Nine ways to cut car insurance costs
A recent report from AA insurance warns that most motorists will experience insurance price hikes in 2009. Here are nine things you can do to help protect your pocket from higher car insurance costs!
With the recession now in full swing, the last thing any cash-strapped motorist wants to hear is that the cost of their car insurance could soar in 2009.
Unfortunately, according to the AA's latest British Insurance Premium Index, prices are rising at their fastest rate for almost a decade. The report states that the cost of the average comprehensive car insurance policy increased by more than 1% per month over the past three months.
Even worse, it seems this trend is set to continue. Insurance companies have made big financial losses in recent years, partly due to the high cost of paying out for personal injury claims.
Luckily, there are things we can all do to help put the brakes on rising car insurance costs. Here are nine top tips that should help!
1. Shop around for low-cost cover
When it comes to car insurance, loyalty doesn't pay. If you stick with the same company year after year, it's unlikely you'll be benefiting from its most competitive deals.
Comparing the options on offer from a variety of car insurance providers is crucial if you're to get the right policy at the right price for you.
Using an online tool such as BeatThatQuote.com's car insurance comparison service will help you check out what's on offer from a wide variety of insurers.
2. Consider increasing your voluntary excess
Your voluntary excess is the sum you will be required to pay out before your insurer will cover the cost of any claim you make. As a general rule of thumb, the higher your excess, the less your car insurance policy will cost.
If you can afford to increase your voluntary excess, this may help bring down the overall cost of your car cover.
However, do ensure that your excess is set at an affordable level. If it is too high and you need to claim on your insurance, you could face serious financial stress.
3. Do you need comprehensive cover?
Thanks to the credit crunch, it seems some motorists are opting for third party, fire and theft (TPFT) cover rather than fully comprehensive insurance.
Because TPFT insurance offers less protection than a fully comprehensive policy, it is usually cheaper. It will cover you for any damage you cause to another person's vehicle, but will not provide you with a pay out if your own car is involved in an accident.
Dropping your cover to insure only for third party, fire and theft claims could be a false economy - particularly if your own vehicle is new or worth a significant sum.
However, if your car is older and worth less, you may decide it is makes sense to take out TPFT insurance rather than a fully comprehensive policy.
4. Ensure your car is secure
All insurance policies are priced in accordance with the likelihood you will need to claim - and the safer your car seems, the less insuring it is likely to cost you.
Fitting your car with an approved alarm system or immobiliser, and keeping it in a garage or on a drive rather than parking it on the street, should help reduce the risk it will be stolen or criminally damaged.
5. Add an additional driver to your policy
Adding an additional driver to your insurance may slightly cut the cost of your premium. This is because your insurer is likely to assume your vehicle will be driven by the other person for at least some of the time it is in use.
Provided they do not represent a higher risk than yourself, naming your wife, husband or parent in your policy should save you some money.
Beware, however of fronting: the process of claiming an older person is the main driver of your car when they are not. This is insurance fraud, and could have very serious consequences.
6. Cover fewer miles in your car
It's easy to see why insurance providers charge infrequent drivers less for car cover. After all, the less you drive, the less chance there is you will be involved in an accident!
If you're able to commit to a lower annual mileage, or if you own a second car that does significantly fewer miles than your main vehicle, ensure that your insurer is made aware of this.
7. Pay for your policy in one go
Paying for your car insurance in monthly instalments may be more expensive than paying for it with a lump sum. This is because some companies charge 'interest' on premiums that are paid for over long periods.
If you can't afford to shell out for your insurance all in one go, you could consider paying for it using a credit card with a 0% on new purchases offer. You can read more about these here.
8. Don't modify your motor
Modified cars generally cost more to insure than unmodified vehicles - even if the changes that are made have no effect on the car's speed or performance.
Therefore, think twice about adding a super spoiler or racing stripes to your motor. Even cosmetic additions like these could bump up the price of your insurance premiums.
9. Protect your no-claims bonus
Finally, if you have not made a claim on your car insurance policy for a year or more, it is likely you'll be eligible for a discount: a no-claims bonus (NCB).
If you haven't claimed for 4-5 years (depending on your insurer) you may have the option to pay a little extra and protect your NCB.
This may sound a little strange if your objective is to cut the cost of your car cover - but in the long term, protecting your discount may make good financial sense.
Typically, you'll be allowed to make one or two 'free' claims before your NCB is lost.
What's more, if the bonus or discount you have built up is substantial, you could cut your yearly car insurance costs by a significant sum - perhaps up to 50%!
**This material is for information purposes only and should not be considered financial advice. We strongly encourage our readers not to rely solely on this content, but to seek independent advice when making financial decisions.**
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