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How to Save on Car Insurance
You do not have to pay too much for car insurance just because you are required to carry insurance to drive your vehicle. In fact, there are a number of ways to save money on your car insurance if you are willing to take some time to research all of your options. You do not have to be an insurance agent or an expert in the industry just to know some of the “secret” ways to save money. Here are some valuable tips on how to save money without compromising your level of protection.
Pay Your Premiums in Full
If you are trying to save money, the idea of paying your premiums in full might sound like a silly way to try and save money. You have to think about the long-term and how much you will save by doing this. More than 26 million people in Britain are paying the car insurance premiums monthly. Because auto insurance companies charge as much as 24 percent in interest, these consumers are handing over an extra £625 million in premiums. If you do not have the cash, you may want to pay your premiums in full with a credit card and pay that off. It will certainly save you money when you consider the average interest charges are 24 percent throughout the year.
Have a Security Device Installed
If you do not have a security device installed on your vehicle, now might be the time to do so. Make sure the device installed is approved by Thatcham so that it will meet the requirements for a discount. While the discounts will vary, you can save anywhere from 5 to 20 percent off of coverage premiums when you have a passive or active alarm system.
How Much Do You Really Drive?
You might not know that the number of kilometers you clock up each year will play a factor in how much you pay for your car insurance. Insurance is a game of risk and you pose more risk the more you drive. If you give a high estimate on how much you drive, you are likely to pay more for your insurance when you do not need to. Calculate how much you drive to work, how much you drive for pleasure, and give an accurate estimate so you are not being overcharged.
Adding Another Driver
It might sound unusual, butting adding another more experienced driver to your insurance policy can help you lower your premiums. Insurance companies consider young and inexperienced drivers to be more risky. If you live with someone who has more driving experience and clean driving record, you can lower your premiums substantially. Considering the fact that the average premium in the UK for drivers under the age of £1,256, you are sure to want to lower your premiums and this is a smart way to do so.
Consider Your No Claims Discount
Drivers who haven’t claimed anything on their insurance for at least a year are often rewarded in the form of a no-claims discount. We’ve got a pretty comprehensive no claims guide on this page of our site. In summary – drive safely and you’ll see a significant decrease in how much you pay, especially if you’re a young driver.
The average car insurance premium in the UK is £497. If you are paying more than this and you have a clean driving record, it is time to find ways to save money. Consider these tips, do your homework, and shop around so that you can save money without compromising your protection.
Young Driver Insurance
Insuring young or new drivers is often stressful, but it needn’t be. Many people think that their child, or that they themselves will be far too expensive to insure, or even “uninsurable” just because they’ve only recently passed their test. Well, we’ll let you into a little secret – everyone is a new driver and has to take out their first insurance at some point, and yes that includes even the most unruly teenagers!
Named Driver, or Own Policy for New Drivers?
This is the biggest thing that many people get wrong. The answer to this question is that it depends. If you insure a young or new driver as a named driver on someone else’s policy, then it means that the young or new driver is not the main user of the vehicle. You are potentially breaking the terms and conditions of your insurance if this isn’t the case! What’s the point of paying for invalid insurance in any case?
In certain cases, it is appropriate or better to insure a first-time driver as a named driver. If they really are not the main user of the vehicle, you could save yourself a lot of money. However, many insurance companies will still refuse to let you do this if the driver in question is the registered owner of the car since this makes it look like you’re trying to pay less to insure a young/new driver who is – in reality – the main driver of the car.
Don’t Forget Their No-Claims Discount
Whilst a new driver is very unlikely to have any years of no claims discount built up, obviously, this is still an important factor in deciding whether or not they should be the policy-holder. If a young person is set up as a named driver, with many insurers they will not build up a no claims discount. This means that when they come to own their own car, of which they are the primary user, then they will have very expensive premiums due to a lack of no claims discount even if they have been driving accident-free. Double-check with the company you choose if this situation could impact you. Students may be eligible for their own discounts too.
