The seemingly never-ending rise in car insurance prices could come to a halt thanks to the proposed government changes.
New proposals will bring about a huge turnaround in the calculation of disaster victim payouts known as the Ogden rate.
The Ogden rate is expected to change next year to create a “fairer” system.
How does the Ogden tariff work?
The government-imposed Ogden rate is the amount awarded to victims of life-changing injuries after an accident.
The rate had been set at 2.5%, which meant that the insurer would pay out £ 975 for every £ 1,000 awarded to a victim in a claim – the other 2.5 percent or the Ogden rate that the claimant is likely to earn through investment interest. This would then give them the full payment they were due.
In March 2017, the interest rate was lowered to -0.75% or insurers would now have to pay victims £ 1,007.50 per £ 1,000 payment.
It was this increase in payouts that helped auto insurance prices hit record highs in the past 12 months.
What is the last change in the Ogden rate?
Although no specific date has yet been announced, the Department of Justice has confirmed that the rules will be revised and the Ogden rate is expected to be 1% next year.
The changes have been welcomed by insurers as they will reduce the amount they will have to pay.
Huw Evans of the Association of British Insurers commented on the proposed changes:
“This is a welcome reform proposal to achieve a fair discount rate for personal injury to applicants, customers, and taxpayers alike.”
“If implemented, it will help reduce the cost pressure on car and liability insurance in a way that only benefits customers.”
What do these changes mean for drivers?
The last change in rates meant an increase in car insurance premiums as insurers passed the additional costs on to drivers.
Now that the payouts to victims are likely to decrease, it only makes sense that the savings are passed on to drivers by reducing the total cost of their coverage.
Changes are not expected to take effect until next year. Therefore, it may take some time before these savings are actually visible in the price of the annual insurance.
How does it affect the accident victims?
Even though the news may be good, victims of serious accidents that sustain life-changing injuries can be replaced at short notice.
Instead of receiving the full amount of the awarded payout, victims are now expected to invest their money for profit again.
While it is believed that these people can easily make up for the difference, many have commented on the injustice of the new sentence.
Brett Dixon, president of the Association of Personal Injury Lawyers, told The Mirror:
“Someone with a life-long, life-changing injury like brain damage or spinal injury cannot afford to take a risk if their compensation is invested.”
“The last thing people with devastating injuries think about when they are in a hospital is their insurance premiums. They are considering how to deal with them. The insurers say that a higher discount rate would benefit customers with their premiums. It is no use. ” if they are seriously injured and are forced to take risks with the compensation they urgently need. “
4 ways to reduce the cost of your car insurance
While you are waiting for tariff changes to lower the cost of your coverage, there are a number of ways you can save money 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 face. You can save money by simply changing your job title from an office manager to an office manager.
You also need to consider the vehicle you are driving. If you choose a car, you should try to find one that is safer, slower, and less noticeable.
Increase your excess
If you increase the amount you are willing to pay in the event of an accident, the price of your premium will be reduced. This is a great way to lower the overall cost, but keep in mind that you should never agree to a deductible that you cannot afford.
Make sure your car is safe
Regardless of whether you add an immobilizer to your car or lock it in a garage overnight, increasing the security of your vehicle makes it less attractive to thieves and reduces the cost of your coverage.
Make sure you tell your insurer about your improved security, as some providers offer discounts before you even renew.
Pay only for the coverage you need
If you only need to borrow a car or just drive a few days, an annual insurance policy can be a huge waste of money.
A temporary policy offers the same coverage and financial protection as an annual insurance policy at a fraction of the price.
You get the coverage you want without having to pay for the insurance you don’t need. You can access a range of offers in minutes and compare prices to save time and money.
Source by Graham Cutbill-White