SQUEEZE YOUR PREMIUMS
How to reduce your insurance bills
Cutting your motor insurance costs needn’t be hard work. We team up with industry experts to provide a number of tips that will slash your annual bills
MOTOR insurance continues to be one of the costliest outlays for drivers, with annual premiums reaching record high levels. According to the Association of British Insurers (ABI), a year’s comprehensive policy will set owners back an average of £462. But things are much worse for young drivers – they can now end up spending thousands on cover.
What’s even less helpful is that insurance premiums are a law unto themselves – finding the lowest often involves trial and error, because insurers use different algorithms to calculate risk and therefore prices. To help you get the most from your provider, we teamed up with the ABI and the British Insurance Brokers’ Association (BIBA) to list these top tips and best practices.
Comparison websites
The best place to start is a comparison site. These let you check policies from over 100 insurers in seconds.
And there are savings to be made. Research in the past has found young drivers can cut their bills by around £350 by comparing premiums, while comparethemarket.com revealed the gap between the average and cheapest policy has reached £123 as costs increase.
But not all insurers are listed on comparison sites, so it’s worth phoning up a broker who will contact insurers outside the comparison site network to see if they can offer an even better price.
Telematics policy
Young drivers pay £2,013 on average for a year’s car insurance, but they can reduce this price significantly by taking out a telematics-based policy that sees a box fitted into the car to measure and analyse driving habits.
Sarah Cordey, senior campaign officer at ABI, pointed out the advantages of the technology, explaining: “If you are able to demonstrate over the required number of miles that you are safer than the average driver, insurers will recognise this with discounts on your premium.”
Although discounts will vary between drivers and their abilities, Graeme Trudgill, executive director at BIBA, estimates a telematics policy can save young drivers up to 25 per cent on their premium. This is because such policies are not just chosen by careful drivers, but the feedback from the policy itself can help improve driving habits. Research by telematics provider Wunelli found motorists speed less and drive more carefully when monitored by such a device.
Adding drivers to policy
“The drivers included on the policy make a difference,” advises Trudgill. “It is often cheaper to insure a driver and their spouse.” Insurance premiums are based on perceived risk; adding someone with a good driving history and noclaims bonuses to your policy will reduce that risk.
“Additional driver qualifications for either driver, such as Pass Plus for new drivers or Advanced Driving Test passes for older drivers on the same policy, will help cut down premiums,” Trudgill adds.
Auto Express compared the quotes for a 2016 Ford Focus 1.5 TDCI Zetec and found an added driver with no convictions or claims in the past five years brought the price down from £457.67 to £355.74 with the same insurer.
Avoid modifications
“Modifying your car is also likely to make it more expensive to cover, so best to leave it as the manufacturer intended if you want to keep your premium down,” says Cordey.
Upgrades, such as bodykits or lowered suspension, may increase the likelihood of an accident or theft. “The exception is security measures,” Cordey adds. “Make sure your vehicle has an alarm or immobiliser and, if it doesn’t, your insurer can tell you which devices it approves.”
The same provider raised its quote from £457.67 on our 2016 Ford Focus to £523.59 after we said it came with a modified bodykit. But safety measures like aftermarket parking sensors slashed the premium to £414.99.
Cashback sites
If you’ve settled on a policy, check if the insurer offers any cashback when you buy. Companies such as Aviva can give you £57.50 in return for taking out cover with them. But be sure to read the terms and conditions, because most insurers will not let you use the cashback service in addition to other offers, such as free breakdown cover.
Another thing to remember is that many do not offer cashback to existing customers – Aviva, for example, restricted this deal to new buyers only.
“a telematics policy can save young drivers up to 25 per cent on their insurance premium”
Beware paying monthly
If you can pay for your insurance in a lump sum, it’s advisable to do so. Separating it into monthly instalments usually means you end up with a higher total than if you settle the premium in one go. Cordey explained that motorists who opt to pay in monthly instalments effectively take out a loan for the cost of the cover and pay it back over 12 months, which means they incur interest.
Third party isn’t cheapest
Don’t just look for third party cover. Some insurers classify drivers who opt for comprehensive cover as lower risk than those looking for the minimum required. A comprehensive policy on our 2016 Focus cost £457.67, while the cheapest third party quote we got for the same car was £1,027.41.
Avoid auto-renew
Automatically renewing your policy is an easy way to lose out. If you haven’t claimed during the year, there is no reason why you should pay the same or more. Shop around for the best policy and ask your insurer to price match. If it can’t, move on elsewhere for a better deal.
“an added driver with no claims cut our price for focus by about £100”