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27th February 2017 |

What you need to know about the changes to car insurance

At Walton Bridge Garage we take road safety very seriously and one aspect to using the roads safely is to ensure you are always correctly insured on any vehicle you are driving.

It’s no secret that the cost of insuring a car can be a hefty one, particularly for young drivers starting out after passing their tests.

But now this cost could be about to get a great deal higher due to changes in compensation payments announced by the Government this week.

What is the Change?

The short answer is the amount of compensation awarded to victims claiming on their insurance is set to rise. This is called the “discount rate” and will move from 2.5% to 0,75%, the first change made by the Ministry of Justice in 16 years!

It is being altered to protect the investment of money awarded to injury victims which on the face of it sounds like a positive step, but has been met with heavy criticism from the motoring industry.

Why is it bad for drivers?

As the payouts awarded increase, the premiums paid for insurance policies are going to increase with it, as insurance firms look to recoup some of their lost profits.

The Association of British Insurers reckons it could impact some 36 million motorists as insurers look to “overcompensate” for the sake of a few thousand injury claims a year. There is also knock-on implications to the NHS who will need to find an additional £1 billion to cover the costs.

What does it mean?

It means that the average insurance premium will increase by about £75 a year to calculate the awards given to those with life-changing injuries.

Younger drivers could be looking at a far greater penalty, though, as it is expected to drive up insurance costs by as much as £1,000 more than they currently stand. So not only is homeownership a dream for the younger generations but so too could driving a car!

When does it start?

The new ruling comes into play on the 20th March, so those looking to pass their tests and get covered should do so quickly.

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