For many people, especially the young, the biggest cost barrier to getting on the road these days isn't buying the car itself. Neither is it the cost of running the car; however exorbitant petrol prices are these days. It is the cost of insurance – which can be several times the cost of the car itself – that is often the biggest stumbling block.
Shopping around to find the best deal can save you money, of course, but with so many companies offering insurance it's impossible to ring around them all for a quote. The advent of price comparison websites has appeased this problem, though; now, you can get quotes from over 100 insurance companies by filling out just one form.
You've got three basic options when it comes to car insurance:
- Third party: where the insurer will only pay for damage done to other people's property when you have an accident
- Third party, fire and theft: where the insurer will only pay out if your car catches fire or is stolen, along with accidental damage done to other people's property
- Fully comprehensive. where loss incurred by you or any third party, arrived at by any means, is covered.
Another benefit of using comparison sites is that you can quickly and easily cross check all these types of cover against one another. While third party is usually cheapest, this isn't necessarily so in all cases.
How your policy is priced up
When deciding how much you pay, insurance companies weigh up how much of a risk you pose based on analysis of trends. Unfortunately, this doesn't bode well for male couriers under the age of 25 who live in a rough neck of the woods!
Each insurer uses their own metrics when deciding how much your quote will be, allocating their own specific weights to a number of different circumstances. There is no industry-wide pricing structure that is adhered to. This means one company might work out expensive for one person and cheap for another while quotes from a second company might turn out the other way around. Indeed, some insurers specialise in and offer lower prices for certain demographics – over 50s or families, for instance. At the moment there are many companies that offer special lower rates for women as they are deemed less of a risk. However, the EU has ruled that insurers will no longer be allowed to differentiate on gender from December 2012.
The following will all be taken into account when your quote is being priced up:
- Your age, occupation, relationship status, and the area you live in
- The make, model, performance, annual mileage and age of your vehicle
- Whether you use your car for business or just for personal trips
- Where you store your vehicle overnight and what alarms or immobilisers are fitted to it
- Your credit rating, any previous claims, your number of years' no claims bonus, the length of time you've been driving for
- The personal circumstances of any second driver covered on the policy
Ways to save
If you can, add a secondary driver who has held their license for longer, has more years' worth of no claims bonus or who has a demographic profile more favourable for insurers.
Try to park your car as securely as possible overnight – in a locked garage or secure private car park, for instance – instead of by the side of the road.
The way you describe your occupation can have a big effect on the price you pay. Once you've been quoted using your usual job title, try again with another role which could equally apply to you. For instance, if you're an editor by trade, try selecting 'journalist' or 'reporter' – you might be surprised by the difference it makes.
Choosing a higher excess can bring your quote down but, remember, this
is the amount that you'll have to pay in the event of a claim before the insurer picks up the rest of the bill.
If you are married or live with a partner make sure you're insurer is aware – you'll generally be considered lower risk and will pay less.
If there's more than one car in your household, discounts are sometimes available for insuring more than one vehicle on a single policy or simply by covering both with the same provider.
Once you've found the best quotes online, get ready to haggle. A lot of insurance companies are prepared to strike a deal if it means they can snap up your business. Give them a call, tell them what prices you've been quoted and see if they are prepared to knock a bit more off.
If you haven't bought a car yet.
Check which insurance group your prospective car belongs to. All cars are categorised into one of twenty groups. The lower the group, the less you'll pay.
As a rule of thumb, the less powerful your car is and the newer it is, the less it will cost you insure. Conversely, though, classic cars cost significantly less to insure, through specialist providers. This is because the insurers figure that you're only likely to drive it on Sundays and take extra special care of it! What counts as a classic car differs from insurer to insurer. The DVLA defines a classic car as one which is 25 years or older, at which point it qualifies as road tax exempt.
Consider a five door rather than a three door vehicle. Insurers tend to offer lower premiums on what they deem to be family cars as they are associated with lower risk drivers.
What's wrong with a little white lie?
It's so easy to bend the truth when you're filling out the forms to try and bring your quote down. 'They'll never find out,' you assure yourself, 'that I park the car on the street overnight instead of in a garage like I told them'. 'What's the harm,' you ask, 'in pretending I only use the car for personal journeys when I sometimes take it on business trips?'
However tempting it is, though, don't do it. When car insurers have to pay out on claims it can cost them a lot of money. Therefore, any excuse they can find not to pay they'll embrace with open arms. And the point that they are most likely to find out is in their investigations after you've had an accident or had your car stolen; your little white lies could come back to haunt you.
Similarly, modifying your car after you've taken out insurance without notifying the company will invalidate your policy.
You could be faced with legal repercussions – as well as huge costs – if you don't have valid car insurance. If any of your personal circumstances or anything to do with your vehicle changes, play it safe and tell your policy provider.
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