The good news is that over the last three years car insurance premiums have on average been getting cheaper. However the evidence is that trend could reverse, and they might now be on the rise.
Although costs might be rising, there are considerable differences between alternative insurers, so it still pays to shop around. There is still plenty of opportunity to save money, especially if you follow these guidelines.
Selecting the right insurance for you
There are three levels of car insurance cover. The cheapest of these is third party cover which insures you against claims made other people might make against you after an accident. It cover’s damage to their property and any injury they might sustain. It also covers your passengers, but not you or your vehicle.
The next level is third party fire and theft. It includes the above, but covers your vehicle in the case of theft, and if it is burned by the thieves to destroy evidence.
The top level is the most expensive. This is comprehensive cover and includes all of the above plus damage to your vehicle and property, along with cover for personal injury.
You should decide which of these is best for you in terms of benefits and costs. Assess the risks and benefits carefully and keep your budget in mind.
How your premium is set
The cost of your premium depends on how risky the insurance company considers you to be, in other words the chance of you having an accident. This is assessed using various criteria which include:
- Your age – young drivers have proportionately more accidents than older drivers
- Your experience – if you have recently passed your test then you will need to pay more than if you are an experienced driver
- Your claims history – each year in which you don’t make a claim reduces your premium. This is called the no-claims discount and it can be very valuable potentially reducing your premium by 60% or more.
- Points on your licence – a fixed penalty charge and points on your licence can have an adverse affect on your insurance premium. The more points you have the more you will need to pay. If you have ever been banned for driving, then that will cost you even more
- The kind of car you drive – your insurance group is determined by the kind of car you drive. Cars are grouped by the Thatcham Group Rating Panel into one of fifty categories based on various criteria. Some of these are car’s price; the top speed and 0-60 mph acceleration time; and the car’s security rating.
Reducing the cost of your cover
Clearly the more claim free and penalty free years that you can clock up, the cheaper the insurance will be. You will need to pay considerably more if you drive a high performance sports car that if you drive a sedate family hatch back.
While you can’t do anything about your age, there are schemes that allow you to reduce your premium if you have a good driving style. You might also benefit from a discount if you taking a Pass Plus training course.
You can also reduce your premium by limiting your yearly mileage and agree a maximum with your insurer. Remember that if you exceed the maximum, it is important to inform your insurer.
While most insurance policies have a minimum excess, which is the amount that you will have to pay towards any claim, you can reduce the cost further by increasing the excess. This is called a voluntary excess. Just make sure that you can afford it if you need to make a claim.
