Car insurance rule change means premium costs could FALL for millions of drivers

A MAJOR change to compensation rules could see car insurance premiums fall by an average of £50.

PricewaterhouseCoopers (PwC) is predicting premiums will drop by 5% for drivers in England and Wales.

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Its forecast comes after the Government's Actuary Department updated the personal injury discount rate (PIDR) from -0.25% to +0.5%.

The PIDR is used to determine how much compensation someone who has suffered a personal injury in an accident should receive.

It is reviewed and set by the Government every five years.

A lower PIDR means higher compensation payouts for insurers who may pass this on in the form of higher premiums.

But with it being raised by 0.75 percentage points, it means car insurance premiums should fall.

The prediction from PwC comes with the average cost of car insurance at £612 in July to September, down 2% on the previous quarter, according to the Association of British Insurers (ABI).

However, despite the quarterly drop, the average cost of motor insurance was still £50 higher than the same three month period in 2023.

Mohammad Khan, head of general insurance at PwC UK, said the upgrading in the PIDR was "good news for drivers".

"Motor insurance premiums have risen by over 20% over the last two years but the direction of travel has been turning and these amounts are starting to reduce," he added.

It comes after the Government announced in October it was setting up a new taskforce to tackle the spiralling costs of car insurance for drivers.

Analysis by the Financial Conduct Authority (FCA) has found motor insurance premiums have spiked by 21% on average since June 2022.

Ministers are now working with industry groups and consumer champions such as the ABI, Citizens Advice, Which? and Compare the Market to figure out how to bring the cost of premiums down.

Car insurance has risen for millions of drivers due to a number of factors including inflation, rising car thefts and pothole-ridden roads.

Former transport secretary Louise Haigh said at the time: "Car insurance is an essential, not a luxury.

"It is vital to accessing economic opportunities and this government is committed to getting costs under control.

"That’s why we’re taking direct action to bring insurance companies and regulators round the table to discuss how we can crack down on spiralling costs."

How to keep car insurance costs down

Tom Banks, car insurance expert at Go Compare, previously told The Sun it's worth parking your vehicle in a garage or driveway, if you have one.

This is because parking off-road can lower the chances of it being vandalised or stolen.

He explained: "Insurers will deem you as less of a risk to insure, thereby lowering your premium."

Paying annually is also the best course if you want to pay less overall.

Tom said: "If you pay monthly you could find yourself forking out for added interest and additional fees; paying annually helps you avoid this."

If you've got the budget, consider installing alarms and other safety devices in your car too.

"These could help bring your car insurance cost down, as well as keeping your vehicle safe," Tom advised.

Up your voluntary excess as well - this is the maximum figure you have to pay if you are involved in an accident.

By increasing your excess, you are taking on more financial responsibility for your driving - insurers reward this by offering you a cheaper premium.