Homeowners and businesses already face a careful balance in finances when it comes to insuring their commercial and personal assets, and now, thanks to a rise in Insurance Premium Tax it’s something that will take even more consideration.
The Insurance Premium Tax (IPT) was introduced in 1996 and this increase round has been the most significant.
Arguing in its favour, the government notes that we in the UK are paying much lower in IPT than other countries such as Germany, which levies 19% on insurance premiums. Those against it call it a “tax on protection”, and say that this extra cost defeats the point of trying to bring personal insurance premiums down in the first place.
It means that those paying out the national average for a motor policy, which is currently £530, will have to pay an additional £20 on top of this, a sum which would have previously paid for useful policy additions such as a courtesy car or legal expenses. It’s a similar story for homeowners, who would see their average building and contents policy would see an increase by £10 to £291.
But what of businesses, who already have to factor in the cost of a combined insurance package or multiple policies in their overheads to make sure they’re covered? This 3.5% on a policy that costs £2,500 could prove a budget stretch too far, and may result in businesses taking out limited or inadequate cover, or worse, no cover at all.
Our advice from Hine would be to approach your business and personal insurance in much the same way – talk to the experts who are going to aim for the best value protection that’s within your budget.
This may mean reassessing which covers are included if they simply can’t be accommodated at the price you need, or further negotiations with insurers, who have already had the chance to acclimatise themselves to IPT since it’s introduction and subsequent rises.