Car insurance can take up a large portion of a household budget. But there are ways to make premiums cheaper.
Motor vehicle insurance is a big expense for the driver. The average monthly fee is around £ 30-50 (depending on data source).
That’s above the cost of fuel, MOT and taxes and, for many people, car financing.
No matter how painful the price, it must be paid. (Although there are an estimated one million uninsured drivers on British roads, lawbreakers are not smart – if caught, they can destroy their cars.)
There are ways to reduce car insurance costs, so read this guide before giving up.
Premium & excess
This guide will use many words “premium” and “excess”. Basically:
The premium is the amount the driver pays (monthly or annually) for their insurance.
The advantage is the amount of money ‘paid’ to the insurance claim. This is agreed upon in advance and affects the cost of the premium.
Usually, higher excess means lower premium.
The driver has an insurance policy with an excess of £ 100.
They had a road accident that damaged their car. The cost of repairs reaches £ 500, so the driver makes a claim to their insurance company of £ 500.
After the claim is processed, the driver only receives £ 400, because the excess amount is released. They have to pay an extra £ 100 from their own pocket.
How Much does Car Insurance Cost?
Depends on who you ask. The British Insurance Association (ABI) says that the average premium for comprehensive car insurance in the UK is £ 471 per year, in September-Dec 2018 (Q4 2018).
AA, however, puts the cost at £ 593.65 far higher. Their method is to take an average of the five cheapest deals available.
Both organizations reported falling prices since the same time in 2017 – ABI made it -3%, while AA said it was -5.9%.
ABI said the reduction was partly due to the Civil Responsibility Draft Bill, which is currently underway through Parliament. This bill aims to crack down on things like reckless whiplash claims, which burden insurance companies in large numbers every year.
Even so, the reduction in premiums is small – not the kind of change that makes a real difference for households. And, so far, they have only been bliping in the long-term trend of rising prices that massively outstrips household income.
In Q4 2003, the AA Shoparound method put an average comprehensive price at 323.66 That’s an 84% increase in 15 years.
In comparison, the Office for National Statistics (ONS) said the average UK average income (the amount left after direct tax) was £ 25,647 in 2003/2004. In 2017/2018 it was £ 28,418 ï ½ – an increase of around 10.8%.
Moreover, ABI said that the current price reduction could only continue if the Government did not raise the Premium Insurance Tax again.
Who pays the most?
How much a driver pays for their insurance depends on many things – from gender, employment to past violations – but the most dramatic factor is age.
Average age group “Shoparound” prices, Q4 18
17-22 £ 1,289.80
23-29 £ 771.70
30-39 £ 504.64
40-49 £ 467.00
50-59 £ 414.19
60-69 £ 364.55
70+ £ 520.11
It is clear from the data that young people pay far more for car insurance. This is because young drivers are far more likely to have car accidents. They also haven’t built a claim-free bonus for years (see below).
Costs dropped as the driver grew older, apart from a slight increase over the 70s.
The driver’s place of residence is also important. The most expensive place to get car insurance is greater London (average premium of £ 1,102.86). The cheapest is Southwest (£ 557.39).
Choose the right car
When it comes to choosing a car, there are many factors to consider. But cars that are cheaper to insure are more likely to have the following characteristics:
ï¿½ € ï¿½ Quite cheap
ï¿½ € ï¿½ Easy to repair
ï¿½ € ï¿½ Easily accessible parts
ï¿½ € ï¿½ Small engine / low performance (‘performance’ in this case is 0-60mph, top speed, etc.)
ï¿½ € ï¿½ Sturdy, with a strong bumper
ï¿½ € ï¿½ Good security features, such as alarm and immobilizer
Look at the group
Taking into account the above, and many other things, insurance providers categorize cars into 50 different groups. The cars in Group 1 have the lowest insurance costs, making Group 50 the most expensive.
Examples of cars in the insurance group *
Group 1-10 CitroÃ «n C1, Volkswagen Golf, Ford Ka
Group 11-20 Alfa Romeo, Ford Fiesta, Mini Hatchback
Group 21-30 CitroÃ «n C5, BMW X1, Land Rover Freelander
Group 31-40 Toyota Yaris, Peugeot 208 GTi, Mercedes Benz E-Class
Group 41-50 Tesla Mode
Modified cars are more expensive to insure for two main reasons:
1. Anything that is not standard can be less reliable and difficult to repair
2. Shiny additions such as alloys, speakers and body kits attract thieves
The only exception here is for additional security features, which can make premiums cheaper.
There are around 1,600 insurance brokers in the UK.
Many general insurance, meaning that customers can take several types of insurance with the same company. Others are more specific, only offering (e.g.) vehicle insurance. Still others target niche markets such as older drivers, or drivers from certain professions.
To get a good idea of what is actually available, customers must use a comparison site and see various brokerage sites directly. Some insurance companies (like Direct Line) don’t even appear on comparison sites.
For insurance hunters with little time, calling several companies can be worth several hours. Insurance providers are sometimes willing to bid premiums or provide extras to capture new customers.
Find a broker
The British Insurance Brokers Association has a free “Find broker” tool for people who are struggling to find insurance providers.
Premium prices are certainly a good value indicator. Comparison sites are the easiest way to check the cheapest policies that apply.
However, the cheapest does not always mean the best value. There are other things to keep in mindâ € ï ½
Many companies have an unfavorable tendency to punish their customers for loyalty. Their best price or offer is provided specifically for new arrivals, making their existing customers pay more for the same service.
