Despite the fact that the car insurance industry is massively competitive, premiums are rising at their fastest rate for 15 years according to the AA British Insurance Premium Index published in October, 2009.
So how can you slash car insurance costs? We offer a simple three step guide to help cut your premiums.
Step one: Lower your risk
Insurance premiums are based on a number of risk factors, which can include the car you drive, your personal circumstances, your level of cover and so on. Lowering your risk will help you save money no matter which insurer you choose – so here are 10 ways to reduce the risk you pose.
Assess the level of cover you need: The more cover you take out, the better placed you should be if an accident occurs. However, there may be cover options that you simply don’t need. For example, there’s no point paying for cover while ‘commuting’ if you don’t drive a car to work; and you may not need a courtesy car if you have access to a second vehicle. Think carefully about the level of insurance cover you need before you shop around.
Increase your voluntary excess: Most insurers offer a compulsory excess, which is the amount that you must pay on any claim, alongside a voluntary excess which you can adjust to a suitable level. Clearly setting the excess at a higher level reduces your risk to an insurer as you are offering to pay more on each claim, rendering many small claims pointless. This will reduce your premiums – but you should think about how high you can afford the excess to be in case a claim is necessary.
Add security devices: Car alarms, immobilisers and tracking devices can reduce the risk of car theft and earn discounts from several insurers. Consult your provider about which devices offer the largest savings.
Park in a garage overnight: Parking in a garage during the night and in a secure car park during the day could cut premiums by as much as five per cent.
Tweak your job description: Small adjustments to your job description could help you save on your car insurance – as long as you don’t lie to an insurer. So for example, calling yourself a ‘journalist’ could lead to high premiums as the insurer may picture a roving reporter – but calling yourself an ‘editor’ gives a clearer view that you’re office-bound.
Add named drivers: Adding drivers to your policy can cause premiums to rise or fall depending on who you’re adding. If you’re adding a young, inexperienced driver, your premiums will rise – but adding a spouse or parent can help cut premiums.
Take an advanced driving course: Completing an advanced driving course can help you save if you’re in your first year of driving – the Pass Plus for example can cut premiums by as much as 35 per cent.
Build up a no-claims discount: Prove to an insurer that you’re reliable behind the wheel and don’t make unnecessary claims and you could earn as much as a 60 per cent discount in as little as five years.
Pay upfront: If you have the cash, pay for premiums upfront as most insurers charge interest for monthly payments.
Declare your mileage: Agree to a mileage limit upfront and you may be rewarded with savings.
Step two: Shop around
Once you have defined the cover you want and made your insurance risk as low as possible, shop around for car insurance with a comparison website.
The leading comparison websites can now compare quotes from more than 100 direct insurers and brokers with a single search helping you gain an overview of the market in minutes. The quotes they offer should be the same as approaching insurers directly and are returned with the cheapest listed first. Remember, however, that the cheapest quote will not always provide the level of cover you require – so you should check the policy details of each deal that’s available to you, to ensure you’re getting value for money.
Step three: Mark your renewal date
Just because you got cheap car insurance once, it doesn’t mean that you will get it year after year. In fact, most insurers increase their premiums at renewal time because so many customers automatically stick with the same provider.
The only way to be sure you’re still getting a competitive deal is to complete steps one and two again when your renewal is due. By doing this you may be able to take advantage of discounts that are available to new customers from other insurers.
Finally, even if you’re not at the point of renewal, don’t assume that you can’t save. Some insurers do impose cancellation penalties but these can be outweighed by the money you could save by moving to a different policy – so it’s well worth shopping around to see if you could start saving money now.