21st April 2016
According to experts at accountancy giant Ernst and Young, car insurance premiums are expected to increase 8 percent in 2016. This is already on top of a 7 percent increase in coverage from last year. The price jump could leave drivers with an extra £40 cost or more. Here are a few tips to combat the price increase.
Oddly enough, most car insurers increase your insurance when it’s time to renew your policy, despite no claims or an unchanged driving record. Drivers have even found that the exact same policy is almost 50 percent cheaper for new customers than a renewal policy. Therefore, it’s best to switch insurers every time you are up for renewal. Also, never sign up for automatic renewal. Diarise your expiry date and check comparison sites for a new policy Insurers are counting on policyholders to opt for this costly convenience.
This is another tip that doesn’t make much sense at first but adding a second, even third driver can significantly drop the price, especially for novice drivers. Car insurers calculate cost based on risk. If you are a high-risk driver, your insurance will be more expensive. However, adding a low-risk driver with a clean driving record can counteract your overall risk and cost. So if you are a new driver it is wise to add one parent or both to your policy. But remember, you must add a driver who would reasonably drive your car and you cannot name someone as a main driver if they are not. Doing so would be fraud and you can face criminal conviction and your insurance will be invalid if you are caught.
Paying monthly for car insurance can be very costly. It is similar to paying off a high interest loan. Some providers like Debenhams and Endsleigh charge as much as 44 percent APR! So save up a few months prior (add car insurance into your budget) so it can be paid interest free.
If prices continue to rise, you can act now instead of later. You can change your provider mid-policy. Most providers allow you to cancel your existing policy and get a refund (as long as you haven’t claimed). However, there will usually be a cancellation fee. Start getting some quotes now and if you find a cheaper plan that also offsets your cancellation fee, switch. If your plan is expiring in the next two months, you should also start getting quotes. Insurers like Aviva, LV, and Nationwide give quotes that are valid for 60 days.
The higher your excess, the lower your premium will be. An excess of £1,000 can significantly reduce your premium. But be cautious when taking this option, as you will need to cover the cost if you make a claim. Your emergency fund should act as your insurance to cover the cost of a claim.