MoneyTimes, October 31, 2012

Posted by Jill Kerby on October 31 2012 @ 09:00



There are always ways to reduce your motoring costs. For example, low carbon vehicles attract much lower vehicle registration tax and annual vehicle taxes – for now:  it has been suggested that these taxes could be increased in the budget.

The fuel costs of an electric car will certainly bring down your annual motoring bill, but the initial cost of electric vehicles is huge and hook-up locations are still few and far between for anyone who lives outside Dublin.

Shopping around for cheaper petrol stations and driving less are obvious ways to cut costs but as for insurance, smaller, older cars are certainly cheaper to insure than newer, larger, more valuable ones. Many people are doing that switch.

Third party, fire and theft insurance, meanwhile, is slightly cheaper than comprehensive cover and there is a big difference in premiums between insurers if you agree to pay a higher ‘excess’ per claim. Up to now, women drivers have automatically been charged less for insurance than their male counterparts.

However, this all changes on December 21 when an EU Directive on the outlawing of gender discrimination for insurance products comes into effect and the cost of motor insurance for male drivers, but especially for young male drivers, is expected to fall and prices for female drivers to rise.

No one knows for sure by how much prices will drop or rise but it is expected to be anywhere from between 10% and 35% by some estimates, with similar increase in premiums for some women like first time young female drivers.

Up to now actuarial risk tables have shown, claim the industry, that more male drivers have more accidents than females. As a result, says the National Consumer Agency (NCA) male drivers typically pay 34% more for the same insurance than females and young males, 77% more. 

The gender factor will no longer be able to be considered after December 21, so if two 20 year olds, a young man and woman, with the same driving experience (say, with a full license and this is their first vehicle) present the same car for the same insurance contract, they will have to be offered the same insurance premium.

(Older, experienced drivers, male or female are unlikely to see much, if any change in their premiums as gender is less of a risk feature the older you get.)

In its latest motor insurance survey the NCA (see www.nca.ie for eight sample drivers in all categories and eight insurers) gives the example of a 20 year old male, provisional and fully-licensed student who drives a 2004 Seat Ibiza five door hatchback. There is only between €100 and €200 difference in the quotes for his provisional or fully-licensed status, but the differential in the range of premiums quoted by the insurers is huge – as much as €2,876 where the fully-licensed student wants third part, fire and theft cover.  These quotes range from €1,315 from FBD to €4,016 a year from Allianz. 

A 20 year old female driver with a full license seeking the same cover for the same car is offered quotes ranging from €660 from FBD to €1,832 from Aviva but  even when they both secure the cheapest quote, her cover costs 50% less.

The message to young drivers seeking insurance is to do so on the right side of the December 21 deadline:  young women should try and secure next year’s cover before that date when premiums for women are lower; young men should wait until after December 21.

If either sex tries to break an existing contract to avail of better rates they should check to see if there are any penalties first.

The anti-discrimination Directive applies to all insurance products, including life insurance, income protection, serious illness, pension annuities, etc.  Since women live longer than men – a gender issue – they tend to pay more for a pension annuity, for example, but less for life insurance. 

If you are wondering if there is any advantage in adjusting your protection insurance premiums in your favour, in accordance with the new Directive then speak to a good advisor. Just be careful of the ‘churning’ potential of such a review if you use a commission-paid broker who might see a big sales commission advantage to him to move you into a policy that seems cheaper, but may not include the same benefits or beneficial terms.

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Today is another significant deadline: the pay and file deadline for anyone with non-PAYE income to declare.  If you can’t get your completed tax return and payment into the Revenue today, you will have another two weeks to comply if you register and pay on ROS, the Revenue’s on-line service.

The self-employed are ROS’s biggest customers, then come anyone with rental income or self-employed income outside their PAYE job. You must also file and pay if you’ve made capital gains by selling shares or a property, for example.

If you’ve left your tax return this late, you should probably try to find a tax advisor or accountant to help you file your return so that you don’t incur penalties for lateness or an incomplete return. 

This could also be the last year that you might avail of top rate (41%) tax relief on pension contributions as there is plenty of speculation that the Minister for Finance may give in to the Troika’s suggestion that the relief fall (eventually) to the standard rate of 20%.  (Relief on PRSI payments of 4%, and the old health levy of 3% no longer apply.)

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