Tips to reduce your quote cost
According to the Association of British Insurers (ABI) the average cost of a fully comprehensive car insurance policy in the UK is now £485. However, dig a little deeper and you'll find huge variances between age groups and different parts of the country.
With nearly 40 million licensed vehicles in the UK and with over 31 million of these being cars, it's no wonder that car insurance is big business and that competition is fierce.
With that in mind, here are our top 20 tips on reducing your insurance premium.
1. Use a price comparison site
Essentially, insurance underwriters arrive at a price for your specific quote by adding or discounting monetary amounts after each answer you give to the questions they ask you. The underwriters for these companies all have different views on what they consider to be a good or bad risk. This is coupled with the type of business the firm is in the market for.
Therefore, it's prudent to spend a little time shopping around for the best quote. By far the easiest way to do this is using a price comparison website. Rather than visiting each insurance company online, a comparison site enables you to enter your details just once and they will then do the hard work for you, showing you the cheapest quotes across the market.
The majority of these comparison sites generally have very similar lists of providers, although some may have unique schemes given to them by insurers that contain custom rates for their site, so it may be a good idea to try a few different comparison sites.
2. Purchase a lower insurance group rated vehicle
With over 350 different car models to buy in the UK, rating each one would prove impractical for underwriters. Instead, they divide them up into 50 groups; with group 1 considered being the least amount of risk and group 50 the highest risk.
Some of the risk elements that define car insurance groups include:
- Engine size
- Vehicle value
- Safety features
- Cost of replacement
- Cost of parts and labour to repair the car
It also follows that the lower the group rating, the lower your premium is likely to be. So, before buying your new car, always check to see which insurance group it falls into. It can have a dramatic affect on your running costs.
3. Consider a different level of cover
It is a legal requirement to have insurance if you wish to drive a vehicle on the road in the UK.
The absolute minimum level of cover you need is called Third Party Only (TPO). If you are unfortunately involved in an accident, this will legally cover you for liability against injury to other people and damage to their property.
However, the big downside here is that any damage to your vehicle will not be covered, including a write-off where you car cannot be repaired and is of junk value only.
You should only consider opting for such cover if your vehicle is significantly low in value, as you will lose everything invested in it. For example, if you've only paid £500 for your car then it might make sense to avoid paying for a more expensive fully comprehensive policy where the premium is even higher than the actual value of your vehicle.
However, buying TPO cover is not always the cheapest option as these drivers are often viewed as high risk. Consider looking at Third Party, Fire & Theft policies and compare prices between all three levels.
4. Buy online
Although the majority of people now get quotes via the Internet, some companies still offer web only discounts for buying your policy online instead of using their call centre. This is because of the overheads involved in operating a contact centre operation. Companies can avoid these expenses if more people buy on the web instead.
5. Opt for a higher voluntary excess
When completing the details for your quotation, you will likely be given the option of adjusting your voluntary excess. This figure refers to the monetary amount you agree to pay towards any claim you make.
For example, if you choose a £500 voluntary excess then you will pay £500 above any compulsory excess for any claim costs incurred by the insurance company. So if the total claim is £1,000 then you will need to pay at least half of this.
The benefit of increasing your voluntary excess amount is that your overall premium will be lower. It's tempting therefore to increase your voluntary excess to the maximum possible in order to get your premium down. However, consider that around 10% of people make a claim with an average claim cost of around £3,000.
The bottom line is that you need to find the right balance between lowering your premium and being comfortable with the amount you pay towards any potential claim you have.
6. Buy a multi-car insurance policy
In recent years we've seen the advent of multi-car policies. This has essentially been brought about due to the increased number of multiple vehicle households.
Essentially, you put all the drivers and cars used at your home address under the same policy with the same insurer and the same renewal date. This not only keeps down the amount of paperwork you need to keep track of but can also attract a discount compared to the cost of insuring each car individually.
Although multi-car policies can be financially beneficial, it may be wise to at least get individual quotes for each car to ensure you are getting the cheapest deal.
7. Keep your annual mileage down
Another important factor that underwriters look at is how many miles you drive each year. It stands to reason that the more miles you do, the greater the exposure you have for an accident to happen.
Lower annual mileage can often reduce your premium that little bit more, so it's worth considering the actual amount and not to overestimate it too much.
However, you should always be honest about the mileage you actually do. Don't enter a low mileage amount on your quote if you know it's wrong, just to get a lower premium. Insurance companies can contest any claim if they believe you have knowingly submitted incorrect information.
8. Avoid penalty points on your license
Even a simple SP30 speeding offence can incur 3-6 points on your license and it stays there for 4 years from the date of the offence. This will almost certainly get taken into account when getting your quote.
The number of points on your license together with the amount of different driving convictions you have will significantly impact your insurance cost.
The lesson here is to drive carefully and always within the speed limit. Remember, it's not just the amount of the speeding fine that you pay; it's also the increased cost on your insurance in the long term.
Having a clean driving license shows the underwriter that you are a safe driver and will help keep your premiums down.
9. Build up No Claims Discount
No Claims Discount (NCD) or bonus as it is sometimes called, is one of the top factors affecting the cost of your policy. Having multiple years of NCD proves to underwriters that you don't make claims and are therefore a great risk to take on for the insurance provider.
Having little or no bonus years shows that you may be an inexperienced driver and/or someone who has made claims in the past. This will inevitably go against you when calculating your quote.
