Avoid This Car Insurance Increase!
Car insurers have warned that the cost of insuring your car could soar by 20% in 2009. Here’s how to avoid the price hikes.
For many Brits, having a car is crucial. However, it’s also costly: paying for tax, regular services and an annual MOT soon adds up.
However, it’s likely that insuring your vehicle brings in your biggest yearly bill. And unfortunately, the cost of keeping a car on the road could creep even higher this year.
In this article, I’m going to explain why – and outline some steps you can take to keep costs down.
Claims are to blame
According to the AA’s British Insurance Premium Index, the average quoted price for a comprehensive car insurance policy rose by 8.7% during 2008.
The reason behind this increase is the high costs companies face when we claim on car insurance. The Association of British Insurers (ABI) estimates that for every £100 we spend on premiums, insurers currently pay out around £105 – which effectively means they’re losing money on the policies they provide.
Britain’s blame culture is part of the problem. The ABI suggests personal injury claims and the legal expenses they bring have risen around 22% over the past year.
In addition, the ABI says detected insurance fraud increased by about 17% during 2008. Meanwhile, the AA expects the cost of repairing damaged cars to climb 6% during 2009.
Pricey premiums
Some companies, including the Swinton group, estimate the price of insurance is around 20% lower than it should be. Thus, consumers could face an upward ‘correction’, which might add the same amount to their bills.
On the other hand, the AA says price rises of 10-12% are more likely. However, Simon Douglas, director of AA Insurance, confirms he expects the upward trend of prices to “accelerate” this year.
Five things you can do
Money is tight for many of us right now, and it’s likely few people can afford this additional blow to their budgets.
Therefore, it makes sense to cut costs for yourself. Here are five ways you could drive down the price of your premium.
1. Adjust your excess
Firstly, it could be worth adjusting the excess you’ve set on your insurance policy. The excess is the amount you have to pay out when you make a claim, before your insurer will step in and cover the rest.
Generally, a policy with a higher excess will be cheaper. However, altering your excess shouldn’t be something you rush into: if you set it at a level that’s too high to be affordable, you could be left seriously out of pocket should you have to make a claim.
Having said that, anyone likely to avoid making smaller claims on their insurance (for example, in order to protect their no-claims bonus) might have less to lose by increasing their excess.
Think about what’s best for you, and get quotes based on different levels of excess to help you make up your mind.
2. Add a partner or older driver to your policy
If you’re young, adding an older named driver to your insurance policy could shave a significant sum off its cost. It’s vital to remember, however, that putting the whole policy in their name is illegal – so don’t be tempted to try and cheat the system.
Alternatively, adding a partner to your policy could also save you money – so it’s always worth checking with your insurer.
3. Pay your premium annually
Usually, paying a bill by direct debit is both convenient and cheap. However, most insurers will charge you more to pay monthly for your motor insurance – so check before you opt to do so.
If you can’t afford to pay for your car insurance using a lump sum, putting the premium on a credit card with a 0% on new purchases offer is an option worth considering.
As long as you clear the balance before the promotional period expires, footing the bill for your car insurance this way won’t cost you extra cash.
4. Lower your mileage, up your security
If you’re able to cut down the amount you’re driving, you’re likely to benefit from lower insurance costs.
Alternatively, fitting a car alarm or immobiliser could see you make a good saving. If possible, you should also park your car in a garage or driveway rather than on the road.
Measures like these will reduce the risk that your vehicle will be damaged or stolen, and could therefore help cut the cost of your premium.
5. Compare quotes
Finally – and perhaps most importantly – it’s crucial to shop around for a better deal on car insurance. Many companies will charge you far more for renewing your existing policy than you’d pay for taking your business elsewhere, so it’s always worth collecting quotes from competitors.
To check whether you could save by switching, use a comparison service like the BeatThatQuote car insurance tool.
Good luck!
**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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