If you are a UK driver, then it is important that you know your car insurance options right down to the minor details. If you don’t, you will end up spending more money and increase your chances of not having the appropriate level of cover when those ever looming chances of an accident turn into reality.
This guide will help you find the right car insurance for your needs and save money.
Car insurance premiums
When you apply for a car insurance quote, what you pay is called the premium. The premium paid changes from driver to driver depending on the risk involved in the insurance provider’s partnership with each driver. The risk is calculated by professional actuaries who assign each applicant into grouped actuary classes depending on the applicant’s characteristics, and risk factors that have the most influence on the eventual premium calculated are car characteristics (model, value, age, manufacturer), driver characteristics (gender, records, previous accidents), geographical location and storage, and the type of coverage selection applied for.
The European Court of Justice ruled last year that gender can no longer be used as a basis for determining risk. As such, young women are expected to face big insurance premium increases this year (up to 25%), which goes alongside increasing premium prices for all drivers. The question is how can these costs be lowered?
Reducing the cost
Saving as much money as you can on your car insurance is as much about being in the know as going for the cheapest cover you can find.
For the three main types of car insurance (third party, third party fire and theft, fully comprehensive), third party is the cheapest, and fully comprehensive the most expensive, but if you are at fault with your claim, third party provides no cover for the damage to your car, which means you may end up paying more than if you went with fully comprehensive in the first place.
If you are looking for budget car insurance, then the excess is something to take not of. This is what you pay if you are at fault with a claim, which is deducted from your insurance pay-out. If a company is offering you a cheap insurance quote, then chances are you will have to pay higher excess if an accident occurs and you are found at fault. As with the last case, going cheaper means going pricier if an accident actually occurs. Compulsorily excess may be applied for younger drivers under 25. Younger drivers with new licenses can offset high premiums by taking a Pass Plus course.
If you know you are a good and sensible driver, then you have a few chances to keep your premiums low. You can opt for voluntary excess to gain a cheaper quote, but this does mean paying out more if you make a claim. No claims bonus is the best way to keeping costs down, which applies for every year you are insured without making a claim. After 3 or 4 years of no claims, you should apply for no claims bonus protection, which preserves your no-claims status even if you make a claim.
If you are a new driver, then you can build up your no claims faster with a bonus accelerator policy, which is applied for 10 months driving as opposed to the traditional 12.
Insurance quotes can be paid as a one-off payment or in monthly instalments. The latter has interest applied, so it is always better to go for the first option if you are confident you will make no policy changes.
Denise Beresford, a freelance writer, provided this article for More Th>n. The opinions expressed are those of the author and any data provided does not originate from MORE TH>N.