How to buy the very cheapest car insurance
To buy the lowest cost insurance for your car, which is adequate for your purpose, you need to think like an insurer. What they care about is risk; they want to feel secure in offering to cover you, with a good chance that you will not be involved in a claim. To get the lowest quotations you need to reduce that risk in their eyes. Some of the main criteria they consider are:
- your driving/accident/convictions history
This may seem obvious but it is more complicated than it appears. Insurers do indeed love to take on highly experienced motorists with a long accident and conviction free record and they are very wary of young, newly qualified drivers but they are more interested in what will happen in the future than what has happened in the past. For example:
Older, married female motorists may find their premiums actually increasing. This is because some insurance companies assume that when their husbands retire they will drive the family car less, and the wives will cover a higher mileage without having had the benefit of regular, previous experience. Whilst many will consider this a completely anachronistic attitude it still prevails in some insurance companies.
People who have been involved in minor accidents but who have paid for the damage themselves can still find their premiums increasing as a result! This is because insurers feel that an accident in the past increases the risk of another in the future. How do they find out? Simple. They have very sophisticated computer systems gathering information which they share amongst each other. You also obliged to let your insurer know about any accident you have been involved in, regardless of who paid for it, and failing to do so could invalidate your cover.
Learner drivers who pass their driving tests will usually find that their premiums increase. This is because, in the past, they will have been accompanied at all times by an experienced driver and this will not necessarily be the case in the future.
- the car you wish to insure
The insurance class that each car belongs to, and the way that insurers view them is not just based on the engine power but on the total risk that the car represents, and the likely costs that the insurer will face if the car is involved in an accident. The bigger and more powerful a car is, the more damage it can cause to other people and property in an accident but, conversely, the safer the occupants of the car are likely to be! Repairing the vehicle would probably, however, cost far more than it would for a smaller vehicle.
Many smaller cars, whilst being very economic to run, are completely unsuitable for use on a motorway. They are underpowered and so sometimes unable to accelerate enough out of potentially dangerous situations, often unstable at high speeds and more susceptible to crosswinds than heavier vehicles. Conversely, there far less prone than larger cars to minor scrapes and bumps in busy city traffic.
Many vehicles, regardless of size, have steering, handling and braking capabilities which are not as good as they should be. This is particularly obvious with many older vehicles.
Whilst regular, rigourous MOT tests have taken a very large proportion of unroadworthy vehicles off the roads there are still a number of older cars being driven around without adequate maintenance. The age of the car is therefore a factor that the insurers will consider.
Vehicles are subjected to crash tests which look at not only the safety of occupants but also of other people, whether these are pedestrians or occupants of other cars. Claims for personal injuries can be very expensive indeed and so the safer the car, the lower the premiums are likely to be.
- where you live
Someone living within an inner-city is very likely to face a higher premium than someone living in a quiet village because of the increased risk of accidents because of the sheer number of other vehicles on the road. This is particularly the case for a motorist with a high mileage and in this case reducing that mileage may result in a noticeably reduced premium.
Inner cities and other busy urban areas can also suffer from higher levels of crime such as theft from cars and vandalism. Under these circumstances, where a car is parked overnight may have considerable bearing upon the cost of the policy, since a vehicle left outside by the pavement overnight is at far greater risk than one parked on a private drive with, perhaps, security lighting, and surveillance cameras keeping an eye on it.
- what you do for a living
Some occupations are looked upon as being far riskier for insurers. This is partly because of the statistical likelihood the drivers will have a lifestyle which is not really suitable for safe motoring. People in the entertainment industry, particularly footballers, may have more 'active' social life, with late nights and exposure to alcohol; will often drive faster, and more expensive cars; and may carry very highly paid passengers who could demand very substantial compensation if they were injured in an accident. People in these categories must expect to be far higher premiums, and if they have been involved in accidents in the past or offences, typically involving drink or drugs, they may struggle to get cover at all.
Conversely, people in certain professions, particularly the caring ones, have a much lower statistical likelihood of being involved in an accident and so they benefit from the lower premiums. These people include teachers, nurses, and school crossing wardens. It is perhaps not a coincidence that many of the people in these jobs are female.
