forgo insurance as they simply cannot afford it, potentially leaving millions of families unprotected.”
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