Why HGV Insurance Premiums are Increasing

car loan tax

For quite some time now, the cost of insurance has been steadily rising. However, in Q1 of 2017, they rose fairly rapidly. Private car insurance has been reported to be up by about a 3rd with commercial insurance premiums being up around 16%. These are quite significant increases and are worst for the larger premiums.

These changes however have not been enforced by the industry, but more by the Government.

As well wondering why lorry insurance premiums keep rising, How much does HGV Insurance cost? may also be of interest to you,

What has caused the rises?

First of, we have an IPT (Insurance Premium Tax) Increase. European Law enforced that insurance cannot be subject to VAT, as such, IPT was implemented and started at 2.5%. The government has been steadily increasing this rate and now it sites at 12.5%. It is predicted that eventually it will be bought in line with VAT and future Governments want greater revenue of the costs of Insurance.

IPT is unavoidable and cannot be claimed back. If you have a larger insurance premium, it is suggest that maybe get your quotes and policies sorted before budgets when IPT increases are announced.

The Ogden Rate

The was a rate very few people knew about 2 years ago, many in the industry would not have known what it was. The Ogden Rate or Ogden Factor is a technical mathematical working out that lays in many industries that few pay any attention to.

The Ogden Rate was thrown into the spotlight March 2017 when it went from 2.5% to -0.75%. This sent premiums soaring as the affects were unknown. Why did this have an effect? Well the ogden rate directly impacts on personal injury claims that commonly arise for motoring claims. The amount of people being injured or killed on Britains roads has claimed a shocking 6% according to some Government statistics. As such, insurers have felt the need to better protect themselves against long term insurance claims that can often have to pay out annually.

As cars get smarter and we turn to cars with AI, this will become less of a factor as the human risk element is removed.

Currently though, it is a rate that cannot be avoided.


Inflation hits everything, it is always on the rise as well and currently sits at a 4 year high! It is predicted that inflation will be over 3.5% by the end of 2017!

As the effects or Brexit and the devaluation of GBP roll out, inflation is set for the increasing.


Regardless of your views on Brexit, it is happening and will affect everything! Brexit causes a great deal of uncertainty across the financial industry and as such, insurers will look to increase their premiums in order to cover any financial damage.

When we fully leave the European Union, there is every chance that IPT will be scrapped and VAT introduced. This changes the whole legal framework to which the insurance industry works on.

Roughly half or all those asked expect to see an increase in their premium.

Saving Money

These are the factors you cannot control, but you can control other elements and we have wrote an article on How to Save Money on HGV Insurance that will help you reduce back down your costs.