Motor insurance premiums in inflation-busting rise

Car insurance premiums have increased by ten per cent in the past year, putting more financial pressure on drivers who have financial worries.

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Car insurance premiums have increased by ten per cent in the past year, putting more financial pressure on drivers who have financial worries.

Research by the Association of British Insurers (ABI) found the average comprehensive motor insurance premium in the second quarter of 2016 was £434, £39 more than a year ago.

The one consolation for those under financial stress from debt is that the rate of increase has slowed, with the average rise from the first quarter being only one per cent, or £5.

Manager for general insurance at the ABI Rod Cummings remarked: "These continue to be tough times for motorists. Despite a highly competitive market enabling motorists to shop around for the best deal, cost pressures on premiums caused by the government’s increases in Insurance Premium Tax and an increasing overall cost in lower value personal injury claims are feeding their way through into higher motor insurance premiums."

He added that with the announcement of an additional rise in the tax being announced last October, costs are set to rise further. For this reason, the ABI is keen to see the government push on with plans to limit whiplash compensation claims, as this will help to reduce premiums.

For those under serious financial pressure, however, waiting for the situation to change and insurance to stop increasing is not an option. While petrol costs have fallen due to lower oil prices, the expense of running a car is high and yet it is something many working hard to make ends meet cannot easily do without.

Debt management plans may be a particularly useful way of handling finances when things seem to be getting too deep. Instead of trying in an ad hoc fashion to pay off small bits of debt each month, only to find cost increases elsewhere use up any cash you have spare, a more comprehensive debt management plan can devise a systematic plan for lowering the amount you owe, with some leeway built in for any unexpected bills.  

By Joe White

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