Everything you need to know about making your car insurance premium more affordable.
If you drive, shelling out for car insurance is an inevitability (not to mention a legal requirement) and while it can represent a significant expense there are some steps you can take to make insuring your car more affordable.
Insurance companies work with risk statistics that calculate how likely you are to make a claim given your personal circumstances, the more 'risky' you're deemed the higher your insurance premium, however thankfully this also works in reverse, so by making yourself appear less of a financial risk, the cheaper your car insurance is likely to be. Here's how.....
The car you drive...
Car insurance providers classify cars into insurance groups based on factors such as engine size, top speed, repair costs, likelihood of theft and so on, so similar cars can be banded together and provided with the correct level of insurance to cover likely claims. Insurance groups range between 1 (very low risk) and 20 (very high risk), with cars in lower groups attracting significantly reduced premiums.
An obvious starting point for lowering your car insurance is to go for a car classified in a low insurance band - your car dealer or vendor should be able to tell you this before you buy but it's always worth investigating your options as there can be a significant difference in grouping between different models in the same range.
Modified cars tend to attract higher premiums as they are seen as more attractive to thiefs and more likely to be involved in accidents so avoid this if you want to bring the cost of your policy down; this is especially the case for young drivers. However, insurer approved alarm and immobiliser systems are likely to attract a discount for your insurer as it makes your car statistically safer.
How you drive...
Your personal driving history and the motoring history of any other individual included on your policy will affect the premium price. Any claims, driving offences or convictions are likely to significantly increase the cost of your policy. Factors such as the way you use your car and the number of miles you drive are also likely to affect your car insurance premium. Lower mileage discounts are often available but are only worthwhile if you estimate your annual mileage honestly and the cost of your insurance is likely to be less if you only use your car a couple of days a week rather than for commuting to work.
Where you drive...
Where you live and park your car also impact your insurance premium and while moving house just to reduce your car insurance is a little extreme there are certain things you can do to lessen the impact of your postcode. If you have a garage you should always use it as it is seen as more 'secure storage and is likely to attract a discount. Additionally, parking on a private driveway or secured car park is seen as more favourable than simply leaving your car parked on the side of the road. Again, it pays to be honest about where you leave your car most of the time.
Who drives...
Statistically the older you are the less likely you'll need to make a claim, along the same lines girls are much less likely to claim than boys. While little can be done about your age, you can avoid insuring younger drivers on your policy if they won't regularly be using the car.
Many parents are tempted to insure their newly qualified children as a named driver on their car and while this can be cheaper in the short term, it doesn't usually pay off in the long term as they could go for years without starting to build on their own insurance policy. Generally, it is better for young people to take out their own car insurance as soon as they are regularly driving their own car.
Third party, fire and theft can be cheaper to start off with, although quoting with a company that offers an accelerated no claims discount scheme (whereby a years no claims discount is earned in 9 months or so instead)can make a huge difference over time as it's possible to earn maximum no claims discount in over a year less than it would usually take.Discounts...
Building and protecting a no claims discount is the best way to make your car insurance cheaper year on year as this can save up to fifty percent of your premium price. You always hear the subsequent cost of car insurance rocketing when someone makes a claim, however while the cost of your insuring your car is likely to increase after an event of this nature, the main reason for the huge increase is because the individual in question is no longer eligible for their no claims discount. For this reason protecting your acquired no claims discount is one of the best ways to make sure your insurance premium stays low even after a claim, even if this costs a little extra.
Most insurance providers now offer significant discounts for buying online, many offer reductions to new drivers who have completed their pass plus and some also offer named driver discounts, helping to reduce premiums significantly.
While its not technically a discount many charge interest on monthly premium payments as they see this as a loan, so if you can afford it you should try and pay in an interest free lump sum annual payment. Some providers offer interest free monthly payments so it can be well worth comparing their overall costs to those of their interest charging counterparts.
Your car insurance policy...
When you insure your car you have three main insurance options, 'Third party', 'Third Party, Fire and Theft' and 'Fully Comprehensive'. The latter tends to be most expensive but provides you with complete protection. Third Party, Fire and Theft can be an economical option for those with little driving experience or a number of previous claims. Third Party tends to only be a viable option for those with a particularly low value vehicle as the cover it provides is minimal although it is the cheapest option by far.
When choosing which option to go for you will need to weigh affordability with the value and condition of your vehicle. Most insurance providers also offer add-ons such as family legal protection or a courtesy car, while these can be useful they are likely to be at an additional cost, so opting out can save you some money if you don't think that you'll use them.
When insuring your car you are also likely to have the option to increase the level of voluntary excess, this is the amount you will have to contribute to repairs or replacement in the event of a claim. Increasing this will attract a subsequent decrease in premium price, however you should always ensure that you will be able to afford to meet the excess if necessary.
You should ensure that the value you insure your car for is representative of the replacement cost of your vehicle, too low and you'll be under insured if your car is written off and too high and you'll be paying for cover you don't need. Looking at the current resale cost of vehicles similar to yours can give you a good idea.
Finally, by comparing a range of different quotes both on price and the level of cover they offer you should be able to find a level of car insurance that meets your needs without costing you the earth!
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