Car cover price drop hope

Insurers have clinched a partial victory in a battle over payouts to crash victims.

Firms slammed a Ministry of Justice ruling earlier this year which increased compensation awards to those suffering life changing injuries.

Insurers said it would cost them £2billion a year and add £75 a year to the average annual motor premium.

The Government yesterday announced a rethink. It should limit the rise in car insurance, but will also mean lower compensation payouts.

Mohammad Khan, from accountant PwC, said the announcement “should mean that motor insurance rates remain stable for the next six months”.

Kevin Pratt, at MoneySuperMarket, said insurers had been quick to blame price hikes on the discount rate, so should now cut prices to reflect favourable reform.