Insurers are not fond of people working at night, or regularly driving between about 11 PM and 7 AM. This is when speeds tend to be higher because of less traffic on the roads, visibility is reduced through poor lighting conditions and there is a higher likelihood that other motorists will be affected by tiredness, alcohol or both.
- your age, and driving experience
as every young driver knows, insurers are very wary of an age group in which accidents occur more regularly and at higher speeds than with older and more experienced motorists. Premiums decline until the drivers reach middle age but then often climb somewhat for older drivers whose physical abilities, such as sight, coordination and reflexes may have deteriorated. Drivers above the age of 75 have a statistically higher likelihood of being involved in a fault accident than those in their 40s but the speeds involved are likely to be lower, as are the consequence claims.
- your sex
The European Court made it illegal for insurers to offer different premiums to males than those they offered to females, all other things being equal. They did not make it illegal for them to offer reductions based upon occupation, and it is a fact that some occupations contain far more ladies and gentlemen! Many nurses, dental assistants, teaching assistants, retail workers etc have seen substantial reductions in premiums, whilst others in more male dominated jobs such as construction, mining, power distribution etc have seen increases. Interestingly, the main differences are to be found amongst younger drivers; a 20-year-old scaffolder will probably be far more than 20-year-old animal welfare technician but in the 40 to 60 age bracket the difference is likely to be much less noticeable. This reflects the likelihood that young male drivers are far more likely to have an accident than young female drivers. This is of course coincidental and not a deliberate way of circumventing the EU regulations!
- Where you work
Many motorists drive to work five days a week, and their cars are parked near their place of work for about 40 hours per week. Although some of these motorists may live in quiet rural areas with extremely low accident rates they may well travel everyday to and from inner-city areas with high accident and crime records.
They may work in large factories or offices with secure parking, where their cars are likely to remain completely safe. Conversely there may be obliged to park wherever they can in sidestreets where the vehicles are vulnerable to being scraped by delivery drivers, vandalised by lowlifes or stolen by professional criminals.
These factors will be taken into consideration by most insurance companies when assessing a premium.
- where you park your car overnight
Ideally your car should be parked overnight in a locked garage. However, although a large proportion of houses do have garages the majority are used for storage space, mainly because they are simply too small to fit a modern car into! Realistically therefore a drive by the side of the house is the safest place that many motorists have available. Parking on the roadside is not a good idea owing to the risk of deliberate damage, theft or accidental scrapes and leaving it parked outside a local pull is just asking for trouble and a refused claim. Insurers are entitled to expect that you take reasonable care of your car and if you do not do so there may be consequences.
- the type of cover you are looking for
there was a time when motorists on a tight budget would opt for third party fire and theft or even third-party only cover if their cars were not particularly valuable. However, insurers quickly realised that people who bought this type of insurance often had older cars which were not in the very best condition, and they tended to spend less money on maintenance. This caused average premiums for this cheaper insurance to increase, and some insurers now refuse to offer anything other than comprehensive cover.
Statistically, the average third-party premium is actually more expensive than the average fully comprehensive one! This is mainly because people who take on these policies are often younger and less experienced drivers who simply cannot afford a comprehensive policy, but whatever the reason the average insurer prefers to issue comprehensive policies and their TP or TPFT offerings can represent poor value for money. If you are thinking of buying one of these lower levels of cover you should get a comprehensive quotation as well, you may be pleasantly surprised.
- how profitable you will be to them as a customer
One of the reasons why insurance companies are often willing to offer very low rates, at least for the first year, to new policyholders is because they can make such a lot of money out of not only upgrading the policy with profitable add-ons, such as legal expenses, guaranteed courtesy car, personal injury cover etc, but there may also be able to sell you other policies such as home or life insurance. These may, but then again may not, offer good value for money so it is best not to assume that a cheap price for car insurance will automatically mean that everything else will be a bargain as well.
How you could slash your premium
There are a number of legitimate ways in which many motorists can reduce their premiums quite substantially. These include:
- Be a promiscuous buyer
On average, motorists only stay with a car insurer for between four and five years. This means that in order to stay in business these insurers have to be continually finding new customers. Many of them do this by offering extremely attractive terms to motorists who switch to them from their previous insurer, but these terms usually only last for the first year and after that prices rise to more normal levels. Renewals are usually done automatically and most policyholders fail to shop around for a better deal at renewal time. Those that do very often find yet another attractive introductory offer and although it does take a little effort to fill in one or two price comparison site proposal forms it can often result in a cheaper quotation than the renewal premium.
