Figures published by the AA have shown a massive 40% rise in car insurance premiums, with young drivers baring the brunt of this increase. Why is this and what can you do about it?
The AA started compiling an index on car insurance rates 16 years ago. 2010 see’s the sharpest rises in its history. So what or who are to blame?
A number of factors have contributed to this hike in premiums. A surge in claims for injuries sustained in accidents, personal injury lawyers taking a 40% cut in those claims, un-insured drivers and probably the biggest contributor to these hikes, car insurance fraud.
The Insurance Fraud Bureau (IFB) estimates around 30,000 accidents are staged each year, with the average claim totalling around £17,000. It cost insurers about £350million in 2009, adding £44 to the premium of every driver in the country.
Young male drivers, between the ages of 17 – 22 are paying the most, with the average of the three cheapest quotes they get being £2,457. That is nearly double the premiums offered to young women. In the insurers eyes, the reason for this is simple, young men are twice as likely to be involved in car accidents than young women.
Annual Premium for less than one pound?
Yes it is possible. According to MoneySavingExpert.com, the cheapest car insurance premium paid for a full year fully comprehensive insurance policy is just 96p! That’s right, less than a pound, and these four simple steps will show you how to challenge that record.
Step 1 – Lower your Risk
Every application for car insurance is different. Each insurer’s price depend on two things, first the underwriters assessment of your particular risk focus and then the pricing model which dictates what type of customers the insurer wants to attract.
Park and drive carefully
Leave your car in a garage or driveway; this can result in a 3% – 7% drop in insurance costs. Also, points on your license can bump up your premium, so don’t speed or use your mobile phone whilst driving.
Add a second person to an under-25s / high risk drivers insurance
Add a second driver with a good record to the insurance, even if they won’t use the car often, it can smooth out the average risk and sometimes reduce the premium.
Pick a car
The combination of car, engine size and value all impact car insurance cost. It’s worth considering this when you buy; a big super-powerful sports car for a 17 year old would cost enough to make David Beckham’s eyes water.
Fit a security device
Any extra security will help, fitting an alarm or immobilizer will reduce the bill substantially.
Don’t modify your car
The more changes you make to your car, barring security ones, the more you’ll be charged. A modification is anything that is not part of the standard vehicle specification including factory fitted optional extras, such as alloy wheels.
Reduce your mileage
The less you drive, the cheaper your insurance will be. Where possible try and reduce your mileage.
Step 2 – Best Buy Comparison Sites
Comparison sites use the information you enter to get quotes from hundreds of insurers. In fact, just combining the top three comparison sites, GoCompare.com, Confused.com and http://www.moneysupermarket.com, will find you over 153 quotes from different providers.
However, two competitive insurers refuse to be included by any comparison site, and sometimes have special offers, so are worth checking separately. These are Direct Line and Aviva.
Once you have found the cheapest quote, double check them. Click through to the provider’s website as some comparison sites make assumptions, so double check the policy and what it includes. Do you need ‘free car hire’? If not, remove this to reduce the premium. Play around with some of the details to see if you can get it cheaper. For example, increase the excess amount, is fully comprehensive cover cheaper?
Step 3 – Grab hidden Cashback and Haggle
At this stage you will now know who the cheapest provider for you is, yet you may be able to reduce the cost even further. TopCashback.co.uk and Quidco.com are the top two cash back sites around offering up to £120 cash back for some providers.
So if the second and third cheapest quotes, offer a higher cashback amount then overall, they could be cheaper for you. These sites get paid by the providers and in turn they then give you some of this cash which means you get the same product, but a cut of its revenue.
Yet be warned, until it’s in your bank account, this cashback is never 100% guaranteed, and getting the right policy is always paramount. Therefore never simply choose based only on cashback, see it as a potential added bonus once you’ve picked the right cover.
Some comparison sites and providers offer their own cashback deals or offers such as a free MOT or vouchers. So factor these into your calculations.
And finally, haggle. The car insurance market is very competitive and companies are desperate to retain your business. Therefore once you’ve got your overall cheapest price get on the phone and try to haggle. The first port of call should be your existing insurer, after all if it can beat or even match the best quote it saves the hassle of switching policy.
Step 4 – Remember next Year
To avoid being forced to decide quickly, diarise a warning six weeks before your renewal date, so there’s plenty of time to sort out a new provider.
Renewal notifications are sent as near to renewal as possible as then you’re pressured for time and less likely to try and find a cheaper price. Apply for cover from your existing insurer as a new customer and it’s likely you’ll be given a cheaper price. Loyalty never pays so never just accept the renewal price. Motorists can typically save £233 a year by scouring the market for a better deal
You could also sign up to www.consumerintel.com, a consumer research company. They pay hundreds of people a month near their renewal date, up to £50 to carry out comparisons. What is even better is that you do not need to buy insurance from any of the companies you’ve contacted.
So there you have it, four simple steps to a cheaper car insurance premium. By spending an hour or two of your time searching for a cheap car insurance premium, you could save hundreds of pounds a year. How low can you go? Can you beat 96p for an annual premium, or even go one better — and actually get paid money to renew your car insurance?!?