Though prices have fallen in recent years, car insurance is still a real drain on finances, and it has often been suggested that the industry offers consumers pretty poor value for money. Seeing as the competition between insurers isn’t providing us with the most spectacular of deals, we need to be savvy to make sure that we don’t pay more than we need to.
As we all know, the premiums we pay are supposed to reflect the level of risk we pose to the insurance company. Knowing how they come to their conclusions on this subject and making sure you ‘play the game’ and match the criteria they are looking for will help you save. On top of this there are a number of other tricks you can use to keep your premiums down, some of which you may very well have never had cause to imagine. Here we take you through them all, form the obvious to the obscure.
Invest in Security
Being a safe bet in the eyes of an insurer isn’t simply a matter of driving safely. You car is at risk from damage at the hands of vandals or theft whenever you leave it parked up. Assuming your policy covers theft, you are going to pay less if you take measures to make life harder for criminals. Alarms, immobilisers, tracking devices and other such gadgets should put a dent in the price you pay.
Prangs can also happen when your car is parked in public. If you have a driveway or garage you are less likely to have to worry about some learner driver giving your car a bump on the curb side during a purely executed three point turn.
Reduce Your Mileage
This is a very simple tip, with an easy to follow logic behind it. The less time you spend on the road, the less likely it is that you’ll have an accident. If you’re looking to save, cutting out short journeys and walking instead could save you money on petrol, bring down your insurance costs and, with all that exercise, you might find you can cut out your gym membership! On top of all that, you’ll be helping out the environment too. It’s win-win-win-win!
Look at All the Policy Types
You may already know that there are three main types of policy; third party only, third party fire and theft, and comprehensive insurance. These offer differing levels of cover, with the most basic being third party only insurance (which only insures you for the damage you do to other people’s cars, passengers and pedestrians).
With this form of insurance you have to pay to repair any damage done to your own car yourself. You’d expect, therefore, that you’d pay much less, seeing as you’re getting less cover. Strangely this isn’t always the case.
Why? Because, companies believe that only a certain type of person would go for such a limited policy. They will expect this person to be young (younger drivers are perceived as more dangerous) to have a cheaper car and no no-claims bonus (if they did, they could go for a more comprehensive product.)
As a result, companies seem to assume that anyone going for the ‘cheap’ option is a risk. As risk means expense, it sometimes happens that lower levels of cover actually cost more. Never assume that going for less cover will automatically save you money. Going comprehensive can prevent insurers from incorrectly profiling you as a liability and see you rewarded with better value.
Spread the Risk
Many cars are shared by a few different drivers. If there are two or more named drivers on a policy then a quote should reflect the average risk posed. This means that, if you belong to a group that is seen as high risk, you may be able to bring down the cost by adding another driver with a great track record of safe driving.
You need to be wary of ‘fronting‘ however. This is where someone falsely claims to be the main driver so as to drop the price of a policy for a friend or family member. It’s not just a bad idea, it’s basically illegal. Obviously, attempting to defraud your insurers puts you in a risky position and simply won’t be worth it in the long run. As we’ll explain a few times over the course of this article, there are many instances where stretching the truth could make things cheaper for you, but it is highly inadvisable to lie and risk invalidating your insurance. It could cost you for years to come.
Leave Your Car as it Is
Modifying a car means it costs more. That automatically pushes up the price of insurance. That’s not so much a problem in of itself, after all, most people would prefer a more expensive car. Unfortunately, driving a modified car tells insurers things about you that, to be quite frank, they’d rather not here. Essentially, they are going to see you as a boy racer with a death wish and charge you accordingly. Of course, that might be a slight exaggeration, but only a slight one.
As with other tips in this guide, we need to stress here the importance of not attempting to withhold information from or otherwise deceive your insurance company. You’ll end up voiding your insurance altogether if you modify your car and decide to keep quiet about it.
Be Clever With Your Excess
We’ve talked about this elsewhere on our site, but it’s worth repeating. There is an odd paradox at the centre of most forms of insurance: We are rewarded for not claiming. Our premiums fall gradually as we go on paying them year after year without asking for anything in return. Given the savings to be had by not making use of the product, many people, if they are in a minor scrape, will simply pay up and have the prang fixed out of their own pocket rather than give the insurers an excuse to put up their prices. We’d rather pay less for something, even if it means never using it! In that case we’d be better off not having it (which we can’t as it’s illegal) or going for minimal protection (though again, as we pointed out before, that doesn’t always work.)
Avoiding reporting accidents makes sense up to a point, but obviously, there comes a level of expense where you simply have to bite the bullet and make a claim. Figuring out exactly where this line lies can help you save. If you can arrive at a number, this is the perfect amount to set your excess at. (The ‘excess’ is the amount that you have pay yourself before benefiting from a claim.)
The higher you put the excess, the lower your premiums will be (as it this reduces how much a company will have to pay out if you claim.) Setting the excess right at the upper threshold of what you’d happily pay to preserve your no claims bonus is the most efficient way to play it. But you also need to consider the question of bonus protection…
You can sometimes pay to ‘protect’ your no claims bonus. This means, for a one off fee (normally a fairly small one) you can keep your no claims bonus intact even if you need to make a claim. Though it seems weird to effectively pay for a discount, it can make sense from a consumer point of view and is worth thinking about.
