10 car insurance essentials when you want cheap cover
Millions of Brits are paying too much for their car insurance. But with annual premiums running deep into the hundreds and even thousands of pounds, at least there's lots of potential to make substantial savings.
Our research at MoneySupermarket shows that 30% of drivers could save up to a whopping £400 on the cost of their annual cover. So here's our top 10 tips to get a lower premium without compromising the breadth and quality of the insurance you buy.
1. Shop around
Many drivers automatically renew their insurance without checking whether their renewal premium is competitive. Big mistake. Insurers love this kind of customer inertia, because it means their prices aren't tested against the rest of the market. But if you run a quote at MoneySupermarket's car insurance channel, you'll find the best deals from over 100 leading insurers.
2. Ramp up security
A big chunk of your premium covers the risk of theft, so if you can thwart the thieves you'll cut your bill. Security measures include immobilisers, alarms and tracking devices.
Before you fit a device, check with your insurer to see if it is approved, otherwise you won't secure the discount. Most insurers favour devices endorsed by Thatcham, the industry's research establishment.
Another way to cut your premium is to park off-road at night, either in a garage or driveway.
3. Monitor your mileage
In crude statistical terms, the more miles you drive, the more likely you are to be involved in an accident – that's why insurers always ask for your estimated annual mileage when you ask for a quote, and charge you more the higher the figure you give.
On every single motor insurance form I've ever filled in, I've always put my annual mileage at 12,000. I've no real idea why, it just seems like a nice round number, and it's become a habit – but I can't imagine I do anything like 1,000 miles a month, every month.
Maybe in August if I drive down to Cornwall and back I might get close, but otherwise I'm probably doing around 100 miles a week max.
So that's my next task: to provide an accurate annual mileage figure and hopefully see my premium fall.
4. Avoid instalments
Insurers often push monthly instalment plans as a way to make an unpalatably large premium easier to digest. But these schemes need to be treated with caution for two reasons.
The first reason is that 12 instalment payments paid over the course of the year usually costs more than paying the premium in one lump sum. This is due to the interest you pay, which could add 10% or more to the premium.
For some of us, though, it's simply not affordable to fork over the required premium in a single payment. If this is the case for you, make sure you factor in the cost of instalments when you compare what's on offer from different insurers as some charge higher rates of interest than others.
The second reason is that, once you're in the routine of paying instalments by direct debit each month, it's even more likely that you'll allow your renewal to slip past without question. It's so easy to let your current insurer do all the 'work' associated with the renewal – that's why they always include a message inside their renewal letter along the lines of: "You don't need to take any action, we'll do everything for you."
But if you don't take any action, you won't save any money!
5. Build your no claims discount
Insurers reward us for not making claims by discounting our premiums – and each year we don't claim, the discount gets bigger until it can be 60% or more of the premium after five claims-free years.
Some people are deterred from changing insurer at renewal because they think they will lose any no claims discount they have built up with their present insurer. But these days many insurers take your word for it when you apply for a quote and you say you've got a certain of number of claims-free driving years under your belt (they'll check if you do make a claim, so it's always best to play it straight). And if an insurer does demand evidence, your present insurer will provide it.
Most insurers also allow you to insure your discount so that, if you make a claim, you won't lose your discount.
6. Boost your excess
Car insurance policies include a compulsory excess – the amount you are required to pay towards a claim before the insurer stumps up its share of the bill. You will also be given the option to include a voluntary excess, increasing the amount you would contribute.
As a general rule, the higher you set your voluntary excess, the bigger reduction you'll achieve in your premium. But you shouldn't set the voluntary element too high, or you might find yourself funding all of the repair costs following an accident.
7. Multi car policy
With more families owning more than one vehicle, an increasing number of insurers are offering 'multi car' policies that allow you to cover your 'fleet' under a single policy. As well as being convenient – you just have one renewal date to remember – you can secure what is in effect a bulk purchase discount.
One potential drawback is that, come renewal, you won't have as many competing insurers bidding for your business. But this should become less of an issue as more firms offer this sort of contract.
8. Add a named driver
Younger, more inexperienced drivers could save money by adding an experienced driver to their policy as a 'named' driver to bring down the price. This is because the insurer will assume the car is being driven by the 'better' driver for some of the time.
But a young driver should never be tempted to lie about who the main driver is – this is known as 'fronting' and your policy could be deemed invalid if you were to make a claim.
Young drivers in particular can benefit from getting an extra driving qualification, such as PassPlus.
9. Consider the 'black box' option
Telematics is a new concept in the motor insurance market that is quickly gaining in popularity, particularly among younger drivers. The insurer provides you with an in-car device that monitors how and when you drive, focusing on acceleration, cornering, braking, the types of road you tend to use and whether or not you drive at night.
If you prove over the course of several weeks that you are a safe and intelligent driver with a low risk profile, you will see the benefit in terms of lower premiums. Les Robert's article explains how telematics works.
10. Consider your car
If your car insurance costs are crippling your finances, it might be time to think about changing your car. Every car is assigned to a car insurance group by the insurance industry and the lower the group, the lower the likely premium. So, without taking driver details into consideration, it will be cheaper to insure a Fiat Punto than an Audi TT.