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Car insurance for the unemployed

Find affordable quotes for unemployed drivers

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Car insurance for the unemployed can be expensive

Insurance companies use all sorts of information to calculate how much your premiums will be – and job title is a really important data point.

So when you apply for car insurance quote and set your job title to ‘unemployed’, the premiums you are offered will be more expensive. Why? Because insurers’ data suggests that the unemployed are more likely to get into accidents and less likely to look after their cars.

While this may feel unfair, especially if you are actively looking for a new job, there are things you can do. Changing your job title from ‘unemployed’ to ‘housewife’ or ‘retired’ for example will shave almost a quarter off the average car insurance quote, according to MoneySuperMarket data.

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*According to MoneySuperMarket data collected March 2020

How to lower your car insurance when you’re out of work

Insurers base the price they offer you on many different factors, of which employment status is only one. This means that even if you’re unemployed, there are plenty of ways you can pay less for car insurance:

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Praksha Patel-Shah

Our expert says

"Car insurance is a lot more expensive if you don't have a job, because insurers believe uninsured drivers are more likely to make a claim. Thankfully there are things you can do to help keep the cost down - especially if you reduce your mileage. "

- Praksha Patel-Shah, senior channel manager of car insurance

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We compare dozens of the biggest insurance providers in the country, including:

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Insurers tend to charge unemployed people more for car insurance because they believe unemployed drivers are more likely to make a claim. There are several reasons for this:

  • Unemployed people are likely to drive more if they use their cars to look for work, which increases the risk of an accident occurring
  • If you’re unemployed, you’re also more likely to be driving on roads you’re not familiar with, which also increases the risk of accident
  • Insurers believe that unemployed drivers may be more distracted because of their circumstances, and may drive less carefully
  • Unemployed individuals may also be viewed by insurers as less likely to maintain their vehicles, as they have less spare cash
  • Unemployed people tend to pose a higher credit risk

Car insurance is a legal requirement for drivers in the UK, thanks to the continuous insurance enforcement rules brought in as part of the road safety act of 2006. This means that unless your car is registered as off the road with a SORN, or in the process of being bought or sold, you could be faced with a fine for not insuring your vehicle.

There are three main types of car insurance:

  • Third-party only: This covers the cost of repairs to another person’s car if you cause an accident. It is the most expensive and least comprehensive type of policy
  • Third-party, fire and theft: This covers repairs to other people’s cars, as well as fire or theft that affects your own vehicle
  • Fully comprehensive: The best level of cover you can get – and these days the cheapest. Fully comprehensive car insurance protects you, your car and other motorists from damage. It also covers medical expenses, repairs, fire damage and theft of your vehicle

You’re likely to get a better deal on your car insurance policy if you pay an annual lump sum rather than in monthly instalments. This is largely because in a way monthly payments are similar to taking out credit – you’ll be covered in full, but without having paid the full amount yet.

Paying monthly can be useful as you’ll be able to spread the cost out, but you will end up paying a little extra overall.

Excess payments refer to the cost of making a claim – it’s essentially how much you’ll need to put towards the total claim cost before your insurer pays the rest. Volunteering a higher excess fee on top of the compulsory amount indicates to insurers you won’t bother making small and frivolous claims.

A no-claims bonus is what you earn when you go some time without claiming on your policy. The longer you’ve gone without claiming, the more your insurers will knock off your premiums as they’ll see you as less likely to make further claims in the future.

You might consider not claiming for an accident if the damage done to your car is minor and it would be more sensible to pay for the repairs yourself – let’s say the excess you’d need to pay was more than the overall repair costs. This way you’ll preserve your no-claims bonus as well as being better off financially.

If you’re involved in an accident and you decide not to make a claim, you should still inform your insurer. They’ll keep their records up to date, so they know what condition your vehicle is in and whether this will affect your likeliness of claiming in the future.

If you don’t keep your insurer updated, it’s possible this will void your insurance policy so you won’t be able to claim when you really need to.

MoneySuperMarket gives you lots of clever ways to save a lot, by doing very little.

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But you might have other questions. Do we provide access to all the companies operating in a given market? Do we have commercial relationships or ownership ties that might make us feature one company above another?

We commit to providing you with clear and informative answers on all points such as this, so we have gathered the relevant information on this page.