It has to be remembered that, even though you’ll still earn a discount, companies can still put your premiums up after you’ve claimed. Basically, you’ll get a bigger discount, but it will be applied to a bigger premium.
Opting to protect your no claims bonus will require you to make an even more nuanced decision about your level of excess.
Pick the Right Job Title
When giving your information to an insurance company you have to give your job title. Obviously, there’s an infinite array of job titles out there, so you will normally have to pick from a fairly exhaustive list. Insurer’s have spent years compiling data to help them decide how professions correlate with a person’s risk level. If you belong to a professional class whose drivers are awful, you could be tarred with the same brush, if your counterparts are all angels on the road, you’ll stand to benefit.
There are some weird oddities that come up with this practice however, and, if you are cunning (or lucky) you could save a lot of money. For instance, if you are a bricklayer, there are a few other things you might also decide seem a reasonably applicable title for you if you were picking from a drop down menu, a construction worker, for instance. However, if you went with that second option you’d end up paying more.
The difference can be in the hundreds of pounds, so it’s well worth playing with quotes to see what comes back with regards to the different titles that could apply to your job. Again, it needs to be repeated that lying to insurers will invalidate your insurance and could see you labelled as a fraudster for years to come.
The biggest ‘job title’ to avoid is ‘unemployed’. This can send prices soaring. If you don’t have a job there may be much cheaper titles that accurately describe you, such as ‘retired’ or ‘housekeeper’ for example.
Keeping Your License Clean
Getting points on your license gives insurance company a clear indication that you are prone to lapses of concentration behind the wheel. It should go without saying that you should drive safely, but bear in mind that indiscretions on the road, as well as being dangerous, will hurt your wallet.
It’s also useful to know that not all points are equal in the eyes of insurers. For instance, being hit with three points for speeding will normally bump your quote up by 10% whereas being caught using a mobile phone whilst driving (without an appropriate hands free kit) will see your bills doubling in size. Multiple offences will multiply your outgoings further, adding a further sting in the tail to the fees you’ll be expected to pay.
Fortunately, there is sometimes a way out for drivers caught speeding in the form of a speed awareness course. Drivers who are stopped doing a speed which is only 10% over the speed limit plus 9mph can be offered a fine and a speed awareness course in the place of points. Obviously, this is only applicable if you are only breaking the speed limit by a relatively small amount, and, even if you are within the parameters just mentioned, it’s still at the discretion of the prosecuting force to decide whether you will be offered a place on a course of just given the points. (It also depends on where you live, as courses are only offered in certain parts of the country.)
If you can take a course instead of points, not only should it give you the skills to avoid breaking the rules again, it will also save you money.
If you do get points don’t worry they aren’t permanent. Most three point offences, such as speeding, they will only stay on your license for four years. If you get points, you do need to tell your insurer, otherwise you could invalidate your contract, which could leave you at risk of having to face big expenses on your own.
If you end up with a disqualification you will find it more difficult to obtain insurance once the ban is over, and you will be expected to pay more.
Dodge Appalling APRs
When you pay your premiums piecemeal you aren’t really paying in instalments. It’s more realistic to think of it in the following way: You can’t pay the whole amount at once so the insurer loans you the money and you pay back the loan.
The problem with this is that this ‘loan’ will usually have a sky high APR in the region of 20%, though some work out closer to 30%. That’s as bad as the price hike you could expect to see if you got 6 points for speeding!
You are better off finding another way to get credit and paying for your insurance in one lump sum. The cheapest option will be to put it on a credit card with 0% APR (you could do some stoozing whilst you’re at it), but depending on your other options and the length of time it’ll take you to pay off, it could even be cheaper to take out a loan with your bank than pay your insurer in instalments.
Be a Man
Okay, so this won’t be of much help to half the population, but it could work out well for those to whom it applies. Since December of 2012 it has been illegal for insurers to discriminate on the basis of gender. This is good news if you’re a man (or particularly enthusiastic about equal rights). Traditionally women paid significantly less based on statistical evidence that they were better drivers. Now that lower premiums cannot be offered on this basis they will, in the main, be higher for women and lower for men.
If you’re still on a policy that was priced before these laws were passed, have a look at switching. In most cases, if you have not claimed on a policy, you can get a new quote and receive a pro rata refund. If you find it would be better just to move to a new insurer, remember to account for any exit fees that might apply. Also remember that you’ll be losing your no-claims bonus by switching and factor this into your sums. The same applies if you’re up for renewal in which case you should also be sure to…
Never Automatically Renew
It might be more convenient in terms of the effort you need to put in, but you’ll pay dearly for your laziness. Insurer’s often put up prices dramatically year on year, making huge profits simply because they know people are too busy to look about. Snap out of your inertia and you can save hundreds.
If you really are too lazy or too pushed for time to find a better quote (which will almost certainly be an easy thing to do) at least call up your insurer and haggle with them. The truth is they know punishing people for being loyal is ridiculous. Tell them you won’t stand for it and they might be prepared to demonstrate some flexibility.