Even just one year of NCD can potentially reward you with a 30% drop in your premium. Having maximum NCD of around 5 years or more could attract discounts of 70% or more.
Finally, remember that companies will always ask for proof of previous NCD in the form of a renewal document.
10. Supply a realistic valuation of your car
A lot of people think their car is worth a lot more than it actually is. Inflating the value of your car on an insurance quote may seem like a good idea but it will only serve to increase your premium. In any case, the insurance company will only pay you the actual value of your vehicle in the event of your car being a total loss and not necessarily the amount you supplied for the original quote.
Do some research and find out the exact value of your vehicle. Supplying a more realistic amount may help keep both your premium lower and your expectation of what the company will pay out.
11. Add a named driver to your policy
Adding someone else to your policy can actually lower your premium. In particular, adding a more experienced driver may reduce your cost further. This is because the insurance underwriter sees you as spending less time behind the wheel.
On the other hand, adding a named driver who is very young or inexperienced may cause your premium to increase. So you would be better off removing these kinds of drivers from your policy.
A major issue with adding named drivers is something called 'fronting'. This is where the experienced person is stated as the main driver but in fact the less experienced named driver does most of the driving. This is often done by parents for a teenage driver in order to keep the cost down. This is illegal and not only will the insurance company refuse to pay a claim but it could also get you banned from driving.
12. Increase the security of your car
Insurance companies look favourably on anything that cuts down the risk of your vehicle being stolen.
Getting improved security on your car such as adding an immobiliser or car alarm can have a positive affect on the amount you pay. Installing a GPS tracking device is also an excellent way to improve your car security and can attract a decent discount on your premium.
13. Pass an advanced driving test
The advanced driving test is available through several organisations but the most well known one is called Pass Plus.
The Pass Plus course takes more than 6 hours to complete and costs up to £200. The course is broken down into 6 modules:
- Driving in town
- Driving in all weathers
- Driving on rural roads
- Driving at night
- Driving on dual carriageways
- Driving on motorways
At the end of the course you are awarded with a Pass Plus certificate, which you can use as evidence to show the insurance company you have completed it.
Not all insurers offer a discount but many do. Although the reduction in premium may seem relatively small compared to what you have paid to do Pass Plus, you have to think about the cost you are saving on your insurance long-term.
You also need to appreciate the additional driving skills it has given you and the indirect costs you are potentially saving on your insurance. These skills will stand you in good stead and may help avoid accidents and insurance claims in the future that would have impacted you financially.
14. Pay your premium in one lump sum
Paying your premium in monthly direct debit instalments often incurs interest charges that increase your overall cost. By paying your entire premium up front in one amount, you can avoid these fees.
15. Get married
It's true. Although not a huge rating factor, many companies will give you a discount on your car insurance if you are married.
The reasoning behind this is a lifestyle and stability factor that underwriters believe makes you less of a risk. Married people are seen as more stable, family orientated and therefore less likely to speed or drive erratically.
16. Change address
The area where you live is a major factor in the quote calculation.
Insurance companies can rate down to a postcode level. A weighting can then be attributed to specific postcode areas in order to increase or decrease premiums. This may be done for example because underwriters believe certain parts of the country are high-risk areas for theft.
In particular, inner city locations are often affected due to high crime rates of stolen vehicles, which ultimately affect the profitability of companies. On the other hand, more affluent suburban areas may prove attractive risks to companies due to their lower rates of crime.
Moving from a city location to the countryside or a nice suburb could lower your premium significantly. A recent survey showed that Londoners pay nearly 50% more than the national average with drivers in the North West next on the list. At the other end of the scale, motorists in the South West, Scotland and Wales pay the least amount.
17. Get black box insurance
Known in the industry as telematics insurance, a black box policy involves the fitting of a small GPS device with motion sensors to your vehicle in order to keep track of how you drive.
The information collected can include:
- Where you drive
- The time of day you drive
- How fast you go and quickly you accelerate
- How well you use your brakes
- How well you take corners
- How many miles you drive on the motorway
- You overall mileage and the number of different journeys you take
The data from the device can then be analysed by the insurance company to determine how safe a driver you are. This can influence the cost of your renewal premium and often provide you with cheaper insurance.
18. Park safely at night
Parking your car in a secure location at night, particularly in a locked garage at your house, is viewed as a positive when it comes to your quote. It shows that the risk of your vehicle being stolen is minimised.
On the other hand, parking overnight on the road or in an insecure public car park, will be seen as high risk and may attract a rating penalty on your premium.
19. Be honest about your occupation
Many people like to exaggerate the job they do when filling out the insurance quote form. However, this may be detrimental to the price you pay. Always be honest about what you do.
It's true that some occupations are rated more risky than others such as construction workers, security guards and couriers, whilst admin clerks, secretaries and people who have retired are usually seen as low risk.
20. Do not auto-renew your policy
Agreeing to automatically renew your policy means the company will charge you whatever they consider is the right premium for you at that time.
Although you may be happy with the cost you're currently paying, this is no guarantee that you will pay the same or less on your renewal. The underwriting criteria at the company may have changed and you could be given a big increase.
Bonus Tip - Always be prepared to haggle
Do not feel you should be loyal to any one company. Always shop around for insurance every year and don't be afraid to either chat online or call them up to haggle on the price. You may be surprised at how far companies are prepared to either price-match or offer you a lower premium in order to get your business.