Since the Competition and Market Authority (CMA) started making a fuss about this late last year, insurance companies have made steps to turn things around.
Changing the insurance culture might take a while, because providers struggle to make profits as they are – and “loyalty fees” are good money makers.
This was exhibited in April (2019), when Lance Batchelor, Saga’s chief executive, went to Radio 4’s Today to talk about changes in financial company policy. He announced a three-year fixed price policy for direct customers, but acknowledged that although customers would be happy, it was “a painful day for shareholders”.
So, pay attention to insurance companies that are pioneering this new way of doing business – this can save you a lot in the long run.
Existing bank or insurance
That said, it’s a good idea to check what is offered at banks and other companies (including companies responsible for home insurance, for example).
Sometimes, these companies will offer better offers to people who already have financial products with them.
Getting cheap car insurance is one thing, but when it comes to the core of insurance – the claims process – many drivers are left to vacillate. And it’s good to find insurance providers who are willing to negotiate premiums or answer questions.
Check automatic magazine and review sites to find out which insurance company idea is the best. Factors to consider are the willingness to negotiate, the time needed to process the claim, and the waiting time for the call.
The Auto Express Driver Power Survey, for example, dropped NFU Mutual, Liverpool Victoria and Privilege as their top three public motor insurance providers (Police Mutual entered at number 2, but only available to police officers and their families).
Choose a policy
There are several things to consider in choosing an insurance policy itself.
There are three types of motorcycle insurance.
1. Third party – the minimum protection permitted by law. This includes the driver against costs for damage to other people and vehicles.
2. Third party fires and theft – as above, but also includes protection for vehicles stolen or damaged / destroyed in a fire
3. Comprehensive – this includes all of the above, plus the cost of treating the driver himself and damage to the vehicle, plus damage / loss of goods in the vehicle.
Usually, comprehensive is the most expensive type of insurance – but not always! It’s good to check before opting for a lower policy, because sometimes system habits make comprehensive less expensive.
Comprehensive additional costs are usually worth it. Being covered in all possibilities can save you a lot of money in the long run.
The excess, as we mentioned above, is the amount taken from the claim. The higher the excess, the lower the premium.
That doesn’t mean it’s a good idea to choose for the highest excess possible. Drivers need to replace lost money when it comes to repairs or replacements, so it needs an amount that can be managed.
Black box car insurance is another name for “telematics” car insurance. The box or, recently, a mobile application, is part of an insurance agreement.
This feeds data about the driver’s habits back to the insurance company. They saw speed, miles, what time the car came out – and even drove and turned.
Based on this data, insurance companies change driver premiums every month. Drivers can look online to see their own data and adjust their driving style accordingly.
This policy is often much cheaper than ordinary insurance. They are very popular with young or new drivers. But sometimes they come with rules – curfews, or mileage restrictions – that keep people going.
Apply for policy
It might be tempting to bend the truth with an insurance application.
But if the provider finds the plaintiff is lying (and they will investigate thoroughly), their claim is invalid.
Even if there are no claims, if the broker finds dishonesty then they can charge customers extra money as a lump sum.
Not only that, but drivers found as liars will find it more difficult to get protection elsewhere in the future. This means higher premiums in the coming years.
Pay every year
Paying insurance all year round in one go is usually much cheaper than paying monthly, with direct debit.
When applying for car insurance, the driver is asked what the car will be used for. To be the cheapest to most expensive:
1. Social only
2. Social + Commuting
3. Personal + Business (includes both of the above, plus other business-related trips)
Only social – if the car will not be used for anything related to work or business – is the cheapest option because it usually involves short distances on known roads.
Commuters, who use their cars to get to and from work, travel longer distances and drive on the busiest roads.
Business drivers travel further and tend to drive in unknown locations.
This is not as clear as some people think.
Insurers will sometimes punish people who keep their cars in the garage, because minor accidents (scratches and bumps) and theft are common. Others will care more about parking on the street.
It all depends on the provider and area. If there is a choice of parking, compare offers with different information – but still what is included in the final application. Being a liar is more expensive than any option!
Think it’s nosy?
Back in 2016, Admiral was suspended from setting their insurance premium based on the contents of the Facebook post. Read moreï €½ € ï¿½
Adding low-risk drivers to a policy may not have much impact on costs. In fact, experienced drivers can even reduce prices.
But having an inexperienced, young or risky driver in insurance can make things much more expensive.
Insurance companies will often try and sell extras such as legal assistance, damage cover and so on. This is not always necessary; and the driver can sometimes pay for the same type of coverage twice! Check the details of each add-on to the main policy document.
Better in driving
Getting a Pass Plus certificate, or even taking advanced driving lessons, can cut car insurance prices. However, additional costs for lessons and examinations must be considered.
Wake up bonus
This is not something that can be done in advance, but driving with caution and building a no-claim bonus for years is what leads to much cheaper insurance in the future.
Unfortunately, getting cheap car insurance is very dependent on the circumstances. How old are the drivers, how much experience they have, even where they live – all this affects the premium.
There are also many other factors that make price predictions almost impossible.
However, it is possible to cut the price of motorcycle insurance by making a few simple changes – most (choice of vehicle) and a small portion (shop for the best deals).
The bonus is that many changes will have other benefits, such as the possibility of smaller accidents, lower fuel costs, and so on.