|
How is the premium set?
Your Car
Reduce your risks
Your insurer
Paying your premium
Be Honest
The rising cost of running a car has become a nightmare for many people. Between tax, petrol and, if you live in London, the congestion charge, it can be so expensive drivers feel like they’re being priced off the road. Insurance is one of the most costly charges, particularly if you are young, male or own an expensive car. It is so expensive that one in ten people lie to their insurer to keep costs down, and a further 3% don’t declare any driving bans for speeding or drink-driving. Lying to your insurer is not only illegal it is very dangerous because if you’re found out you could be left with a totally invalid policy. Luckily there are a few legal and safe steps you can take to cut down your insurance premium.
Compare now
Before we look at how you can keep the costs of your insurance premium down, you need to understand how the price is set. The basic three factors are: the insurer, the level of cover and the perceived risk.
Depending on the insurer you rate will vary as they each set their own rates.
The level of cover you opt for will have a great effect on the cost of your insurance as you are asking them to increase the risk that they will have to pay out. If it is thought that you will be more likely to make a claim or multiple claims then, to adjust for the perceived risk, you will be charged a higher amount.
Now that you understand what can influence your premium we can look a ways to drastically slash costs. Top
Compare now
Your insurers will consider you car when they set your premium. It is important to consider what car you can really afford to keep insured.
Buy wisely If you haven’t bought a car yet or are looking for a new one consider the engine size and cost which both influence premium costs. Avoid buying large and sporty cars with powerful engines.
The idea of making you car look like it came from the future seems like a great idea but if your premium concerns you it probably isn’t. Do not upgrade or modify your car (beyond security) otherwise you premium will be more expensive.
Level of cover Deciding what level of cover to take out is a very hard decision to make. Are you willing to sacrifice security and coverage for savings?
The minimum amount of coverage required by law only protects you from the liability of any damage you cause to other people or their property. This alone can cost a lot but adding in comprehensive cover for your car repairs and medical treatment can cause the cost to rocket up.
Decide on the level of insurance that is right for you and your car. For example: if your car is very old and cheap you might save more by paying for repairs than comprehensive car insurance.
What are you willing to pay? Pay for the small claims out of your own pocket. Claiming money for smaller expenses that you could afford can drive up your premium needlessly and threaten your no claims bonus. Top
Compare now
Improve your security One of the most important actions you can do to lower your risk is to protect your car and improve its’ security. Insurers will base your premium, in part, on the results your model of car got on a test of its’ security carried out by Thatcham. They test the doors, alarm system, ignition lock and immobilisers in their attempt to grade the make of car.
If your make of car was giving a low rating by Thatcham you can improve upon it by upgrading the car with more security features.
There are more practical actions you can take, such as storing the car in a garage or parking it in a driveway. If your insurer knows you do this they may lower your premium. Cars which are deemed to be high in risk will naturally carry a greater premium.
Improve your driving Your insurer is almost as impressed with good driving as you are. Some insurers will provide you with a discount if you agree to take additional driving courses.
Drive less The less mileage you have on your car than the less expensive your premium should be.
No claims discount Most insurers will offer you a no claims discount or bonus. A no claims discount gives you massive savings (as much as 70%) so long as you’ve not made any claims in the past. Even if you have the only claims that count against you are fault claims, no-fault claims do not affect your no claims bonus.
Voluntary excess Offer to pay a higher voluntary excess. Paying the first £200 instead of £100 of any claim can greatly lower your premium. Top
Compare now
There are many different insurers with many different rates and policies. Save time and money by using Only Finances’ free engine to search through over 95% of the market for the right deal.
Specialist Insurers Many insurers offer a specialist service for certain groups. If you fall into a specific group, such as young people, women and the elderly, then you might find savings in a policy tailored towards you.
Renewals If you are looking to renew your car insurance it is often better to reapply entirely and get a new quote, as it is often lower than the renewal one.
The policy If you are living in a household and other people use the car, try to take out the policy in the name of the driver with the best record. This will encourage the insurance provider to trust you more and lower the cost.
It is also a good idea to limit the people covered by your policy to those specifically listed, rather than just anyone you give permission to. Taking this step should see your premium fall.
New type of policy Pay as you drive schemes are ‘the next big thing’. These are policies in which your car is fitted with a tracking device that keeps a record of how many miles you have travelled and at what time. These types of insurance policies charge you according to the rate you travel and are seen as the ideal way to cut the costs of car insurance. If you travel during hours in the night which are considered statistically dangerous than you are charged more, this allows the insurance company to charge a lower rate for those who drive during safer hours. Top
Compare now
Even after all the cost cutting exercises have been done you can still be charged £100s a year. Such a large amount can be too much to pay off at any one time and so insurers offer you the chance to pay the premium off monthly. This comes at a high cost as interest is attached to the amount you owe. While, in the short term, it might seem like a good idea you will probably be spending more in the long run.
If you really cannot afford the one lump sum and need to pay it off monthly, consider getting a credit card with a 0% rate. You can pay for the insurance in one lump sum with the credit card and pay the credit card off monthly, avoiding the large interest rate. Top
Compare now
It is far too tempting to lie to your insurance provider for the much needed discounts, but that is illegal and as expensive as you think your premiums are it’s better than going to the courts. Worse yet, if you get into an accident and your insurer found out you lied then you could be held liable for all the costs. Top
Compare now
|