Between 2002 and 2010, fuelled by burgeoning personal injury claims and the accompanying legal fees, motor premiums rose by 72 per cent. That has slowed but Simon Douglas, the director of AA Insurance, still warns: “Premiums are likely to continue rising in 2012, though at a more modest rate than has been the case recently.”
But it’s not all doom and gloom. There is plenty drivers can do to help themselves reduce the cost of their annual cover. For starters, when the renewal notice drops on the door mat, don’t just assume that because your current insurer gave the best deal last year, it’ll represent the best value for money over the subsequent 12 months. There are no rewards for loyalty in the world of insurance.
Recommendations from others don’t necessarily work either. A friend of mine swears that he’s quids in by insuring his family’s two cars under the same multi-car policy. I’ve never been able to find multi-car cover that’s cheaper than two separate policies with different insurers. Malcolm Tarling from the Association of British Insurers explains: “It all depends on your profile. What works for one person’s profile and circumstances won’t work for another.”
It’s the same story with professions. Obviously you can’t lie about your job when asked. That’s fraud and could mean you’re not covered at all. But think about how you describe what you do from the insurer’s point of view. Say you’re a journalist and you’ll be stereotyped as high-risk paparazzi, possibly giving wealthy, litigious people lifts and leaving your car in the early hours to stalk celebs through inner-city badlands. If, on the other hand, you say you’re a writer, the image – and the accompanying cost of cover – relates more to a genteel wildlife lover living in a thatched cottage with roses around the door.
If the description doesn’t work, the ABI advises shopping around again. Tarling says: “For an unusual occupation, it pays to find an insurer who asks the right questions and understands your profession. The higher the premium, the less an insurer wants to cover you because you represent a greater risk.”
Think also about who’s going to be driving the car. The more people listed on the policy document, the more expensive a premium will be. So if you’ve got an offspring or two who’ll only be driving the car during the holidays while home from college, temporary rather than full-time cover for them might well be more financially expedient. Strangely, though, adding a husband or wife to a policy will cut costs. Insurers apparently think drivers will take more care when their spouse is under the same cover, and it spreads the risk.
Then there’s where you leave your car. As vehicles become increasingly difficult to steal, the nature of car crime is changing. Tarling says: “As cars evolve, so do the criminals. Theft from a vehicle is still a problem and my neighbour recently had the catalytic converter stolen from his car when it was parked on his drive.” As a consequence, keeping a car under cover will cut premiums by five to 10 per cent. With research finding the average garage contains £3,429 worth of clutter, the more expensive your car, the more it makes sense to clear a space.
How you pay can have an impact, too. Some insurers charge as much as 24 per cent APR for paying in monthly instalments rather than in a lump sum. Gambling on whether you’ll actually make a claim can cut premium costs as well. If you elect to bump up your excess – the amount you pay on a claim before the insurance policy kicks in – your premium will tumble. The thinking is that no one likes to spend their own money; they’re less fussed when it belongs to a faceless insurance institution. So being prepared to cover the first few hundred pounds of any claim makes you less likely to involve the insurer and means you’ll try harder not to have a prang.
Limiting mileage can also be an effective way to reduce premiums. Again, it’s not worth lying to an insurer about, as it’s relatively easy to find verify. But limit your annual miles to 12,000 and you could earn a 10 per cent discount. Limit it to 5,000, perfect for the family’s second car that does little between short hops to school and the supermarket, and you’ll get even more money off.
Of course, by far the easiest way to have an impact on your cover is the car that you run and how you drive it. The more expensive the car, the faster it’s likely to be, the more eye-catching for thieves and vandals and the more expensive to repair, hence the more costly cover will be. Equally, there’s no substitute for careful driving. A car owner with speeding convictions and a lengthy list of previous claims will probably, not unreasonably, be viewed as a higher risk than one without.
Sadly for some beleaguered drivers, no amount of garaging, bumping up excesses and shopping about will change that.
10 tips to cut your cover
• Shop around - don’t automatically renew your cover; you’ll possibly get it cheaper elsewhere.
• Lock it away garaging - your car makes it less liable to damage.
• Check out black-box telematics policies - how and when you drive can mean cheaper policies.
• Pay just once - monthly payments can be more expensive.
• Increase your excess - larger excesses, lower premiums.
• Limit numbers - fewer named drivers on a policy reduces premiums.
• Choose a low-premium car - smaller, less powerful cars tend to mean cheaper cover.
• Don’t modify - insurers will penalise power boosts and body modifications.
• Take some driver training - some insurers reduce cover.
• Drive carefully - makes perfect sense…
