6 ways to cut car insurance costs

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.

7 tips for taking out car insurance

Having a car involves many expenses: maintenance, road tax, repairs, parking expenses… and of course, car insurance. In Spain, by law, all vehicles must have insurance that covers at least mandatory civil liability, which takes care of any damage that may be caused to third parties. However, there is a wide variety of car insurance policies on the market from which you can choose more or less coverages, and at a higher or lower price. Here are some things to consider before deciding on a specific policy.

Cancel your previous insurance one month in advance
If you have found a car insurance policy that is more suitable for you and you want to cancel your previous one, you must notify your insurer one month before the end of your contract, according to the Insurance Contract Law. If you do not notify us in advance, your current insurance will be automatically renewed. The best way to do this is to send a written statement to the company by telegram, bureaufax or traditional mail. In this way you will avoid later problems if the company claims that you did not communicate with the necessary time.

Adjust the coverage to your needs
The type of insurance, as well as the coverages to be taken out are the most important factor when choosing a Car policy, over and above the price. It is not a question of having the best ones, but of choosing the most appropriate ones in each case. For example, for new cars up to 3 years old, it is advisable to take out an all-risk insurance policy, as it has its own damage cover. In this way, if the vehicle suffers any damage, such as rubbing against a column when parking, the insurance company will assume the cost of repairing the damage. In addition, in the event of total loss, the compensation usually corresponds to the new value of the vehicle. On the other hand, in the case of cars more than 3 years old, it is usually more advisable to take out an insurance policy with Extended Third Parties, or even a basic one, since the value of the vehicle is considerably reduced once that period has elapsed since it was purchased. In any case, you may qualify for complementary cover depending on the risk you face. For example, if your vehicle sleeps on the street, it is recommended that you hire theft coverage, while if you do so in a private garage, you can save that coverage. Consider your specific situation to choose the coverages you need, without hiring more than necessary. </li>

Check coverage limits
In addition to the coverages that you have decided to take out, it is very important that you look at the limit that each one has. One that can cause some problems is roadside assistance. Although most insurers offer this coverage from kilometer 0, there are others that can establish a minimum distance from home to provide this service, so if you suffer a breakdown 5 kilometers from your home, it is likely that this incidence is not covered by your policy. Another example may be compensation in case of total loss of the vehicle. Some insurers may offer you compensation for the market value of the vehicle, while others do so for the new value, which can make a difference of hundreds of euros. Pay attention to these aspects in the specific conditions of each policy to be aware of the specific coverage you have in each case.

All parts count
Road safety comes first and that’s why you should pay close attention when driving your car. Also, it’s important to know that the more parts you give to insurance, the more expensive your policy will be the following year. In this way, if in one year you have given two parts, for example for a rear impact and a broken glass, the following year the insurer will penalize you by increasing your premium or not applying bonuses, even if the claims did not occur because of you.

with or without franchise?
If you want to save some money on your insurance premium, you have the option of taking out an insurance policy with excess. This implies that if, for example, you take out a policy with a $500 deductible, in the event of a loss you will have to pay for the expenses incurred up to that limit ($500) and the rest will be borne by the insurer. In return, the premium payable will be lower than if the policy had no franchise. The insurance policies that are most often “franchised” are the All Risks, since they are those that have the most expensive coverages, such as own damages. However, third-party insurance can also include coverage with excess cover, such as theft, although this is very unusual. In this way, it is possible to pay less for the insurance premium, while at the same time being protected in the event of a high-cost claim.

The single payment, the cheapest option
When it comes to paying for insurance, most companies give you the option of paying a one-time or installment payment, which can be monthly, quarterly or semi-annual. If it’s possible, pay it all at once, since it’s usually the cheapest option, and even some companies offer discounts if you pay the fee in a single payment. Conversely, some insurers may charge surcharges if you decide to pay the premium in different installments, and the more you split the premium, the higher the surcharge is usually.

Compare
The current car insurance offer is very numerous, so numerous that sometimes finding a policy can be very complicated. Comparing prices and coverages and choosing the right insurance can involve a long and difficult search if you don’t have the right tools.