Pick the Car Model with Care
Whilst experienced drivers often find relatively little difference between different models of car, the effect on inexperienced drivers’ premiums (and it’s probably not a great idea anyway, to be honest) of driving a powerful car can be huge – you could find the premium is thousands of pounds more expensive with a sportier model.
Helpfully, in the UK there is the insurance group model – every car gets put in an insurance group between 1 – 20, with 20 being generally the most expensive group to insure and those cars in group 1 being significantly cheaper on average. However, the insurance category of the car is by no means a reliable estimate. The only real way to tell what the precise costs will be is to get a quote. However, that’s hardly a problem – click ‘Get New Quote’ above and we can provide a provisional quote for their insurance so you’ll know precisely what they’d pay with over 100 insurers.
Modifications – Are They Cool?
The answer from a younger person or an enthusiast may be a resounding “yes”. Watch out for their effect on their insurance. Anecdotally, we’ve heard of people unable to insure themselves to drive cars with – for example – lowered suspension because they were under 25 years old. Make sure you contact an insurance company (and yes, this will involve having to make a special case to find out where they stand) to see how this could impact the cost for you. We’d strongly recommend that new drivers do not modify their cars if they wish to save money!
Student Car Insurance FAQ
It is probably one of the biggest ironies that students must pay higher car insurance premiums during a time in their life when they can least afford expensive bills. If you are a student and you are in the process of getting your own student car insurance, you probably have a lot of questions to ask and a lot of worry in your mind. Between your tuition, your books, and your housing expenses, the last thing you can afford is an insurance policy that will break the bank. Browse through some of the commonly asked questions about student car insurance in the UK and get the answers you will need to feel peace of mind before you start requesting quotes.
Why is Car Insurance Higher for Students?
Insurance companies throughout the UK will use a number of different factors to calculate how much each policyholder will pay for their auto insurance coverage. One of the main reasons why students are charged higher premiums is because they are considered a higher risk. They have less experience on the road and when driving is concerned, the more experience you have the better. This is why a student fresh out of high school will pay higher premiums than a student attending grad school.
What is a No Claims Bonus?
Your age is not the only factor that comes into play when your premiums are concerned. Another factor that will affect your premiums is the no claims bonus. If you are new to insurance, you will quickly learn that having a no claims bonus is a good thing for your wallet. As you get more experience on the road, you will accrue a no claims bonus each calendar year you do not file a claim on your insurance policy. While some insurers do allow you to protect your bonus by paying extra, the best way to save money off of your student car insurance is to be claims-free through your entire student career.
What Discounts Might You Qualify For?
There are a number of different discounts available to students who are under the age of 25 to help them keep their premiums low and affordable. It is important for students to know how they can save money before they purchase their car insurance for the first time. Here are some of the most popular discounts offered by the best insurers in the business, these are alongside our other tips for how to reduce car insurance costs:
– Good Student Discount: Most insurance companies will offer full-time students with a GPA of 3.0 or higher a Good Student Discount. Simply submit proof of your grades and your premiums payments will go down accordingly.
– Driver’s Education: If you are a new driver, you might qualify for this discount if you complete an approved education course on driving instruction. Make sure you find out which courses are approved before enrolling in training.
– Experience Credits: You might want to add an experienced driver, preferably one of your parents, to your policy to reduce your premiums. You can even stay on their insurance policy if you are still considered a dependent.
When you are building a car insurance plan, you need to make sure you protect yourself and others on the road. Quote several different plans, compare different cover options, and feel protected when you are on the road.
Multiple Car Discounts FAQ
There are multiple ways to save money on your car insurance premiums. If you are like most of the drivers in the UK, you are constantly looking for new discounts and inexpensive policy options that will keep you protected while you are on the road. When you own more than one vehicle, the multiple car discount is a discount that you cannot live without. If you are not familiar with this discount, read on and get answers to all of the frequently asked questions. Handy tip: another important potential saving is by building up your no claims bonus.
What is the Multiple Car Insurance Discount?
Car insurance companies encourage drivers throughout the UK to insure all of their vehicles with the same company by offering a multiple car discount. By simply insuring two vehicles with the same company, the policyholder will qualify for an automatic discount.
