One of the biggest expenses you’re likely to face is your annual insurance just to drive your car. In Britain, there are over one million uninsured drivers on our roads, which in turn increases premiums for those who do insure their vehicles.
There are also many extra charges that you may face as a car owner, including MOT charges, road tax and fuel allowance for things like your daily commute. There are also the hidden costs to consider if your vehicle unpredictably breaks down.
For many people, a yearly payment is just too big of a lump sum, so they must break it down into monthly payments. But, are you aware of all the ways you can potentially reduce your insurance outlay? Here, we look at the biggest contributing factors.
Have a solid credit score
Having no claims bonuses are obviously a great help when it comes to lowering the cost of your insurance. But, were you aware that your overall credit score can also have a huge impact on your car insurance? That’s because insurers take in the impression that if you’re responsible in your personal life and with other financial situations, you are less likely to file a claim.
Some insurers will lower the annual cost of your cover if you fit a small box in your car that can help insurers to track your driving methods. This will include aspects such as braking and speed via GPS, as well as taking into account the time of day you drive. This method, also known as telematics insurance, is effective for young and inexperienced drivers, those who have low annual mileage, or older drivers who want to prove that they’re safe behind the wheel.
It goes without saying that it’s important to consider your options. Like any service, you should do your research. Many insurance companies will attempt to ‘better’ the offer on the table by a different provider, so be sure to know what you want and don’t just settle with the first, or your current provider. However, remember that cheaper isn’t always better. Check what is included before agreeing to a cheaper cover.
Reduce coverage on older cars
While you may be tempted to always choose comprehensive cover for your vehicle, be aware that choosing this coverage for particularly old vehicles may not be cost-effective. For example, if you buy a used car and your insurance values the vehicle at £1,000 then you’re involved in a crash, there’s a possibility that your insurer will just write your vehicle off. Therefore, if your insurance is costing approximately £500 for comprehensive cover, it may not make financial sense to purchase it. Comprehensive cover is the most cost-effective for those with new cars, or cars that have held their value.
Add other named drivers
It may seem strange that more drivers being named on your insurance will bring down your costs, but that’s the case for many quotes. This is because it helps the insurer tie more people into their service. This works well for younger drivers who would usually be charged an extortionate amount. Being named on their parents’ insurance can help reduce their outlay significantly.
Increase your excess
Your premiums are based on how much your insurer is likely to pay out if you claim. By choosing to pay a higher voluntary excess, you will lower the cost of what the insurer will have to pay towards the claim. Therefore, this can lower your overall insurance. However, you must ensure that you choose an excess you will be able to afford and make sure the excess doesn’t exceed the overall value of your vehicle.
While it’s a necessity to be insured when on the road, you don’t have to pay over the odds to do so. Following the above guidelines can help you reduce your overall payments — leaving you with extra money to spend elsewhere.