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Summary: Tips on how to reduce your car insurance premium and save yourself money and also tips on reducing insurance premiums for your drivers
It’s not just rising petrol prices that are hitting motorists in the wallet as the global credit crunch continues to bite – car insurance prices too are continuing their upward trend. According to the AA British Insurance Premium Index in July 2009, car insurance premiums are increasing by an average of one per cent a month.
So how can you combat these increases and get cheap car insurance
The importance of shopping around
According to the Index, the average comprehensive car insurance premium at the end of July cost £778.13. However, the average on the ‘shop around index’ was £526.42 – more than £250 cheaper.
The shop around index reflects the average of the three lowest quotes for each insurance risk. Therefore it’s a clearer reflection of the premiums motorists can receive if they compare car insurance deals before they buy.
Shopping around isn’t an arduous task. The leading comparison websites now compare deals from more than 110 insurers with a single search giving you an overview of the deals available – just remember to ensure the deal you choose provides the level of cover you want as well as offering a competitive price.
Other ways to bring car insurance premiums down
Though you are well advised to shop around for car insurance every year to take advantage of introductory rates, it is possible to save money without switching provider. Here are some tips:
- Pick the right car: If you’re buying a new car, opt for a vehicle with a small engine and no modifications. The more conventional the car, the lower the premium.
- No-claims: Think twice before making a minor claim as most insurers offer no-claims discounts which could take as much as 60 per cent off your premiums after five years.
- Up the excess: The excess is the amount you pay in the event of a claim. The higher this is set, the lower your premiums will be – but setting it too high could leave you out of pocket if an accident occurs.
- Pay annually: Most insurers charge interest if you pay your premiums monthly. However, if you pay upfront each year there are no interest charges.
- Reduce your mileage: If you agree to drive less than 12,000 miles a year you could cut premiums by as much as five per cent with some insurers.
- Limit the named drivers: Generally, the more drivers on the policy, the higher the risk. So limit the number of named drivers to those who use the car regularly – you can always add someone to a policy temporarily as needed.
- Get the right cover: Ensure you’re not paying for cover you don’t need. For example, most policies cover social, domestic, pleasure and commuting as standard. However, some will include business use too, which you may not need unless you use your car as part of your job.
- Be secure: Ask your insurer to recommend security systems such as alarms and immobilisers to cut premiums – parking in a garage overnight should also help.
Tips for young drivers
Young drivers face particularly high premiums but it is possible for them too to cut their premiums. Here are some tips:
- Pass Plus: Complete the Pass Plus course after passing your driving test and you could slash premiums by as much as 35 per cent.
- Rapid bonus: Some insurers offer rapid bonus schemes to young drivers.
- Add a parent: Adding a parent as a named driver on a policy could earn a discount, but don’t ask a parent to ‘front’ a policy as this is considered fraud.