Millions of households and drivers face a steep rise in the cost of new insurance policies, following the latest hike in the tax that insurers are charged.
Insurance premium tax (IPT), the cost of which is passed onto consumers by insurers as part of their policies, jumps from 10% to 12% today – just eight months after it rose from 9.5% to 10%. It's expected to add an extra £47 to the average household bill.
The tax hike applies to any new pet, car, mobile, contents, buildings and private medical insurance policies which start from today. See our Pet, Car, Mobile, Home and Health insurance guides for help getting the best deals.
Check if you can beat the hike by locking in a cheap deal on insurance
Use our insurance guides for help getting the best deals on cover for car, home and pet insurance, and more. But here are a few general tips:
- Never auto-renew. Always check if you can find a cheaper policy, and if you don't want to swap insurer use the new price to haggle.
- Beware monthly repayments. They are essentially high interest loans so always pay annually where possible.
- Never assume all policies are the same. They vary greatly and will have individual exclusions so always make sure you're covered for what you need.
'It is time to call a halt to this raid on the responsible'
The Association of British Insurers (ABI), which estimates the rise will add £47 to the average household bill, has warned that the IPT changes will be felt hardest by those paying higher premiums, including young drivers.
James Dalton, director of general insurance policy at the ABI, said: "With a doubling of IPT in just under two years it is time to call a halt to this raid on the responsible.
"This tax penalises hard-working families, as well as businesses, who have done the right thing by taking out insurance to protect against many of life's uncertainties. This latest hike must be the last. The next Government must freeze this tax, to give hard-working households and businesses a break."