How to Save Money on Your Car Insurance Premiums


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By Crispin Bateman

on Thursday 14 March 2019


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Car insurance – it’s one of those horrible annoyances that comes with owning a car. It’s expensive, it’s legally obligatory and it always feels like you get nothing for it.

The truth is, of course, that if you ever have an accident, your car insurance provider goes from being a money-grabbing beastie to your best friend as they deal with the aftermath of the accident and leave you alone to recover.

Still, it’d be nice if it didn’t cost so much!

How can I reduce my car insurance premiums?

It’s all about risk! (but not yours.)

Car insurance premiums are based on a calculation that’s made by the insurance company which works out how much risk you present for them. High-risk customers end up with expensive premiums, and low-risk ones get the nice cheap premiums we are all after.

So, you reduce car insurance premiums by showing that you are less risk, but how do you do that?

17 ways to save on car insurance

1 – Get the right cover

Thinking third-party might be cheaper than fully-comprehensive? You may be right. But also, you may be wrong.

First of all, in the long run (and if you do have a crash) fully-comprehensive car insurance is going to save you loads – after all, without it you will be repairing your car yourself with no financial help.

Secondly, opting for fully-comprehensive insurance shows insurance companies that you take your insurance seriously and aren’t just trying to get by with the legal minimum – that makes you a lower risk!

While comprehensive car insurance is a higher cost service on paper, it may well be cheaper in reality! It’s just a part of the crazy world of calculating car insurance.

2 – Shop around

You hear this one a lot because it is true! Insurance is a competitive business and by taking the time to evaluate multiple quotes, you will be able to concentrate on the cheaper ones.

Talk to the brokers and insurance companies and tell them the other quotes you have been given and they will try to beat them. Don’t just agree straight away, call someone else and see if they’ll go lower. Soon you’ll get an idea of how low they are realistically able to go and will probably have saved yourself a huge percentage.

3 – Don’t stay with the same insurer

Remaining loyal might mean you expect a discount going forward, but the reality is that many companies entice new customers through introductory offers that loyal customers in subsequent years don’t get.

See what else is on offer and go back to your current insurer with the quotes that competitors are putting on the table. They might well match it and all it took was a quick phone call or two.

4 – Build your no-claims discount

No-claims discounts (or no-claims bonus depending how you like to look at it) are capable of taking a massive chunk out of the cost of your insurance. Remember – it’s all about risk, and nothing says ‘low risk’ more than years of proof that you haven’t had an accident (or at least, not claimed against an insurance company when you have had an accident!).

No-claims discounts are the king of cheap car insurance quotes and while they max out at five years, that climb to the five-year peak is well worthwhile.

And how do you get a good no-claims bonus? Simple – you don’t crash. Drive sensibly, drive well and getting a no-claims bonus will just happen. It’s not a cheat or hack for the system – just good, honest, sensible driving. You show the insurance companies that you are low risk because that’s exactly what you are!

5 – Drive something low risk!

You know what’s high risk? A flashy Italian supercar, or a meaty pick-up truck as your first car. You know what isn’t? A Vauxhall Corsa or Ford Fiesta. Sure, you might have your heart set on a flashy Jag or sporty CLK, but if you are trying to save on car insurance then maybe a car like that isn’t really for you.

Drive an expensive, eye-catching number when you are earning the millions and the cost of your car insurance isn’t even noticeable when your bank account tends to hover between seven- and eight-figures in the black!

Cars are grouped for insurance from group 1 (cheap to insure) to group 50 (definitely not cheap). It’s easy to look up cars for grouping, so do that before making a decision on what you’re planning to drive and get something that fits your budget and lifestyle.

6 – Park it away from trouble

You want to make your insurance cheaper? Try to park your car in the safest possible place.

Theft and vandalism make up a large number of insurance claims, and by parking your car away from the road, in a garage or in another place where it isn’t easily seen or taken advantage of, then you will lower that all-important risk factor.

Of course, often your choice of parking location is limited by other factors – not everyone has a garage or long winding driveway with overlooking elm trees. If you can improve your overnight parking situation, though, do so and you will see results on your car insurance premiums.

7 – Improve the alarm system

Even if you can’t park your car somewhere different, you can always opt to improve its internal security measures. Adding a high-quality alarm system, immobilisers, tracking and other security features then you decrease your risk and the cost of your insurance. Remember to inform your insurance company of these changes (they can’t give you a discount if they don’t know) and if possible, advertise through a window sticker that your car has these additions to deter thieves.

8 – Move home

Do what? Move to a new house just to lower the car insurance costs?

Making such an extreme change for a few percentage points of car insurance discount sounds crazy, but if you are planning a move, why not take your car insurance into account as part of the equation? Your postcode has a large factor on your car insurance, with some inner-city locations increasing your insurance as much as 100% when compared to low-risk rural areas.

If you have a choice and are debating between two different types of lifestyle, think about your car insurance premiums as one of the factors and it could swing you either way.

9 – Opt for telematics – black box car insurance

The world of black-box insurance has come on in leaps over the past decade and looks to improve further as time goes on. Black box insurance (officially called ‘telematics-based car insurance’) involves having a device (the ‘black box’) added to your car that can track your driving habits and report those back to your insurance company for their analysis.