Which Cars Will Receive the Discount?
You might be wondering just which cars will receive the multi-car discount when you decide to insure more than one vehicle with the same company. Your first car will receive the standard premium rate. The second vehicle, as well as all of the subsequent vehicles added to the same policy, will receive the multi-car discount. There are cases where vehicles that are listed on different policies may also qualify for the discount if you meet the requirements set by the insurer.
How Much Can You Expect to Save With a Multiple Car Discount?
The amount of money you can save off of your insurance depends on how the discount is applied. If you choose a company that offers discounts off of the second and subsequent vehicles, you can save 15 percent off of your premiums for each vehicle. If you choose a company that offers a single policy with the discount applied to each vehicle, the percentages may be lower but the savings will still add up.
Will the Discount Change Over Time?
Not every company offers the same discount each and every year. It is up to you to research the percentage of the discount offered each term on your policy. Some insurers will call the first year discount an exclusive discount. This means that the discount will last for the first year and will later drop to a smaller percentage off. Other policies, where all cars are on the same policy, will offer the same discount for the life of the policy.
What Vehicles Are Eligible for the Multi-Car Discount?
Your vehicles do not all have to be registered to the same owner to receive the multi-car discount. If the vehicle’s are garaged at the same address or you are a named driver on another policy with the same company, you will qualify for the multi-car discount. This means that having roommates, living with a partner, or living with family can save you money.
Owning more than one car can actually save you money. If you have been insuring your vehicles with different companies, you are missing out on discounts that could save you a pretty chunk of money. Use the discounts available to you to your advantage, do your homework, and keep some money in your pocket.
No Claims Discount Frequently Asked Questions
Drivers throughout the UK are looking for a way to save money on their car insurance premiums. From the multi-car discount to the multi-line discount, there are a number of different ways drivers can reduce their premiums without reducing their coverage limits. The No-Claims bonus offered by each insurer in the UK is a bonus that every driver should strive to earn. This discount can save drivers anywhere between 30 percent to 60 percent off of their premiums. If you are not familiar with the No-Claims bonus, read on and find out everything you need to know to take advantage of the savings.
What is the No Claims Bonus?
The No Claims Bonus, often called the NCB by insurance agents, is a discount that rewards policyholders who have not filed a claim at the time of their renewal. In some cases, individuals will still qualify for all or some of their discount even when a claim is filed.
How Much Will You Save with a No Claims Bonus?
The savings will accrue over time based on how long you have gone without filing an insurance claim. You will receive a 30 percent discount when you have been claim free for 1 year. Once you hit your second year renewal, your discount will go up to 40 percent. The discount rises to 50 percent for 3 years and 60 percent for drivers who have been claim free for 4 years. Some insurers will give a 65 percent discount to drivers who have been claims free for 5 years or more.
What if you Want to Switch Insurers?
You are not obligated to stay with your current insurer if you are receiving the No-Claims Bonus. Your bonus will transfer to the new policy provided that you have not filed any claims during your current period. In some cases, the new insurer will ask for a letter from your prior company to prove you did not file any claims. If you do file a claim, you may lose some or all of your bonus.
What is the Grace Period?
If you went a period of time with no car, you might be wondering how long your NCB is transferable before it expires. Generally, insurers will let you transfer your NCB from an expired policy to a new policy for up to 2 years. This is a grace period and the period of time could be longer or shorter with specific insurance companies. You need to make sure the insurer you choose allows breaks in cover if you want to receive your discount when you purchase a new policy without existing cover.
What is a Protected Bonus?
Some insurance companies offer policyholders the option to protect their bonus by paying higher premiums. You will be given a number of at-fault claims you cannot surpass to keep your NCB. Keep in mind that you will not lose your discount, but your premiums can still be surcharged for the accident.
As you can see, there is a lot to know about the No-Claims Bonus – it’s just one part of our section on how to reduce you car insurance premiums. You need to make sure you get all of the credit you qualify for whenever you are receiving a quote. Request a letter from each of your prior insurers, avoid filing claims, and save money on your car insurance.