Equine insurance prices may rise in the wake of the coalition government’s emergency budget, insurers have warned.
Insurance premium tax (IPT) — a tax paid by some insurance companies and brokers selling insurance — is set to rise from a basic rate of 5% to 6% from 1 January, 2011, which could mean cover costs are hiked up too.
Charles Green, of Four Counties Insurance Brokers, said: “IPT is added to the vast majority of insurance purchases. Currently, for insurance such as equine and horsebox, five per cent tax is added, but for breakdown and rescue it’s the same as VAT, 17.5 per cent [rising to 20 per cent].”
But he advised people to think before cutting cover.
“Many policies cover anyone over 25 [rather than a named driver], which could add 10-20 per cent to your premium.”
NFU Mutual also advised caution. “With veterinary treatment continuing to be an area of high claims, any money an owner may save by cancelling or failing to renew a policy could be a false economy when compared to the expense of meeting bills for serious conditions such as colic,” said a spokesman.
This was echoed by the British Horse Society (BHS), which urged owners to compare a small increase in premiums with “potentially astronomical” vet fees.
“Shop around to save money instead,” urged BHS head of welfare Lee Hackett.
Barry Fehler, deputy chairman at SEIB (South Essex Insurance Brokers), said taken on its own the 1% rise in IPT was unlikely to have a major impact, but that the increase in VAT would eventually also add another 1-2% to premiums.
“Most things people claim for are subject to VAT, so the rise in VAT will eventually filter through to increased premiums.
“In terms of the IPT, however, it could have been worse — some European countries pay up to 20%.”
A straw poll of H&H readers indicated most would not risk going uninsured for the sake of a few extra pounds.
“It’s annoying, but I wouldn’t dream of stopping cover even though I’ve never had a big vet bill for my horse,” said Bath-based rider Katie Roebuck.
This article was first published in Horse & Hound (22 July, ’10)