A few weeks ago it was reported that young female drivers are soon to see their car insurance premiums increase due to the fact that the European Union ruled that car insurance providers were no longer allowed to base their quotes depending on gender. However, it now seems that young drivers in general are soon to be struck by increased car insurance prices due to the fact that the way compensation is paid to those involved in a car accidents is changing.
Previously, those that were involved in a car accident and suffered severe injuries were paid compensation in a lump sum; however courts are now declaring that payments should be made monthly instead. This has been decided as those that are paid lump sums of compensation often run out of money whilst they still need to pay for care, and if compensation is paid monthly it also means that the payments can go up with inflation, or if the claimant’s condition deteriorates.
Car insurance providers are understandably concerned with this new method of payment, with Karl Murphy, of insurance broker Towers Watson, saying “Motorists could see the increases coming into force from this January and we could see similar rises in the future if this trend in settlement continues. It will be a blow for young drivers and a double-whammy for young female motorists who have already been hit by the gender directive.”
Prices are set to rise by up to fifteen per cent, meaning that those that are under the age of twenty two could start paying more than £3,300 a year for car insurance. Younger drivers are set to suffer the most from the increases due to the fact that they are more likely to be in serious accidents, however even older drivers could find that their premiums could go up between £40 and £120. Malcolm Tarling from the Association of British Insurers said “It is little surprise motor premiums are rising because insurers have been hit with a mixture of extraordinary conditions such as increased cases of fraud and whiplash claims. When these come under control the cost to drivers will fall.”