The cost of car insurance could reach record highs in 2020 as insurers push up prices to reflect larger claims costs.
An increase in car crime and changes to the way personal injury compensation is calculated are two of the reasons why bills are rising, according to comparison website Go Compare.
We’ve rounded up five factors that could affect your premium.
1. Car theft is on the increase
Police crime figures for 2019 show a three per cent increase in vehicle offences, mainly as a result of increases in ‘theft or unauthorised taking of a motor vehicle’ and ‘theft from a vehicle.’
Vehicle related offences have been on the increase since 2015 with claims for the theft of vehicles more than doubling from £42million in summer 2013, to £88million in summer 2018, according to the Association of British Insurers.
With economic uncertainty causing a fall in the value of the pound, this has increased the cost of imported cars and replacement parts.
There will also be a number of things that motorists need to take into consideration now that Britain has left the EU, including whether they need an international driving permit or a green card.
3. Insurance fraud
This pushes up the cost of cover for all motorists. Industry figures show that car insurance scams are the most common and most expensive, with 55,000 dishonest claims worth £629 million detected.
Some 80 per cent involved personal injury fraud ranging from staged ‘crash for cash’ frauds to opportunistic scams.
4. Government change to the Ogden discount rate
This is a calculation used to determine the amount insurers should pay as compensation to people who have suffered life-changing injuries so that it will cover all their predicted future expenses, including loss of income and care costs. However, because the compensation is paid in a lump sum, the amount is discounted to account for interest payments.
The Government changed the rate in July 2019, increasing it from -0.75 per cent to -0.25 per cent, which was reflected in higher premiums.
5. Insurance Premium Tax
There are concerns that as the Government seeks to raise revenue, the rate of insurance premium tax charged on car insurance – which stands at 12 per cent - could come under the spotlight again, with some experts fearing it could rise to 20 per cent in line with other insurances and VAT.