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Van drivers face insurance price rise of 29.5%

Van drivers face insurance price rise of 29.5%

Category: Van Insurance

Updated: 21/07/2017
First Published: 21/07/2017

If you thought car insurance price rises are bad enough, you'll be surprised to hear that van drivers have it even worse, with the typical van insurance premium rising by a whopping 29.5% as new compensation rules and tax increases start to bite.

The figures, from Consumer Intelligence, show that price rises have accelerated rapidly over the last year, with the cost of a typical van insurance premium standing at £1,636 for the year to June. Prices have risen particularly rapidly in the last three months, and it's for the same kind of reasons as the car insurance sector:

  • The decision to cut the discount rate (or Ogden rate) to -0.75%, down from 2.5%, has had a huge impact, as it essentially means that insurers will now pay out more to victims of the most serious claims. While it's undoubtedly worthwhile for those individuals, it's had the unfortunate effect of raising prices across the industry, as insurers pass on the rising cost of claims to their customers.

  • The further rise in insurance premium tax (IPT) has added yet more cost pressure. The rate now stands at 12%, having doubled in little more than 18 months, and again, consumers are paying the price.

Furthermore, the report found that average premiums for van drivers are around two-and-a-half times higher than for car drivers – the average premium for van insurance is almost £1,000 more than the typical car insurance premium of £666 – and all kinds of van drivers are impacted.

Drivers using their vans for work, and therefore have 'carriage of own goods' policies, have seen prices rise by an average of 28.4% over the year, while those who use their vehicles as car substitutes have seen the biggest increases – policies for 'social, domestic and pleasure' cover rose by 33.5% in the year to June, a particularly substantial rise, and there's no sign of premiums falling anytime soon.

John Blevins, Consumer Intelligence pricing expert, commented: "The acceleration in insurance costs for van drivers is down to the Ogden changes in March with tax rises and claim costs adding to the pressure.

"Before the Ogden rules came into effect in March, prices were rising by around 1% a month and then rocketed by 11.4% in April, with the Insurance Premium Tax rise in June adding another 2%.

"Choosing the correct cover is vital, and opting for carriage of own goods where appropriate will reduce premiums, as will shopping around as prices vary month-on-month and between providers. But unfortunately, it seems the only way is up."

Average premiums are already more expensive for vans than for cars as the cost of any claim payout is typically higher, but the latest price rise underlines the need to make sure you compare policies to get the best option possible.

This may not always be the cheapest, but you still need to make sure you're getting the best-value deal – use our van insurance quote tool to compare the options, taking into account everything from the price to the level of cover included, and hopefully you won't be hit with too much of a price rise when it's time to renew.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

 
 
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