In the UK there, is only one form of insurance that is compulsory under the law for individuals and that is car insurance. If you drive, you have no choice in the matter. But while it is an unavoidable expense, there can be many differences between both individuals and policies which can affect the level of your premiums. If you know how to pick your way through all these differences you could save yourself money while still meeting all your obligations.
Car insurance policies generally run for a year and many insurers rely on their customers choosing to auto-renew, which means you simply continue with the policy for another year. If there have been changes to terms or prices, your insurer must tell you but they still expect a large proportion of customers to choose the ease of auto-renewal. While it may be that they are offering a good deal, you should definitely look around at everything else that is available. Start getting quotes several weeks before your policy expires. Most quotes will remain valid for 30 days so if you have a better deal on the table, you can try to use this as leverage with your current insurer or switch if they can’t match or beat the new terms.
Pay for a Year
Paying for your insurance in monthly instalments is very attractive – instead of seeing a lump sum disappear from your account, the money trickles out almost unnoticed 10 or 12 times a year. Before you sign up to this, work out how much extra you might be paying over the year in return for this facility. Some insurers add as much as 25% to your policy. If you end up paying more as a result, it’s worth considering biting the bullet and paying upfront.
Insurance is not just a burden, it does protect you from unforeseen expense so it’s worth having fully comprehensive cover. Many people believe that third party, fire and theft (TPF&T) is cheaper because it sounds as if it must be. This is not always the case and you might be paying more for less. One of the reasons for this is that the cost-per-accident of TPF&T claims is generally higher so beware of an entirely false economy.
Pick the Right Car
OK, this may not be an option if you can’t easily change your car, but if you can, there is definitely potential for savings. Big cars with big engines are more expensive to insure, as are the more exclusive brands. Smaller is cheaper, which doesn’t necessarily mean buying a car that’s just too small for your needs: it’s the engine size that makes the real difference. At the same time, a car with a smaller engine is likely to be cheaper to tax now that emission levels have become a major consideration.
A telematics insurance policy involves the simple installation of a small black box, no bigger than a phone, which allows your insurer to monitor your driving performance. This is always recommended for new, inexperienced drivers partly because it keeps the insurer informed and partly because it encourages drivers to be cautious. It is not only for young drivers, however. If you’ve had claims in the recent past, this may increase your policy premium but you can offset this by switching to telematics. It all depends on driving safely and sensibly of course, but that ought to be taken for granted.
Aside from accidents, insurers are also concerned with the risk of theft and damage to stationary cars. You’ve probably filled in applications where you are asked about the internal security of the car itself – what kind of alarm or immobiliser is fitted, for example – and also where it is parked in the day and overnight. Of course, you must answer these questions truthfully but use them as a reminder to maximise your security arrangements.
Don’t assume the factory fitted alarm is the only option: consider upgrading. Avoid parking on the street if possible and use a driveway or even, with their permission, someone else’s. Best of all is to use a secure garage, and if you don’t have your own, it is often possible to rent one nearby relatively cheaply. Before making any decisions on security measures find out if they will make a worthwhile difference to the cost of your policy.
Many people believe that adding an extra driver to a policy will increase it but this is often not the case. Some insurance companies will see this a reduction of risk through sharing. Younger drivers will almost certainly benefit if they add to their policy a parent with a good record and years of experience. Be careful, however, if you think about doing this the other way around – an older driver adding a young one will probably increase the premiums. Make sure you choose the right extra driver.
Pass Plus Courses
This is particularly useful for drivers who have only recently qualified. Getting your licence is only the start because it is only once you have gathered experience and maintained an unblemished record that the cost of your insurance will go down. If you have only just passed your test you can take the government’s optional Pass Plus driving course which provides an extra six hours of intensive tutoring as a shortcut to greater knowledge and awareness of the road.
Many insurers approve of this because their statistics tell them that a disproportionate number of accidents happen during the first 12 months of driving. However, as with all of these suggested measures, make sure that your prospective insurer will reduce the premium as a result and also satisfy yourself that the benefits in reduced insurance rates outweigh the cost of taking the course, which can be as much as £200. Some councils provide the course at a discount to residents, so this is another thing to check.
You will always be asked if you want to pay a voluntary excess in the event of a claim, and if so, at what level. This means that you will have to contribute to the cost of settling any claim or carrying out any repair to the extent of the excess you have chosen. For the insurer, this not only reduces their total liability but it also demonstrates by sharing the responsibility that you take your position seriously. If you are confident in your safety as a driver, this might be worth considering.
Insurance companies will offer you a range of optional extras which they will promote as being convenient and good value. These might include items like legal expenses, windscreen cover and the use of a courtesy car should your own car be off the road being repaired for any length of time. It’s true that they can all be useful but think carefully about whether the benefits are worth the extra cost. If you are trying to minimise your expenses then you might feel able to do without them. There is an element of risk in all of this of course, so you need to find the right balance for your circumstances.
This may have little impact, but most insurance companies do take into account the occupations of those they insure because some will incur higher risk than others. For example, it will be cheaper to call yourself a writer than a journalist. Alternatively, if you have a public transport option for commuting, you can designate the car as being for social or leisure use only, which can also lower the premiums.
There are lots of things to think about which can help. Consider all of them carefully before you take out your next policy.
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