Top 10 car insurance questions answered

We all want to pay less for our car insurance. But what’s the best way to make deep inroads into your annual premium?

If you do nothing else, shop around when it comes to renewal. Don’t just let your current insurer roll your policy over for another 12 months, because chances are you’ll pay significantly more than if you moved your custom to a new firm.

You can check prices against your renewal offer in a matter of minutes on our car insurance page, and it only takes a few minutes to switch provider.

Read on for a more detailed explanation, along with the answers to other common questions asked by insurance buyers.

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1. Why should I shop around for car insurance?

Insurers attract new customers by offering them their best prices. They rely on the fact that most of their existing customers will simply renew each year, even if their premium has edged up. After all, it’s very tempting just to let the renewal go through ‘on the nod’ – I know, I’ve done it myself.

Inertia selling, it’s called. For years I was with the same firm – they’d send me a letter just before my policy was up telling me I could relax, I didn’t have to do anything, they’d sort it all out and make sure my renewal went through. And because there was always a nappy to change or a kettle to boil, I was happy to be swept along – until one year I used MoneySuperMarket and found I could save over £200 by switching.

I can’t bear to add up how much I wasted over the years on unnecessarily expensive car cover. Best just to focus on the savings I’ll make from now on.

Here at MoneySuperMarket we battle against inertia selling by encouraging people to shop around every year. Insurers simply don’t reward loyalty. So don’t reward them with an automatic renewal.

2. Does boosting security make a difference?

Absolutely. Fit an alarm, steering lock and tracking device and you could knock 5% or more off your premium. Chances are you’ve already got a factory-fitted immobiliser (they’ve been fitted on all cars since 1998), but it’s worth checking. If you fit any security device, it should be ‘Thatcham-approved’ – Thatcham is a research and development centre funded by the insurance industry and many discounts are dependent on its kit being deployed.

3. Does it matter which insurance group my car is in?

Yes. Your premium will be determined in part by the car you drive – how powerful it is, how attractive it is to thieves, how much it costs to repair. Insurers allocate all cars to one of 50 groups (22 for motorbikes and 20 for commercial light vehicles) to help them work out how risky and potentially expensive they are, with the cheapest premiums for the lowest numbers.

A car’s insurance group number is something to factor into your deliberations when you’re buying and want to work out the likely running costs. You can check which group any car falls into at www.thatcham.org.

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4. Does where I park matter?

Yes again. Most cars are stolen or vandalised while parked on the street. Your insurer will charge you less if you can park overnight on a driveway or, even better, in a locked garage.

5. How does the policy excess work?

The excess (occasionally referred to as a ‘deductible’) is the amount you pay towards any claim you make. It’s made up of a mandatory or compulsory excess, imposed by the insurer, and a voluntary excess, which you set yourself.

The sum of these two is the combined excess. If this stands at £200 (£100 compulsory plus £100 voluntary, say) and you make a claim for £500, you’ll receive £300 from the insurer.

If you volunteer to pay a higher excess, you should see your premium fall. But it’s wise not to set the excess too high because you’ll end up having to pay a hefty amount if you make a claim – and you’ll price yourself out of some claims completely.

6. Is it worth protecting my NCD?

Almost certainly. You earn a no claims discount by driving claims-free for a number of consecutive years. After five years without a claim, you should be getting at least a 70% discount on your premium. Some insurers will offer an even higher percentage if you don’t make a claim for eight or nine years.

Clearly, losing a discount of this size would sting, so you can insure your discount as well, meaning you can actually claim once or even twice in a 12-month period without losing the discount itself.

Having a discount doesn’t mean your underlying premium won’t increase – you’ll simply get the given percentage reduction off the new total.

Don’t stay with your current insurer in the belief that you’ll lose your NCD if you go elsewhere – the discount is ‘portable’, so you can take it with you. Your new insurer will tell you what you need to do as far as getting documentary proof is concerned – it shouldn’t require more than a phone call.

7. What is ‘fronting’?

Young drivers can be tempted to save on insurance by putting a parent down as the main driver of their car. But this is illegal – the person who does the bulk of the driving must by law be listed as the main driver. The practice is known as ‘fronting’ and, if the insurer finds out (it’s one of the things they keep an eye open for), it could turn down a claim.

And as fronting is fraud, both the young driver and the parent could find themselves in court and subject to a fine.

A lower premium might be obtained by listing the parent as a ‘named’ driver on the policy – the insurer will work on the basis that this person is driving the car for at least part of the time, diluting the risk it faces over the course of the year.

8. What is ‘black box’ insurance?

Recent years have seen a significant increase in ‘telematics’ or ‘black box’ insurance. This is where satellite technology is used to monitor your driving – the roads you use, the time of day or night you drive, your acceleration and braking habits, your speeds – to help the insurer assess how risky you are. Drive safely and your premiums will fall.

These policies usually come with restrictions on the number of miles you can drive annually, and they might impose a curfew (no driving after 11.00pm, say) and a limit on the number of passengers that can be carried.
They are marketed primarily to younger drivers as a way to bring down steep premiums, but their popularity is increasing across other age groups.

9. Can I insure more than one car on a single policy?

Yes. A growing number of insurers are offering ‘multi car’ or ‘family fleet’ policies where you can insure two or more vehicles on the same contract, earning a discount of 10% or 15% on the second and subsequent vehicles. It’s a neat and tidy solution for families – but don’t let having a multi-vehicle policy deter you from shopping around when the renewal date arrives.

10. What happens if I modify my car?

Many of us like to modify our cars, whether it be the engine, the lights, the bodywork or the wheels. But it’s imperative to tell your insurer about any work you do before you do it. Why? Because changing the manufacturer’s specification in any way, no matter how small, could invalidate your cover.

Your insurer might adjust your premium if it thinks the car now has a higher risk profile (if you’ve turbo-charged the engine, say, or fitted a spoiler). If the change is purely cosmetic, the premium might still increase because your car is now more attractive to thieves and/or vandals.

Certain minor changes won’t affect your premiums –but don’t try to second-guess your insurer’s attitude to modifications. Tell them about your plans so you know where you stand.

Please note: Any rates or deals mentioned in this article were available at the time of writing.

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