So: don't automatically accept any renewal, but look around instead to see if there is a better offer available.
- Ask for a discount
If you are reasonably happy with your current insurer but feel that the premium they are asking for is too high, why not ring them up and tell them? Provided that you have been a profitable client they will want to keep your business and very often their call centre staff have some leeway in negotiating a reduction in premium, or they have someone they can refer to with that authority. They will probably, of course, tried to persuade you to take an extra cover, but that is their job and you do not have to do this. If you cannot negotiate a decent discount you still have the option to look elsewhere in any case.
- Look out for special offers
Many insurance companies have marketing budgets which they spend on special promotional offers such as price reductions. Unfortunately it is usually not possible to predict when these offers will be made available, or when they will expire. Most companies will allow you to pre-– order a policy up to a month before the insurance is due to come into effect, so it can sometimes be well worthwhile starting a search for your next one 30 days or so in advance. If you find a decent offer within that period you may wish to grab it whilst it is available, rather than wait until the last minute. There is, in any case, some evidence that a number of insurance companies offer slightly lower premiums to car owners whose renewal date is some time off; they recognise that these potential customers have plenty of time to shop around, whereas those who need cover immediately are very much in a 'take it or leave it' situation.
- buy only the cover you really need
Many insurance policies on price comparison sites automatically offer extras such as free courtesy car in the event of an accident or legal cover if you need to see a solicitor over a motoring matter. This is sometimes a deliberate policy insisted on by the owners of the price comparison site, in order to ensure that, as far as possible, their visitors can compare like with like. You may not need or want these extras, so why not get a quote anyway and then ring the insurance company and ask for a price reduction in exchange for them being removed from the policy. This could result in a lower premium for you, and save you wasting money on benefits that you may never need.
- Consider buying a new car
New cars tend to have more and better safety features than older ones, and so attract lower insurance premiums, particularly when the driver is young and fairly inexperienced. They are also usually a lot more economical to run. There are many very attractive leasing deals available these days and it may be very worthwhile sitting down with a pen and piece of paper and working out the total cost of running a car over a year. The savings involved in cheaper insurance, better fuel economy, freedom from possible repair costs and vehicle reliability may make splashing out on a new car a much more attractive proposition.
- Consider telematics
Telematics are claimed to reward good drivers, and penalised bad ones whereas traditional methods of calculating premiums simply place everyone into a particular category, regardless of whether the individual is a careful driver or not. The idea behind telematics is that you have a black box fitted to your car which tells the insurance company whenever you drive too fast, corner too hard, break to fiercely, or generally drive erratically. It will also report on where you have driven to, the mileage you have covered, and the times of day that you have been on the road. This involves a considerable loss of privacy but then so does the use of mobile phones, search engines and sites such as Facebook and Twitter. If a motorist drives carefully the insurer is made aware of this and may be able to offer reduced premiums as a result., Conversely, someone who drives badly can expect to receive warnings and may even have insurance cover withdrawn completely.
One particular advantage of the blackbox system is that parents can keep an eye on the way that their offspring drive, and can be made aware of any infringements of the law or good driving practice. This can only lead to safer roads in the future.
- Consider a dashcam
Dashcams first originated as a result of 'cash for crash' type scams in Russia and although the early ones were unreliable and expensive the modern ones can be very reasonably priced, small enough to hide behind a rear view mirror on a windscreen and capable of clearly recording many hours of motoring at a time. Most of them work on the loop principle, which means that they continually record by starting again at the beginning of a recording medium such as an SD card each time they fill up.
The main advantage of having one of these devices is not so much to get a lower insurance premiums now, but to avoid losing a no claims bonus and getting a higher premium in the future. If you are involved in an accident it is very often debatable just which party is to blame but if you have a filmed record of the incident you will have a much better chance of convincing your insurers, and possibly the police as well, that you were blameless. They are not particularly expensive and can be fitted quickly and easily by most practically minded people.
