Best buy premiums up by a tenth

Best buy premiums up by a tenth

Car insurance rates are accelerating in the wrong direction after the introduction of higher Insurance Premium Tax, research reveals.

Average best buy premiums increased by 10.9% to £696 in the year to 30 November, market researcher Consumer Intelligence claims, meaning it is more expensive for motorists to protect themselves on the road .

Insurance Premium Tax - the tax paid each time an insurance policy is purchased in the UK - increased from 6% to 9.5% in November.

Drivers over the age of 50 were the worst affected, with a typical annual increase of 16.4% sending their typical premium to £279.

Prices jumped 12.8% to £498 for those aged 25 to 49, while prices went up 1.5% to £1,680 for those under 25.

Ian Hughes, chief executive of Consumer Intelligence, says the rise in Insurance Premium Tax is having a massive, immediate impact on pricing across the market, describing the average 10.9% annual increase as "substantial".

His biggest concern is that prices are rising once again for under-25s after years of cuts. He recommends they start looking at ways of limiting rises in the cost of insurance such as black box technology.

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