Court Decision Could Force Car Insurance Premiums To Rise investigates how motor insurance premiums could rise due to a recent court ruling. This news comes after speculation that there could be a rise in the cost of minor vehicle repairs of as much as 25 per cent.

The court ruling under consideration involves insurer Royal Sun Alliance, who currently utilises its own subsidiary company to conduct repairs to damaged vehicles that have been involved in crashes or other incidents. This is a very different practice to most other insurers, who tend to use independent garages for vehicle repairs. With all repairs, once the vehicle has been worked on the bill is then passed onto the at fault drivers insurance company to pay.

Several other insurance companies have disputed the size of some of the claim amounts put in by Royal Sun Alliance, claiming that the charges could not be justified. They suggest Royal Sun Alliance is unfairly profiting from the repair work.

The High Court ruling stated that as long as the insurer is billed at an amount that would be payable if the individual arranged the repairs personally; the difference in cost does not matter.

Experts say that following this ruling many other companies will follow Royal Sun Alliances methods of repairing vehicles to remain competitive and avoid being disadvantaged. This could cause car insurance costs to rise by as much as 25 per cent as the inflated repair bills are inevitably passed onto the consumer through their motor insurance premiums.

The ruling emerged shortly after the Office of Fair Trading (OFT) investigated the motor insurance industry calling it ‘dysfunctional’ and referred it to the Competition Commission. This was in relation to rising insurance premiums and the High Court ruling has placed the industry under more scrutiny.

Andrew Goulborn, Commercial Director at commented:

“As we have written about recently, the industry is already under scrutiny from the OFT and this could well give rise to further investigation around this ruling specifically. Over the longer term we hope that both the industry and consumers will benefit from more consistency and transparency across insurer operations. Meanwhile, we are working hard to provide motorists with the ability to compare car insurance to ensure they can access the best deals possible.”.

20/06/2012 11:00:01 Eren
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