They are usually plugged into a car cigarette lighter socket which means that in the majority of cases they can come on automatically whenever the engine is switched on. They can therefore be fitted and then forgotten about, until they are really needed.
How insurers extract more money from you
Motor insurance is a cut throat business and the vast majority of drivers are looking for the very, very cheapest premiums. Many motorists use price comparison engines to get quotes, and most of them accept one of the three cheapest quotations. It is therefore vital for insurers to be able to offer the cheapest possible initial estimate, whilst still making a reasonable profit. They can do this in the following ways;
You find your perfect policy from a price comparison site, pay the premium and relax. A few moments later you get a phone call from someone at the insurance company who wishes to check up on a couple of items. This person offers you a range of extras such as legal cover in the event of a prosecution or an accident, a guaranteed courtesy car if your own is off the road, a protected no claims bonus, or perhaps cover for breakdowns or personal accidents. When you point out that these are too expensive, you cannot afford them or you simply don't want them you are offered an immediate substantial price reduction. What you will not be told is that when your automatic renewal is processed in a year's time these extras will be included, but this time at full price. The majority of motorists never even notice.
If you really want any of these add-ons then by all means buy them at the reduced price but make a note to check on them at policy renewal time. Bear in in mind that some insurance companies make more money out of add-ons than they do from selling you the policy in the first place. You may well decide you don't want to continue with them at the full rate.
You buy a policy at an amazingly low price. Shortly afterwards you receive a letter from the insurance company demanding that you provide them with proof of your no claims bonus, or a copy of your driving licence, within, say, 14 days. You cannot get the proof in time, or you forget all about it, and two weeks later the insurer cancels your insurance completely and charges you £80 in cancellation charges. Can they really do this?
Certain insurers have been doing this for some time. They will also accept a premium and then check the information you have given, either by asking you for proof or by checking information they have available in various databases. If they find any anomalies they will either (a) send you a demand for an increased premium or (b) cancel your policy and charge you a fee as above.
Is this legal? Yes. You are not only under an obligation to provide accurate information on the proposal form, but you are also supposed to inform the insurance company of any factors you are aware of which would influence their decision on whether or not to insure you, or for how much. If you fail to do either of these you could be held in breach of contract. Oh, and the huge cancellation fee was spelt out in the policy documents. You did read these before buying the policy, didn't you?
Insurers tell us that for our convenience they will automatically renew our motor insurance policies every year as they fall due. The charges are almost invariably made by direct debit or against our credit cards so many of us never even notice, even when premiums cost more than they did last year. It is just so easy to accept the renewal policy, rather than go to the trouble of searching for a better quotation.
The government are quite happy about this system. It means that the number of motorists who inadvertently drive without insurance have dropped substantially. Insurers are happy about it because after they have attracted new customers with lower than average premiums and special offers they can be confident that a substantial proportion of them will renew their policies at full price for several years to come.
Insurers are obliged to give you at least 14 days notice before they charge you for a policy renewal. You should check this carefully and if you are not happy with the new policy or the premium you need to contact the insurer as soon as possible, inform them that you do not intend to proceed and asked them to confirm in writing that they will not claim any more charges from you. It is then your own responsibility to make sure that you have alternative cover in place before your current policy expires.
Please do not buy a different policy before you are confident that you have cancelled the automatic renewal; thousands of motorists do this every year, and it causes a lot of confusion and misunderstandings.
To fully enjoy your cheap car insurance, you
should do the following before buying a policy:
- Check again that you have given 100% accurate information on the proposal form. This is the basis of your contract with the insurer, and they may be well within their rights to reduce or even completely refuse payouts in the event of an accident.
- Read the policy documents carefully. By law they must be easily accessible and written in plain English. Make sure that the policy covers everything that you need, that any excess payments are within your budget, and that you fully understand any additional charges you may be liable for.
- Search for online reviews about the insurance company you have chosen to deal with. Bear in mind that many people who post unfavourable reviews may be biased, but conversely there have been quite a number of cases in the past of companies planting false, glowing reviews about themselves on review sites. Often bad spelling or grammar on these reviews can ring alarm bells.
- Finally, always ALWAYS read the policy documents before you buy. A few minutes reading may save a lot of problems and expense later.