Did you know the average driver faces an annual insurance premium of 680$ with drivers younger than 25 paying over 1,400$ for cover? Here are our top 10 car insurance cost-cutting tips that can save you 100s.
Don’t assume third party is the cheapest
You would expect third-party cover to be the cheapest because it is the lesser cover, just covering the person you bump into and their car. Yet don’t expect car insurance to be logical.
With some insurers the mere fact you have selected comprehensive, which includes your car too as well as fire and theft, means you’ll be assessed as a lower risk (based on actuarial history, which is what an insurer will hold about a particular age group or address, for example, on which they base their premiums).
This can outweigh the fact you get more cover, and make your policy cheaper.
There are no hard rules here, it’s a matter of trial and error, yet if you’re just looking for the very cheapest cover, never only check third party.
A responsible 2nd or 3rd driver can cut costs
It may seem counter logical, but covering an extra driver can reduce rather than increase your cost – in some cases by 100s or 1,000s. Here are seven quick tips on how to do it most effectively…
- Car insurance is all about risk. That’s why it can work. If you’re a high-risk driver and you add someone who is a much lower risk as a 2nd (and/or 3rd) driver, they can bring down the average risk and you may get a cheaper policy.
- This isn’t just for young drivers. While it works well for young drivers as they are automatically seen as a high risk and know many people, like their parents, who may be lower risk, it can work for anyone. But of course, it’s especially powerful for those with costlier insurance.
- The better the driving history and lower the risk, the more impact it should have. Those with a good driving record are likely to help make the most savings, but anyone who’s a lower risk can help. By law insurers can’t discriminate over gender, but age, driving experience and history can make a difference.
- This is about trial and error, not logic. Your mum may increase the cost, your brother may cut it, or vice versa. It’s just a question of trying different quotes and seeing what happens.
- Different insurers respond in different ways. One may cut your costs adding your uncle, another may increase it. A quick way to check is by varying quotes on comparison sites – it’s easy to do, see our top comparison sites list below.
- The second driver should be someone who would reasonably drive your car. So don’t add Lewis Hamilton, unless you happen to be his brother (and even then racing drivers are likely a very high risk so I wouldn’t bother) – but your mum, son, best mate or gran should be OK – as long as they would drive the car.
- Never add someone as main driver if they’re not. This is known in the industry as ‘fronting’ and is fraud. If you do it and are caught, you can face a criminal conviction and your insurance will likely be invalid.
Tweak your job description – some save 100s
Another quick win is tweaking your job description (legitimately of course). An illustrator is often cheaper than an artist, an editor than a journalist, a PA than a secretary.
Beware paying monthly
A monthly payment plan for your insurance is essentially a high-interest loan. For example, if your premium is 1,000 and want to pay monthly, you could pay 95/month, which is 1,140/year (140 more) at a huge APR of 25%.
So either pay in full, or if you can’t afford it, use a credit card with a lower APR rate (or better still, a 0% credit card for spending, ensuring your repayments are big enough to clear it within a year).
If paying by credit card, check if the insurer or provider charges a fee for doing so – though the fee is usually less than the interest charged on monthly instalments.
Insurers charge more each year, knowing inertia stops policyholders switching. And even though new rules mean insurers must now tell you the premium you paid last year in correspondence to you, don’t rely on this to take action.
If your renewal is coming up, jot it in your diary to remember it. Compare comparison sites and then call your insurer to see if it can match, or even beat, the best quote you found. If it can, you’re quids in.
Don’t pimp your ride. Lock it down
For those over the age of 50, ‘pimping your ride’ involves decking it out with fancy alloys, windows and spoilers. The more changes you make to your car, barring security ones, the more you’ll be charged. Always tell your insurer about any modifications and whether you made them or not, or it may invalidate your policy.
The exception to this rule is if you’ve a classic car needing insurance – in this instance, insurers accept modifications as a natural part of classic car ownership and don’t penalise you with higher premiums.
Even more savings are there for the taking for normal car owners if you can protect your vehicle by securing it. Fitting an alarm or immobiliser (especially one approved by Thatcham) will reduce the bill substantially.