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Fears raised that motorists could face further insurance hikes

Fears that motorists could be faced with further hikes to the cost of their cover have been raised by an insurer.

The AA is urging the Government to re-think its policy around insurance premium tax (IPT), warning that more expensive policies could encourage drivers to take dangerous risks.

It said further increases to the tax should not be made in Wednesday's Budget.

IPT affects the cost of new policies bought by a wide range of insurance customers, including those buying home insurance, motorists, private medical insurance customers and pet owners.

A string of increases to IPT have already been made, and as announced in the Autumn Statement, from June 1, the IPT rate will increase further, from 10% to 12%.

The AA said that more expensive insurance policies would only encourage people to take dangerous and illegal steps to save money, including driving without any insurance.

According to an index from the AA, the average annual comprehensive car policy is currently around £633.

Edmund King, AA president, said: "The danger here is that by increasing IPT, drivers, especially young and new drivers, might be tempted to take illegal steps such as fraudulent insurance details, or worse, forgoing insurance altogether.

"We are already seeing this happen as there are around one million uninsured drivers on our roads. Further increases in IPT will only drive this number up.

"The Government needs to urgently rethink its policy around IPT and cut it rather than even think about increases."

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