Car insurance could get cheaper after plans to ban whiplash cash payouts

Car insurance premiums could end up being £50 cheaper thanks to government plans to ban cash payouts for small whiplash claims.

Announced by George Osborne in the government’s Autumn Statement, the plan is for people to no longer be able to claim cash compensation for a minor whiplash injury. People who sustain a serious whiplash injury can still make a claim.

The Treasury said: “This will end the cycle in which responsible motorists pay higher premiums to cover false claims by others. It will remove over £1bn from the cost of providing motor insurance and the government expects the insurance industry to pass an average saving of £40 to £50 per motor insurance policy on to consumers.”

However, critics fear it could instead result in small claims courts being inundated with cases for whiplash. There is also no definitive answer as to how much of the savings will be passed on to motorists, so how much they will benefit is still unknown at this point.

In 2014, car insurance cost an average of £372, according to the Association of British Insurers. If customers save £50 from their premium this therefore equates to a saving of 13 per cent.

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