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Your Questions: Will I lose my Covid motor insurance rebate if I switch insurer?

 

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The Covid car insurance rebate is a one-off payment to existing insurance customers in recognition of the reduction in claims that insurers have experienced as a result of the pandemic, according to the managing director at Insuremycars.ie, Jonathan Hehir (stock image)

The Covid car insurance rebate is a one-off payment to existing insurance customers in recognition of the reduction in claims that insurers have experienced as a result of the pandemic, according to the managing director at Insuremycars.ie, Jonathan Hehir (stock image)

The Covid car insurance rebate is a one-off payment to existing insurance customers in recognition of the reduction in claims that insurers have experienced as a result of the pandemic, according to the managing director at Insuremycars.ie, Jonathan Hehir (stock image)

Q. My car insurance is up in three weeks. I think I might stick with the current insurer as my premium has gone down in the last two years. I still haven't received my Covid insurance rebate payment, so I don't want to switch in case I miss out. When will I get this, and will it come directly off my premium? Could I use it as credit against my premium if I wanted to?

A. The Covid car insurance rebate is a one-off payment to existing insurance customers in recognition of the reduction in claims that insurers have experienced as a result of the pandemic, according to the managing director at Insuremycars.ie, Jonathan Hehir. The payments are currently being issued by insurers, either by cheque or voucher, depending on your insurer. If you are an existing customer with a valid policy you will be entitled to the rebate, so the chances are that you just haven't received yours yet, Mr Hehir said.

The rebate is a separate payment which will not affect your premium or premium payment schedule and cannot be used as credit towards another transaction, he added. In terms of your renewal, he recommends you shop around. As the overall claim costs for 2020 will almost certainly be lower, insurers have some incentive to lower their premiums and compete for business based on price.

Q. I work in the leisure industry and earn around €21,000 a year. My employer put me on the Temporary Wages Subsidy Scheme in April, but I don't get any top-up. How much will I be short this year in my wages, and will I have to pay any additional or a higher tax rate on the wage subsidy than normal?

A. The Temporary Wages Subsidy Scheme (TWSS)was announced in March and rolled out to see employers through the instability of Covid-19. The payment is intended to ensure businesses emerge from the crisis intact, but undoubtedly many employees are seeing less money in their pockets as a result, especially where payments are not being topped-up, according to consumer tax manager with Taxback.com, Marian Ryan.

She said the system is based on what is known as the "previous weekly average take-home pay" for each employee. This figure is based on an employee's pay in January and February 2020. In your case, and for employees earning up to €22,000 with no income top up, you can expect to see your net income drop by €1,000 during the 23-week period of the payment, Ms Ryan said.

However, while employees like you who didn't receive a top-up on their TWSS payment will have suffered from lower income during the pandemic, you will have a lower tax liability at the end of the year or may in fact be due a small rebate, she said. The TWSS payments are liable to income tax and USC. However, the subsidy is not taxable in real time through payroll. Instead, the employee will be liable for tax and USC on the subsidy amount, determined by an end-of-year tax review. Where a tax liability exists, an employee's unused tax credits may cover it.

Q. As the owner of a small café in the west of Ireland, I have seen my finances hit hard over the last few months. I have taken a six-month payment break in my mortgage. If things don't improve I am considering asking my mortgage provider if I could take an interest-only option until the end of the year once the payment break ends. Do I need to make changes to my mortgage protection?

A. If you are having difficulties repaying your mortgage due to concerns surrounding your income, then you should contact your lender to discuss a potential solution. There are many alternative repayment solutions available, according to Trevor Grant, chairperson of the Association of Irish Mortgage Advisors. In the main, a mortgage protection policy cannot be simply changed as you suggest, he said. But he said you are right in thinking that changing the structure of your mortgage repayments could affect your cover. Depending on your policy, your cover may simply decrease in line with the expected decrease in your mortgage due to an assumption you are making contractual capital and interest mortgage repayments. If you avail of an interest-only facility and your policy is decreasing in line with the anticipated mortgage repayments, then your policy will offer less cover than your outstanding mortgage balance, due to the interest-only period. This is because you will not be making capital repayments during the interest-only period.

 

Need to know

The Covid car insurance rebate will not affect your premium and cannot be used as a credit towards another transaction.

The Temporary Wage Subsidy Scheme is based on what is known as the previous weekly average take-home pay for each employee.

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