It’s not just speed they are tracking, but the way you brake, the times you are on the road, your typical routes. Through all this data they can build an accurate picture of your regular driving habits and, through that, properly assess your risk factors.

Having a black box is the best possible way to prove that you are low-risk.

Of course, if you are trying to hide your poor driving skills and reckless nature from the insurance company, then telematics-based insurance is probably not for you!

Black box is the best way to get cheaper car insurance for new drivers. With no driving history, the insurer must assume that you are a high-risk venture from the off, and only months and years of good driving is going to convince them otherwise. The process is significantly sped up through the data collected by a black box and even young drivers will soon be enjoying substantial discounts on their car insurance.

Our useful articles about black box car insurance are:

10 – Be older!

One thing that is definitely going to happen is that you will get older and this means your insurance premium is going to lower. Older drivers are statistically less likely to have a road traffic accident and are also proven to claim for less when they do – two factors that lower their risk level.

Obviously, you cannot get older any faster than anyone else, but take some reassurance in the knowledge that your insurance isn’t always going to be as high as it is today!

11 – Change your job! Or at least, tweak the title a little

One of the many sets of data that is used to determine your risk factor is your job title, but only the underwriters (the team of people that calculate your exact risk level) know exactly what jobs are good and what are bad. One thing is known, however, and that is that data is collated by job title. If a thousand people who describe themselves as a chef have major car accidents in a single year, other chefs are going to see their premiums rise. Conversely, if all librarians manage five years of accident-free travel, then being a librarian is going to be great for getting cheap car insurance!

It is imperative that you never lie on your insurance application, but if your occupation can be described in a number of ways, it may be worth trying out a few and seeing if any comes with a discount. Even a slight tweak from ‘office manager’ to ‘office supervisor’ can have an effect!

12 – Lease your car. No! Buy your car. Or lease it. Or…

Is car insurance cheaper when you own the vehicle? No. There is very little considered by an insurance company regarding whether you own your vehicle outright, it is leased, or you are buying it on a finance agreement.

Don’t worry about this particular myth – it doesn’t matter either way.

13 – Add a named driver

Adding a named driver reduces insurance – assuming the named driver has a good insurance record and is low risk.

Insurance companies will take a good view to your adding someone to your policy who has a positive driving record and low risk factor. If you are young, then adding a parent (or both) with strong driving history can knock as much as 10% off your insurance costs.

Just make sure you have it the right way around, and they’re an additional named driver and not written in as the car’s registered keeper. While it may seem that you can cut the cost of your insurance by taking it out in your dad’s name and then putting yourself on as a named driver, this is a fraud crime known as fronting and is going to result in invalid insurance and a potential prosecution for your dad!

14 – Add a little excess

Excess is the amount you have to pay before the insurance company pays out the rest of the value. For example, with an excess of £350 and a crash which totals £1700 in damages, you would be expected to pay £350 towards the costs and the insurance company would have to pay the remaining £1350.

By increasing the excess, you substantially lower the risk for the insurance company – showing that you have confidence in yourself as well as directly affecting the amount of money they are going to have to pay should a collision occur.

Excess comes in two halves – compulsory excess determined by the insurance company as part of your contract, and voluntary excess determined by you. There will always be some sort of compulsory excess, so when discussing increasing the excess with your insurer, be sure that you understand the total value you will have to pay and don’t leave thinking that the voluntary excess is all there is!

Be aware, however, that there is a maximum cut off point to the usefulness of excess. It may be the case that you are only doing yourself out of money if you put too high an excess value, where the premium doesn’t lower past a certain point. For example, the insurance company maximum excess discount may occur at £500 voluntary excess, and any additional voluntary excess you add beyond that point takes nothing off the annual premium! Make sure to ask your insurer if you are putting too high an excess on.

And remember – you will have to pay the excess in the event of an incident. Don’t make the excess so high that you cannot afford to cover it should the worst happen! Far better for an extra £10 per month on your insurance than having a collision and having to find £1,000 you don’t have!

15 – Pay annually, don’t put it on a monthly direct debit

When you take out a monthly direct debit agreement with your insurance company, what actually happens is you make a loan application for the full amount with 10 or 12 monthly instalments to pay it back and, just like any other loan, that comes with interest.

If you choose to make the payments easier with a monthly direct debit, you are paying a huge percentage more for your insurance through the loan system, and it’s also likely that you will have to find a large initial payment anyway! If at all possible, do yourself a favour and pay it in a single lump sum.

16 – Make sure you get the cover that is relevant to you

Most people don’t realise it, but the most basic level of cover is social and domestic, and not social, domestic and commuting. The difference is in that last word – without commuting as part of your insurance, you are not covered for the drive to and from your workplace!

And you are certainly not covered to drive for work-related purposes without business level car insurance.

Talk to your insurer and let them know exactly how you plan to use the car to make sure you are properly covered (and not over-insured!).

17 – Mileage

The more you drive, the more you are on the road.

The more you are on the road, the more opportunity there is for an accident.

Therefore, the more you drive, the more you are a risk.

Accurately estimating your mileage goes a long way to bringing your insurance premiums down. Just make sure you don’t under-estimate and find your insurance invalid because you are a few thousand miles past the limit. If you do start to get close to your estimated mileage, it’s worth calling the insurer and letting them know you’d like to adjust that value. It might increase your premium slightly, but it’s better than the alternative which is to find a claim rejected due to excess mileage.

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