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Your Money > Insurance Articles > 18 ways to...
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By Sarah Modlock
Earlier this year, Cristiano Ronaldo walked away from his £200,000 Ferrari 599 GTB write-off without a scratch. However, the 23-year-old's insurance premium next year sure will be huge. That's if he can get cover at all. Anyway, I am sure you are not too upset over Ronaldo's car and insurance bills. But before the rest of us get too smug, it looks like increasing car insurance costs will be a problem for lots of us this year, with insurers claiming your premium could rise by as much as 20% this year. On average, that's another 80 pounds. The good news is there are ways to make sure your car insurance costs don't drive you around the bend: 1. Shop around . Yes, it's obvious but it's hard to get motivated over something as dull as insurance. Put a note in your diary about five days before your cover needs renewing and spend just half an hour getting quotes online. I usually find most are much higher than my renewal quote but can often find one which is lower. I then ask my existing insurer to match it, which they have been happy to do for the last five years or so. It makes the cover that much cheaper every year. 2. Buy online . You will often find the best discounts online as the company is saving money on overheads. 3. Use your no-claims discount if you have one. This is one of the most reliable way of reducing the cost of car insurance so aim to build yours. Some companies will win your business by giving your an introductory no-claims bonus or matching your existing one. 4. Increase your voluntary excess . This the the initial amount that you have to pay in the event of a claim. Most policies have a compulsory excess which is fixed and a voluntary excess which you can vary. Raising the voluntary excess usually ensures a lower premium as you are reducing the risk to the insurer. Just make sure you are willing and able to find the cash if the worst happens. 5. Reduce your annual mileage . Insurers look closely at this - obviously the more time you spend on the road the more chance there is of something happening. But different insurers have different limits starting from around 3,000 miles a year to an upper limit of around 20,000+. You may have to categorise your typical use pattern too - for instance whether you use the car for regular commuting, work purposes or just leisure. Generally driving less than the average 12,000 miles a year will secure you some discount on your insurance cover. 6. Choose your car carefully . If insurance costs are an issue then make sure the car you plan to buy fits into a low insurance group - phone for quotes if you are not sure. 7. Avoid car modifications . Anything that makes the car different from the way it was manufactured is potentially a risk as far as insurance goes. If modifications were made by you or the car's previous owner as opposed to the manufacturer then you could be facing insurance problems. 8. The right kind of security . Anything which prevents a car from being stolen is good news but find out what your insurer expects from security devices. Alarms and immobilisers all help but many companies will only take notice of Thatcham-approved alarms which are professionally fitted, so cutting corners may not pay off. 9. Park carefully and use your garage if you have one. This reduces the risk of theft or damage. Insurers have become more strict though and many will only discount a premium if your car is in a locked garage every night but will not discount for parking on driveways. 10. Name drivers carefully as they may add considerably to your costs. Avoid adding those who may only use the car once in a while. If you find that an unnamed driver needs to drive the vehicle then most companies will allow you to temporarily add them for a small cost. By only naming drivers on the policy that will definitely driver the car, you can lower the final cost. Insurance that covers any driver to use the vehicle can be expensive. The only time when this can work out cheaper is when a named driver policy is required for a younger driver, then having an all-driver policy could work out the better option. 11. Use your gender . Believe it or not, female drivers are statistically safer and so usually have lower insurance costs. If you have a family car used by both partners then putting the wife's name as main driver could work out cheaper. 12. Specialist is not always best value . There are now several insurers aimed at women or older drivers but don't assume they will give you the best deal. Shop around for quotes from non-specialists too. Every year I get quotes from a couple of women-only insurers just to see if they are competitive. They are often more than double my non-specialist premium, despite me being over 25 and with 12 years no claims. 13. Drive carefully . Yes, I know it's another obvious one but insurers reward those with clean licences. It's not just claims that can push up your premiums - speeding fines and points can cost you more, too. 14. Be realistic about the value of your car even if it is your pride and joy. Most people give an unrealistically high value for their car, especially if they bought it brand new. This is because they believe this is the amount they will get back if they write it off. The reality is that the company will only pay out what the car is worth at the time of the claim and not what you stated for the quote. In fact, by giving a high and unrealistic value, you can increase your car insurance premium as this is often a factor affecting your final price. 15. Pay your premium in one go if you can. This avoids interest on monthly payments. The difference can be as much as 20%. 16. Consider bulk buying . If you have home and/or contents insurance or already insure another car with one firm, find out if they give discounts for existing customers. But make sure you shop around to compare their offer. 17. Take an advanced driving test which will improve your skills as a driver and lower your insurance premium in many cases. Newly-qualified drivers can complete a Pass Plus course designed by the Driving Standards Agency to by completed within 12 months of passing your test, to enhance driving skills and road awareness. Young drivers could save in the region of 30% on their first policy just by completing this course but it's worth talking to insurers first if you are counting on the discount. You will also need to volunteer the information as most insurers will not ask about Pass Plus. 18. Be truthful . You may think that insurance fraud is committed by bonkers people who push their Roller off a cliff then claim it was stolen. But if you lie on an insurance application form then you are entering the same dangerous territory. Whether it's your age, address, mileage, where the car is parked, how much it is used and who by, you are setting yourself up to invalidate your cover. Why are our premiums rising? AA Insurance estimates premiums will rise by between 10% and 11% during 2009. But some insurers claim prices could rise by as much as 20%. The AA research found that the typical cost of the most competitive comprehensive premiums had risen by almost 9% during the year to the end of September to hit an average of £486. Figures are not yet available for the final three months of 2008, but it is thought premiums jumped by around 3% during this period. "Some commentators suggest a rise of 20% over the next year and, certainly, a rise of that magnitude will be necessary if the insurance industry is to achieve an underwriting profit," says Ian Crowder of AA Insurance. What about Ronaldo? "We cannot find anybody who would touch him with a bargepole," said a spokesman for the AA. "The minimum age to get insured for that car would be 25 and then the best price we could find would be £44,000 but if the person had had an accident that would go up to around £100,000." It's not the just the cost of the car that insurers worry about, if there are several Premiership footballers in one vehicle which crashes then the additional claims could be enormous. "I’m sure his top range Ferrari 599 was insured to the hilt, but this accident shows that you can’t take any chances," says James Harrison, chief executive of Insurancewide.com, the insurance comparison website. Dramas like this should prompt young drivers to look again at their car insurance and be absolutely sure they’re protected in the right way. "You can save on your car insurance premium in many ways although some factors are beyond your control, such as the influence of your age, occupation and postcode," Harrison adds. "Footballers will find it tough to get a good deal but there are other things you can do to help yourself in the long run. If you have a clean claims record for example, you can protect your no claims bonus by paying a little extra on your premium. Ultimately you’ll still make a saving." Ronaldo’s car insurance will have been well over £15,000 a year. But for a Fiesta ST, a more affordable alternative, a 22 year old footballer with five years no claims would be looking to pay around £1,300 per year. Yet after an accident in the following year with NO no claims this would rise to around £2,400 - over £1,000 more. So, the most obvious way to protect your no claims bonus is not to make any claims. You can save up to 70% of your next insurance premium by having a clean record, so think twice before claiming for very small incidents. But for a small amount added onto your car insurance policy you can actually protect your no claims bonus. In this case, even if you make a claim, your no claims will stay largely intact. And if you’re lucky enough to be driving a Ferrari, insure it to the hilt. Useful links: |
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