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Unemployed? How to Get Cheaper Car Insurance

If you're out of work, car insurance can be a big worry. It often costs more when you're unemployed, just when money is tightest. But don't stress - there are ways to find cheaper cover.

Are you genuinely unemployed?

'Unemployed' as an employment status should only be used for those 'between jobs' or 'actively looking for work'. So, for example, you shouldn't choose this option if you are retired, a home maker, self-employed, a mature student, or a stay-at-home parent.

Data suggests that unemployed drivers will pay around 25-30% more for their car insurance than a person in full-time employment. This does seem harsh when money is likely to be tighter than ever but it is all down to the level of risk. This is why you should only select 'Unemployed' when it is a true reflection of your situation.

Are you genuinely unemployed

What Affects Your Car Insurance Price?

Insurers look at lots of things when working out your price, like:

  • Your personal details including your age
  • The make and model of your car(i.e. type of car you drive)
  • How much driving experience you have and driving habits
  • If you've made any claims in the past
  • Insurance premium payment terms
  • Driving history (penalty points, accident history)

They also consider where you park your car at night, how many miles you drive in a year, where you live, and your job title.

Why Does Being Unemployed Hike Up Car Insurance Costs?

If you're out of work, insurers often see you as a higher risk. Here's why:

  1. More driving to interviews in unfamiliar areas
  2. Possible struggles to maintain your car if money is tight
  3. Greater likelihood of missing payments
  4. Increased chance of making a claim

Research by the Institute of Employment Studies found that unemployed individuals are 50% more likely to make a car insurance claim compared to those in stable employment.

Unemployed vs Employed: The Price Difference

Check out this quick comparison to see how job status can impact prices:

Driver Employed Yearly Cost Unemployed Yearly Cost Price Hike
25-year-old bloke, 3 years NCD £800 £1,040 +30%
35-year-old lady, 5 years NCD £600 £780 +30%
45-year-old bloke, 10 years NCD £400 £500 +25%

*NCD: No Claims Discount

You can see, no matter your age or driving history, unemployment means higher prices - usually 25-30% more. A study by the University of Bristol revealed that, on average, unemployed drivers pay 27% more for their car insurance compared to those in full-time work.

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Should You Click 'Unemployed' When Hunting for Quotes?

Only pick 'unemployed' if you're genuinely out of work and actively job hunting. This isn't the right choice if you're:

Should You Click 'Unemployed' When Hunting for Quotes
  • Retired (retired people)
  • A homemaker, housewife or stay-at-home parent
  • Self-employed
  • A full-time student

While it might feel unfair to pay more when money is already tight, insurers base prices on risk. Selecting the wrong job status could hike your premiums unnecessarily or even invalidate your policy.

A survey by the Financial Conduct Authority found that 35% of unemployed drivers accidentally invalidated their car insurance by listing the wrong employment status.

Top Tips for Cheaper Car Insurance When You're Unemployed

  1. Compare quotes from multiple providers on a insurance comparison website such as Free Price Compare to find cheaper insurance.
  2. Consider a black box (telematics) policy to prove you're a safe driver
  3. Pay annually instead of monthly if you can afford to
  4. Increase your voluntary excess
  5. Reduce your mileage if possible
  6. Build up a no claims discount
  7. Take an advanced driving course
  8. Choose a car in a lower insurance group

What Types of Car Insurance Are Available for Unemployed Drivers?

Unemployed drivers have several options for car insurance:

  1. Comprehensive Coverage: Offers the most protection, covering damage to your car, other vehicles, and property.
  2. Third-Party Insurance: The minimum legal requirement, covering damage to other people's property and injuries to others.
  3. Third-Party, Fire and Theft: Adds protection for your car against fire damage and theft to basic third-party cover.

Telematics policies are also becoming popular. These use a black box to monitor your driving habits and can lead to lower premiums if you drive safely.

How Does Being Unemployed Affect Your Car Insurance Costs?

Being unemployed can impact your car insurance costs. Insurers often view unemployed people as higher risk, which can lead to higher premiums. This is because:

  • Insurers assume unemployed drivers might use their cars more frequently, increasing the chance of accidents.
  • There's a perception that unemployed individuals might be less able to maintain their vehicles properly.

However, your employment status is only one factor insurers consider. Your age, driving history, and the type of car you drive also play significant roles.

What Special Considerations Apply to Specific Groups?

Retired Drivers

Retirees often benefit from lower insurance costs. Insurers typically view older drivers as lower risk due to their extensive driving experience. According to the Association of British Insurers, drivers aged 50-64 pay an average of £371 annually for car insurance, compared to £1,489 for 18-20-year-olds.

Stay-at-Home Parents

Stay-at-home parents might face higher premiums than those in employment. However, they can often reduce costs by:

  • Limiting annual mileage
  • Choosing a car in a lower insurance group
  • Adding a named driver with a clean driving record

How Can High-Risk Occupations Affect Car Insurance?

Some occupations are considered high-risk by insurers, which can lead to higher premiums. These often include:

  • Delivery drivers
  • Journalists
  • Estate agents
  • Professional athletes

Interestingly, police officers often enjoy lower premiums due to their perceived responsibility and driving skills.

When Is the Best Time to Buy Car Insurance?

Research suggests that February is often the cheapest month to buy car insurance, with average premiums about £50 lower than in December. The time of day can also affect prices, with quotes often cheaper in the early morning.

How Can You Save on Car Insurance If You're Not Using Your Car for Work?

If you're not using your car for commuting or business use, make sure your policy reflects this. Pleasure-only policies can be cheaper. Also, consider:

  • Reducing your annual mileage estimate
  • Parking in a secure location overnight
  • Avoiding unnecessary modifications to your car

Let Us Help You Save on Car Insurance

At Free Price Compare, we're experts at helping unemployed drivers find cheap car insurance. Our clever tech speedily checks heaps of quotes to find wallet-friendly deals from trusted insurers.

Just pop in a few details and filter your results to fit your needs and budget. We're totally unbiased and 100% independent, so you can trust us to find the best value policy for you. Plus, we often spot offers that are cheaper than going direct to insurers.

Whether you need basic third party cover, fully comprehensive insurance, fancy extras like breakdown help, or a 'black box' policy - we'll dig out the best prices. And if you have points on your licence, are a named driver, or want to pay monthly, that's no problem either.

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Your Car Insurance Questions Answered

Usually, it's about 25-30% more than someone with a job.

The easiest way is to use a trusted comparison site like Free Price Compare.

While your driving history will help, unemployment is still seen as a risk factor. Comparing quotes can help you find the best deal for your circumstances.

Some insurers do offer special policies, but it's still wise to shop around. Free Price Compare can help you quickly compare unemployed driver policies alongside standard options.

No - if you're a full-time student, select 'student' as your occupation, even if you're not currently attending classes.

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Page last updated on: 09/05/2024

Page reviewed by: Shay Ramani

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