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Car insurance costs are lowered, but it’s not good news for everyone

The seemingly endless rise in car insurance prices could be coming to a halt thanks to the changes proposed by the government.

The new proposals will see a huge U-turn in the rate at which payments are calculated for major accident victims, known as the Ogden rate.

Ogden’s rate will be changed next year in an attempt to provide a “fairer” system.

How does the Ogden rate work?

Set by the government, the Ogden Tax is the amount awarded to victims with life-changing injuries after an accident.

The rate had been set at 2.5%, which meant that for every £ 1,000 awarded to a victim on a claim, the insurer would pay £ 975, with the claimant expected to earn the other 2.5% or the Ogden rate through investment interest. . This would then give them the full payment they owed.

In March 2017, the rate was lowered to -0.75% or, in a monetary sense, insurers would now have to pay victims £ 1,007.50 for every £ 1,000 payment.

It was this increase in payments that helped auto insurance prices hit record levels * in the last 12 months.

What is Ogden’s latest rate change?

While no specific date has been announced, the Justice Ministry has confirmed that they are reviewing the rules and Ogden’s rate is expected to stand at 1% starting next year.

The changes have been welcomed by insurers as they will reduce the amount they are required to pay.

Huw Evans from the British Insurers Association commented on the proposed changes:

“This is a welcome reform proposal to offer a personal injury discount rate that is fairer to claimants, clients and taxpayers alike.”

“If implemented, it will help alleviate some of the cost pressures on motor and liability insurance in a way that can only benefit customers.”

What do these changes mean for drivers?

The last time the rates changed it meant an increase in auto insurance premiums, as insurers passed the additional costs on to drivers.

Now that payments to victims are expected to decline, it only makes sense that the savings are passed on to drivers by reducing the total cost of their coverage.

The changes are not expected to take effect until next year, so it may take some time before these savings can actually be seen in the price of annual insurance.

How will it affect accident victims?

While potentially good news for drivers, serious accident victims left with life-changing injuries could be replaced.

Instead of receiving the full amount of the payment awarded, victims are now expected to again invest their money for profit.

While these folks are supposed to be able to make up the difference comfortably, many have commented on the unfairness of the new fee.

Speaking with The Mirror, President of the Personal Injury Lawyers Association, Brett Dixon said:

“Someone with a life-changing life-long injury, such as brain damage or spinal injury, cannot afford to take any chances with the way their compensation is invested.”

“The last thing devastatingly injured people think of when they’re in the hospital is their insurance premiums. They think about how they’re going to manage it. Insurers say a higher discount rate will benefit customers through their premiums. There is no benefit if they are seriously injured and forced to take risks with much-needed compensation. “

4 ways to lower the cost of your car insurance

While you wait for rate changes to lower the cost of your coverage, there are several ways to save money right now.

Reduce your risk

While there are some details that you cannot change, there are some things you can do to reduce the risk you pose. Something as simple as changing your job title from office manager to office administrator could save you money.

You should also consider the vehicle you are driving. When choosing a car, you should try to get one that is safer, slower, and less conspicuous.

Increase your excess

Increasing the amount you are willing to pay if you have an accident will lower your premium price. This is a great way to lower your overall cost, but remember that you should never accept an excess that you cannot afford.

Make sure your car is safe

Whether you’re adding an immobilizer to your car or locking it in a garage overnight, increasing the security of your vehicle will make it less attractive to thieves and lower the cost of your coverage.

Be sure to inform your insurer about your enhanced security, as some providers will offer discounts even before renewing.

Pay only for the coverage you need

If you’re just borrowing a car or just need to drive for a few days, an annual insurance policy could be a big waste of money.

A term policy offers the same level of coverage and financial protection as annual insurance at a fraction of the price.

You get the coverage you want without having to pay for insurance you don’t need. You can get a variety of quotes in minutes and compare prices to save time and money.

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