How to save money on your car insurance
Car insurance is, for many motorists, the single biggest expense of the year.
So if you’re up for renewal, here are EIGHT tips to cut your premiums and beat the price rises.
Of course, the best way is to run a comparison and switch to a cheaper deal.
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1: Third Party? Think Again
Third party offers the lowest level of cover, so you’d expect it to be the cheapest option. But the logic of car insurance runs deeper and odder than that.
Your insurer will base your premium on a host of factors including your age, type of car, and which type of insurance you opt for.
Choosing third party insurance is likely to get you flagged as a higher-risk driver and push your premiums up. Go for comprehensive cover and your premiums might actually go down.
This rule doesn't always apply, but it's becoming increasingly common to find third party is more expensive than fully comp. So, if you're happy to have only third-party cover, by all means search for quotes. But make sure you check out fully comp as well.
2: Add Another Driver
As counter-intuitive as this one sounds, adding a responsible second driver to your policy can cut costs significantly.
Adding another driver can cut the price by bringing down the overall risk of the policy.
This is especially true if you’re a young driver (under 25), and you add a parent, say, with a good driving record.
Your parents are lower risk, so putting them on your insurance could take hundreds off the price. But it can work for other drivers too.
Shop around online and see what quotes you get with different additional drivers.
Make sure they’re someone who might actually drive your car – do NOT just add someone at random because you know they have a good record.
And don’t add someone as the main driver if they're not!
If you ever need to claim, the insurance company will have a good hard look at the paperwork, and if you’ve lied on your forms you could face criminal prosecution, to say nothing of your insurance being invalid.
HAVE YOU READ: Six Hacks to get a great deal on car insurance
3: Install Security Devices
Improved security can cut insurance costs.
The Thatcham Motor Insurance Repair Research Centre evaluates security devices against the same criteria that car insurers use, so buying and installing Thatcham-approved security devices like vehicle trackers will usually be rewarded by insurers with lower premiums.
4: Avoid Monthly Repayments
Monthly repayments may split the cost of insurance into chunks, but they often add significantly to the price you pay.
When an insurance company lets you pay monthly, what’s usually happening is they’re giving you a high-interest personal loan on the full sum, and you’re paying it back monthly. If you're not paying extra for the privilege then chances are the interest has been 'front-loaded' into the quote and you're still paying more.
It should always be cheaper to pay in full up front than to spread out payments over many months.
The terms of what is effectively a loan from the insurance provider are rarely as good as you’d get from a lender.
If you really want to pay monthly, the most cost efficient way is to pay your insurer in a lump sum, after borrowing it from a bank or lender, and service that loan monthly.
Alternatively, consider using a credit card - but only on a 0% deal, which you ensure you pay off before that deal runs out.
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5: Never Auto-Renew
Auto-renewal is a mug's game.
The motor insurance places zero premium on customer loyalty.
The industry business model doesn’t invest in your satisfaction, it bets on you doing nothing and just sticking with the same company.
But so that and you're actually subsidising all the cheap deals that same company is offering other people to win a bigger market share.
Want to test this?
Approach your current insurer as a new customer and have your eyes opened: see how the deal they offer you compares to what you pay now. They all do it, so shop around.
Top Tip: The best time to shop around is three weeks before existing policies expire - this is when insurers will be frantically competing on price to tempt new customers.
Don't fall into the auto-renewal trap - switch car insurance now.
6: Don’t Modify - Your Car or Your Insurance Package
The more you modify your car, the more your insurance will rise. Many insurers won't even want to offer you a quote. About half of them won’t cover any significantly modified vehicle.
The remainder will put hundreds on your premiums.
The only exception to this is when those modifications increase security.
As much as they don’t appreciate a modified car, insurers love a modified policy. They’ll try to sell you everything from windscreen cover to breakdown cover, and it’s often at higher cost than you could get it from another source.
Worse, it’s often offered at ‘introductory prices’ which jump when your policy auto-renews.
Don’t buy add-ons unless you’re sure they’re good value.
7: Defend Your No-Claims
Your no-claims bonus is one of your biggest assets. Hang on to it by agreeing to higher excess.
Paying higher excess makes sense - making small claims on your insurance will increase your premiums such that you’ll lose the money when you pay for a new policy, even if you go to another provider.
Set a high excess, if you can afford to, when you apply for your insurance, and you’ll be offered lower premiums.
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8. Use the right job title
Using the right job title can keep your premium down. Research has found that "chefs" receive higher quotes than "kitchen staff", for example.
Experiment with different variations on your job title and see which one offers up the best deal. But don't lie - don't say you're librarian when you really work in a high-risk job. That's fraud.
If you’re not up for renewal, you can probably switch anyway: most policies will let you switch with a small payment, around £50, providing you haven’t claimed.
You won’t earn no-claims for the time at your old insurer, so it’s only worth doing if you stand to make substantial savings.