Steve Sweeney, who is head of motor insurance here at moneysupermaket.com is here to explain why.
Q1: So Steve, obviously when you are looking to buy a new car you would probably do some research into what make / model you want to go for, but beyond that its worth looking at how much it going to actually cost you to get it onto the road in insurance isn’t it?
Steve Sweeney: Yes, absolutely. It’s not just the cost of the car – it’s also the cost of insurance that needs to be weighed up. It’s absolutely critical that that is done as part of the purchase decision.
The really exciting part of buying a car is actually buying the car! The insurance is the mundane part of it but it’s actually really really important that you do that because you are actually buying a significant purchase, you need to make sure it is insured correctly. But, clearly you need to make sure that you are getting the right deal for that particular car as well and it may well be, in certain circumstances, the car that the individual is looking for may well be out of their price range when insurance is taken into account.
Q2: Yes, and it might be, for example, that you want a 2 litre but when you factor in insurance, perhaps a 1.6 or a 1.8 would be better value for you?
SS: Yes. It all comes down to the power of the vehicle and the potential acceleration of the vehicle and how fast that vehicle could potentially go and the likely hood of that car crashing. So, they are all actually rated and higher powered vehicles tend to have higher engine capacity and lower engine capacity vehicles tend to go that little bit slower so they are theoretically safer to drive and less likely to be involved in a accident. So picking a lower engine size vehicle will definitely help reduce your insurance premium.
Q3: The other thing, I think, where people can get a bit of a shock – it happened to me earlier on in the year – in that I changed my car in that I went from a 1.9 litre to a 2.0 litre so I expected the insurance costs to be pretty similar because it wasn’t that massively different. But my insurer was going to charge me £1,000 more a year to insure the new car then the older one. And obviously the age of the car, because it was a newer model, it all makes a difference doesn’t it?
SS: Yes, absolutely. There are tipping factors in insurance and clearly one of them is engine size and you maybe went over one of the [other] tipping factors.
I think ultimately everything has to be taken into account when an insurance quote comes along and the fact that you did change your car mid-season – if you like, is probably a great way to explain it – means that in some instances, cancelling that particular policy may well have been a little bit difficult. That’s not to say that you shouldn’t do it, it may well have been more economical for you rather then paying the £1,000 in that particular instance to shop around and try to get a better deal.
Q4: Yes, we did pay a cancellation fee but still we ended up getting a quote from a different insurer at the same sort of price as we were paying before so it does make a difference but it’s just this factor that people perhaps aren’t quite expecting.
Because insurers obviously they price for risk and they also cherry pick because they want certain types of driver or types of car on their books. So, what is your advice? Is it that if you are partway through a policy not just to continue with your existing insurer but when you are shopping around, check your insurance as well?
SS: Yes, the first thing that most people are going to do is ring their existing insurer and say ‘look, I want to buy a new vehicle, here’s the details of the vehicle’ and receive a new quote. It’s the word ‘new’ that’s the key – it’s a new quote – so on that basis of it being a new quote you should go through the process that you would normally go through which is coming onto moneysupermarket.com and shopping around and making sure you are getting the best deal for that new car that you are quoting for. So, it’s a brand new insurance, that’s how you need to see it.
Q5: If you are planning on changing your car in the next 12 months and you are up for renewal at the moment, does it make a difference whether you opt to pay monthly or annually. Because if you have to break and you have paid upfront for the whole year, can that affect the ability to cancel the policy?
SS: The advice I would give in that situation is, the insurer that you are actually going with you need to read the small print. My insurance for example is one months policy premium because I pay monthly, in the situation where you pay annually it could well be that the insurer will try to take more then one months payment as a cancellation fee.
Every insurer is different but the cancellation policy in that instance is critical, so if you are looking to change your car within a 12 month period read the cancellation policy on the insurance before you buy.
CF: Great, thank you Steve.