If you buy car or home insurance then changes to the tax rules mean that the cost of your cover went up on 1 November. Insurance Premium Tax rates were raised on 1 November from 6 per cent to 9.5 per cent, with the Association of British Insurers reporting that this will add an average of £12.25 to the cost of comprehensive motor cover.
The changes were announced by George Osborne in his Summer Budget and will affect you if you buy buildings, contents, car or pet insurance. With the annual cost of home insurance set to rise by over £10 a year the rise will affect 7.3 million car policies, 4.7 million household policies, three million pet policies and three million private medical insurance policies.
With the cost of car insurance already on the rise, motorists face a double blow. AA research recently revealed that the average cost of a comprehensive car insurance policy rose by 9.2 per cent in the last year to £569 and now drivers also face a tax hike.
So how can you beat the insurance tax rise? Here are three tips.
- Shop around for your car insurance
One of the biggest mistakes you can make is to simply accept your insurer’s renewal quote without shopping around.
Insurers often reserve the best deals for new customers which means that existing policyholders often pay more than they need to. Rather than just renewing your policy, shop around and see if you can find yourself a lower premium.
Even if you want to stay with your current insurer it can pay to tell them that you have found a lower price elsewhere and often they will try and match it.
Online comparison sites can be a good place to start and they will give you an indication of what you can expect to pay. However, some insurers don’t appear on these sites and so you may have to approach them directly for a quote.
- Make sure you provide the correct information
Making any mistakes on your car insurance application can push up the price of your premium.
For example, you should be careful not to declare any spent claims or convictions. Research from the DVLA has revealed that over three million drivers declare spent convictions and penalty points on car insurance applications. This is often due to confusion about when the conviction occurred or because they have provided more information than an insurer has asked for.
Similarly, choosing the most appropriate occupation can save you money. If you say you are a housewife or househusband instead of ‘unemployed’ on your application it will often reduce your premiums.
- Pay for your car insurance up-front if you can
If you can afford to pay for your car insurance up-front it can make the cost of your cover significantly cheaper.
Many insurers charge interest if you pay your insurance by direct debit and the APR charged can be up to 40 per cent. Some insurers will also charge a fee if you want to pay monthly.
If you can pay your car insurance annually when you take it out you could save up to £100 a year.