If you own a car, have to buy car insurance - even if you've no plans to drive the car, Continuous Insurance Enforcement (CIE) laws mean all car owners must have insurance in place, unless it's been delcared off road via a DVLA statutory off-road notification (SORN).
What is car insurance?
Car insurance is a legal requirement. Every car owner is required by law to have their vehicle insured to provide cover for you, other named drivers and any third parties in the event of driving-related damage or injury. The good news is, car insurance doesn’t have to be expensive, especially if you follow MoneySuperMarket’s top seven tips to driving down the cost of cover.
1. Pick a cheap-to-insure car
The type of car you drive can have a big impact on the cost of car insurance. A Porsche 911, for example, will be more expensive to insure than a Ford Focus. Like I needed to tell you that… But not everyone is aware that the insurance industry allocates all cars into one of 50 groups, according to a number of factors such as engine size, performance and cost of repair. Premiums for cars in Group 1 are lower than for cars in Group 50, so it’s worth finding out a bit more about a car’s classification before you buy. There’s lots of information on the website www.thatcham.org. You should also avoid jazzing up your car as insurers take a dim view of modified vehicles. In other words, you could end up paying a high price for your tinted windows or spoilers. And if you don’t tell them about a modification, you risk invalidating your cover, so pick up the phone.
2. Improve your road skills
If you don’t have much experience of the road, you are more likely to have an accident and claim on your motor insurance. Premiums for young drivers therefore tend to be high. The typical cost of cover for a driver between the ages of 17 and 22 is about £1,158, roughly double the average premium. There’s nothing you can do about your age, but there is something you can do about your driving skills. Several organisations run advanced motoring programmes and successful completion of a recognised course can knock down the cost of cover by as much as 15%. The Driving Standard Agency’s Pass Plus is one of the most familiar and is made up of six modules, covering skills such as driving on motorways and at night. The Institute of Advanced Motoring also runs motoring courses for drivers of all levels of experience, and some insurers recognise such qualifications when you apply for cover.
3. Don’t claim
Insurers reward motorists who don’t claim with a discount on their insurance – and the discounts can be extremely valuable. Most firms offer no claims discounts (NCDs) of 70% or 75% and some go even higher after five consecutive claim-free years.
It’s therefore worth paying for any minor damage yourself in order to safeguard your NCD. You can also pay a little extra to protect your discount, allowing you to make a limited number of claims without jeopardising the NCD. And remember that an NCD with a particular firm should not stop you switching insurers. The new firm should recognise your claims history, although the size of the discount might not be exactly the same.
4. Consider your excess
Every motor insurance policy comes with a compulsory excess, which is the amount you have to pay towards each claim. For example, if your policy excess is £200 and you lodge a claim for £500, the insurer will pay only £300. You can usually volunteer to increase the excess in return for a lower premium. You might for instance bump up the excess to £500 and so cut your premium by 5%. But there’s a trade-off – the lower premium you get means you have to fork out more if you make a claim. So just make sure that the excess is affordable, otherwise you might not be able to fund necessary repairs, for example.
5. Get an alarm
The risk of theft or vandalism is higher if your car is kept on the street when not in use, which is why insurers love garages. If you don’t have a garage, try to park the car in a drive way overnight as it will almost certainly have an impact on the premium. Insurers are also fond of security devices such as alarms, immobilisers and other security devices because they reduce the likelihood of a claim. Most modern cars come with up-to-date security kit, but if you own an older vehicle, it might be worth fitting your own. Just make sure any device is approved by your insurer to reap the full premium benefit – the Thatcham branding is usually an indication of acceptability.
6. Get the right the level of cover
There are three levels of motor insurance: third party, third party fire and theft, and comprehensive. The legal minimum requirement is third party, and you might reasonably think you would pay less for more this basic cover. But you could be wrong. Comprehensive cover is in fact typically cheaper than third party fire and theft, so you should not rule out a more extensive policy on the grounds of cost.
7. Shop around
Most of us are lazy about our car insurance. We buy from a big-name company and stick with the same firm year after year. But loyalty rarely pays in the competitive world of car insurance and you could save hundreds of pounds a year by shopping around. It’s easy, too, if you log onto a comparison website such as MoneySuperMarket’s car insurance channel.
Article originally published on June 24, 2014