Why car insurance policies vary and what differences exist?

Not all car insurance polices are the same. Policy wordings cover different things and have different exclusions. Find the policy to suit you.

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You get what you pay for. This truism stretches across the insurance industry and is emphatically the case for car insurance. The cheapest car insurance may not be the best for you.

Car cover and insurance premiums vary widely because many insurance companies target specific types of customers. That’s just like car companies specialising in certain types of vehicle that may have higher profit mark-ups, or designed for a niche market.

That might be young drivers, for instance, or car owners with classic vehicles. And there are insurers who target car drivers who live in rural areas with more demanding needs, such as the farming community. There might be an insurer targeting you.

What are your cover priorities?

If you compare and contrast quotes from similar niche areas, you might find quotes remarkably close – assuming you’re careful to supply everyone the same level of information.

Think about it: when you buy bread at the supermarket, do you always buy the cheapest loaf? Of course you don’t. So if you only focus on the lowest price you might find the cover less filling and generous when you really need it.

Some policies may also exclude certain situations while being more liberal with other areas, including some of the below.

  • How many points do you have (and what effect may they have on your premium)?
  • What state is your no-claims bonus in?
  • What about your excess (the more you commit to does not necessarily lead to a cheaper the policy)?
  • How many miles a year do you drive versus…do you really need to drive so many miles a year?
  • Are you male or female? Though gender-neutral pricing is in force, price differences still hang about in some cases
  • Third party, with fire and theft, or fully comprehensive?

Have a think about the last point. While some car companies will offer a cheaper third-party quote, some may find fully comp’ cover is actually cheaper. It can pay to check.

Should I go for a ‘black box’?

Adam Moger, marketing director at Marmalade, a company specialising in telematics insurance for younger drivers, reinforces the message on low prices – however eye-catching they might look at first.

“Let trustworthiness be your top priority when choosing between insurance companies,” he advises. “Look for their Trustpilot reviews and read through how they have handled claims in the past.”

He says some people can be more inclined to leave a negative review than a positive one, “so don’t be put off if there is the odd one. Look for a 50/50 balance when it comes to claims handling as this is usually an indicator of a good provider.”

What about my no-claims bonus?

Martyne Miller, an associate director at Coverbox, another telematics provider, says a black box in your car could save your no-claims bonus.

“If you need to make a claim the insurer can use the data collected at the time of the accident to prove if you were at fault or not, potentially saving you your excess and protecting your no claims discount.” That could be worth hundreds of pounds – not something available with standard insurance cover.

While even the best price comparison websites offer good advice don’t ignore the experience of friends or acquaintances. If they’ve had solid support – often at a highly stressful time – from their insurance company then find out more, get their details and follow up.

How can I reduce my car insurance premium?

There are several ways that you can influence your car insurance premium:

  • Cut your mileage: how many miles do you really do each year? Rounding it up costs more. The more miles you drive the greater risk of accident, so the higher the premium. Cutting the number of miles you drive should see your premium fall. How many miles did you actually drive for the past few years? Put in a realistic amount, not a much larger number
  • Go fully comprehensive: many insurers charge less for fully comprehensive cover than third party, fire and theft – sounds counter-intuitive but insurance data sometimes points to third party drivers being high risk
  • Don’t insure your car for work use if you don’t use it for work: don’t even put commuting unless you do so. Adding work use will cost a lot and you can only claim a maximum 45p a mile from your boss – is it worth it?
  • Change car to one in a lower insurance group: these are cars that are cheaper to repair if involved in an accident, usually less powerful and more efficient. Many are safer than more expensive models too, such as the five-star rated Seat Ibiza.
  • Do not modify your car: modifications worry insurers.
  • Keep your car safe: clear your garage of junk and store your car in there. Even off-road parking can secure a discount insurance premium. Buy extra security or fit an alarm or tracker.
  • Take an advanced driving course:  as some insurers offer discounts for these course (IAM/RoSpa etc). For new drivers, take the Pass Plus course.
  • Add other drivers onto your policy: Brian Brown, head of insight, banking & general insurance, Defaqto, says many insurers will actually charge you less “if you have more than one driver on your policy – as long as the other drivers are seen to be lower risk”. If you’re young, consider adding an older named driver to the policy. Insurers consider you less likely to drive wildly if you share the vehicle with your mum or dad.
  • Consider a multi-car policy: Some insurers will offer you a lower premium if you agree to go onto a multi-car policy.  “This can lower your premiums in the short term,” says Defaqto’s Brown, “but watch out for big premium hikes at renewal”
  • Consider black box insurance (telematics): particularly for young drivers. These monitor your driving behaviour and reward safer driving. There are also new models based on drivers’ per mile insurance
  • Only buy the add-ons you need: if the policy comes with full European breakdown cover but you are never going to Europe on a driving trip, you don’t need it. And if you do need it, you might be able to buy it separately at a better price if you shop around
  • Change the excess: some insurers will offer the same price with a lower excess. If a bigger excess makes a difference to the premium, consider taking that better value quote and getting excess insurance.
  • Pay annually, rather than in instalments: this is usually a lot cheaper

Don’t be tempted to lie to get cheaper car insurance. Just don’t. That’s a crime. The insurer can withdraw cover leaving you uninsured and may prosecute for fraud. Declare what you will use the car for, any driving convictions and points on your licence.

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