The Insurance Premiums for Motor Cars are Falling
When it comes to insurance premiums and price reductions, motorists are one of those who rarely rejoice about announcements. However, luck seems to have shone on them and the price of insurance premiums is spiraling downwards.
According to the latest AA insurance index, drivers have benefited from a £18 reduction in the average premium cover provided for comprehensive insurance. In the last one year, the premium has experienced a downtrend; dropping to £648.10 from £726.93.
An insurance director at AA was quoted saying, “Even though not many people will witness a reduction in premium of this magnitude, this development is well-received by many drivers. Prior to the recent news of premium reduction, the cost of insurance premium has risen dramatically due to various reasons. One of the reason is the increasing claims relating to whiplash, unprincipled law firms, and the exorbitant cost of repairing a car.”
In 2017, the government announced a Civil Liabilities Bill that was aimed at reforming the culture of claims. They also mentioned a review of the widely-misunderstood ‘discount rate’ on payments relating to very serious injuries that is likely to reduce the insurance payout. This then led to a reduction in premium, hoping that the cost of claims will also fall.
According to a report by Moneywise in September 2017, the Ogden rate that is being used to calculate how much the cost of compensation is for a serious accident claim has been changed. At first, the rate stood at 2.5%, but after a while, it changed to -0.75%. This also added an average amount of £60 on the amount a motorist pays for insurance.
This occurred because the insurance companies were forced to pay heavily to accident claimants. The public is clamoring for a new Ogden rate to be set to restore normalcy but the government hasn’t provided anything substantial to that effect. In fact, as at September 2017, they announced that according to the information at their disposal, the new rate, if it were to be applied anytime soon, might be in the region of 0% to 1%.
As regards the imminent Civil Liabilities Bill for claims relating to whiplash, the justice secretary, David Gauke, averred that the reform will emphasize impartiality to both motorists and claimants. This is also expected to help insurance companies pass on the cost-savings to the loyal customers.
He concluded by saying that motorists who are experiencing a form of difficulty or the other will most likely accept this development with wide arms. It will provide them with a lot of spare cash eventually.
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