Car Insurance

With the cost of car insurance set to rise due to a change in rules regarding compensation payouts, we take a look at how to avoid overpaying for your policy.

What should I consider when buying car insurance?

The ABI (Association of British Insurers) suggests that you consider the following factors when buying car insurance:

  • what type of policy best suits you?
  • do you need to include any named drivers on your policy?
  • will you need extra cover if you take your vehicle abroad?
  • will your policy cover you if you rent a car or other vehicle?

Top Tip from annabel consultant, Jen Russell-Smith:

Not all comparison sites include the main insurers. For example, Direct Line doesn't feature on any, so always check them separately.

Should I switch provider each year or negotiate with my existing one?

As with most types of insurance, it isn’t always necessary to change provider. However, you should definitely check on a comparison website to see whether you could be paying less elsewhere and use this information to negotiate with your current provider who will, more often than not, match the lowest price you found.

Money Saving Expert recommends renewing your insurance three weeks before the renewal date for optimum value but also points out that you can renew your policy at any time.

If you cancel an existing policy mid-year, you will usually receive a refund for the remainder of the policy (providing you haven’t made a claim) and, even if you have to pay a cancellation fee, it can be a very prudent exercise.

See Money Saving Expert’s top comparison sites for a list of their current rankings of recommended comparison sites.

Top Tip from annabel consultant, Sarah Goldschmied :

I’ve secured a significant reduction in car insurance for one client, just by calling as soon as renewal arrived and asked what they could do. Magically, it was £350 cheaper than the renewal quote and £100 cheaper than last year’s premium for exactly the same cover.

How can I insure my child without paying the earth?

Young drivers can be eye-wateringly expensive to insure, but there are some steps you can take to reduce the cost:

  • Try adding a responsible driver – mum, dad or Auntie Glad – to the policy. Bizarre as it seems, it can reduce the cost by up to £1000.
  • Don’t assume third-party insurance will be the cheapest option. Sometimes fully-comprehensive is seen as a sign that the driver is less of a risk.
  • Improve their driving skills. Some insurers will offer a reduction on completion of the government’s Pass Plus scheme.
  • Look into multi-car cover. This can be particularly cost-effective if your child lives at home or you have more than one car in your household. Comparison websites don’t offer this option so you would need to speak directly to an insurer or consider using a broker.
  • Install a black box (telematics). This device will monitor the driver’s actions behind the wheel and if they drive well, they’ll pay less for cover. Be sure though that you are confident in the driver’s ability as poor driving can result in a higher premium.

Top Tip from annabel consultant, Avril Robertson:

Make a point of regularly checking that all car policies are updated with recent information e.g. driving convictions, named drivers, any changes in circumstance

Breakdown cover

The days of being a loyal lifelong member of the AA or RAC are gone. Breakdown cover is a competitive business and therefore your policy should be negotiated or switched on a regular basis and, according to Money Saving Expert, breakdown providers are the easiest to haggle with!

You can either cover yourself or your vehicle, the former being useful if you are likely to drive several cars and cover can range from basic to comprehensive. This does tend to be the more expensive option though. If your car is new and reliable, you may find that a basic policy is sufficient, but if you’re more likely to have problems, you should strongly consider comprehensive cover which includes home start and onward travel.

If you’re driving abroad, you can usually add extra cover to your existing policy, but if you drive abroad frequently, it may be worth paying for an annual European policy.

Finally, do check that you are not covered already by a bank account. This is sometimes offered as a sweetener for opening an account but many people are unaware that they have it.

Top Tip from annabel consultant, Sophie Phillips:

If you don’t have any breakdown cover and you find yourself in need of assistance, most providers allow you to join on the spot at the same time as sending someone out to you.

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