With the cost of living crisis continuing to squeeze the wallets of people across the country, many are looking for quick ways to cut down their monthly outgoings and leave a few extra pennies in their pockets. Our recent survey found that over two-thirds of people are more worried about their finances now than they were during the pandemic, with 21% of people considering (or have already started) reducing their insurance policies.
In the modern world, you can insure pretty much anything. Some are required by law, like car insurance, and others are down to personal preference, such as mobile phone or appliance insurance. When it comes to reducing costs, there are ways to lower the amount you spend on insurance without jeopardising the level of cover you require. Here are our four handy tips to help you save money on your insurance policies.
- Cancel any unused policies
Just like subscription services, many people have old insurance policies taking small amounts by direct debit that can easily go unnoticed for extended periods of time. Take a look at your bank statements and identify any old insurance policies that are still running, then decide if you still need them.
This could be student insurance that’s continued after leaving full-time education or cover for an old mobile phone you don’t use anymore. You may only be paying a few pounds each month for these, but small amounts add up, so removing any old, unused policies is a great way to cut back on unnecessary spending.
It’s also worth checking that you haven’t doubled up on any policies. Perhaps you currently pay for mobile phone or appliance insurance, but your phone and appliances are also covered under your home contents insurance. Some banks offer insurance products with certain accounts or cards, so it can also be worthwhile checking whether you could use their insurance policy instead of paying for one yourself.
- Review any existing policies and their terms
After cancelling any old, unused policies, it’s time to look at the insurance products that you do use. By law, you can’t cancel your car insurance unless you will no longer be using the vehicle, and other insurance products, although not required by law, are a necessity for protecting things like your home and belongings, and may be required as part of a contract for other things, such as your mortgage.
A quick and easy way to reduce the money you spend on necessary insurance is to pay the premium for the year upfront, instead of opting for monthly direct debits. By paying monthly you’ll also be charged interest, often bringing the premium up by a substantial amount, meaning you pay much more over the year than you need to. Not everyone will be in the position to pay the total upfront, but whenever you can, it’s well worth it in the long run.
Another way to lower the cost of your insurance premium is to increase the voluntary excess of the policy. Excess is an amount you agree to pay to the insurance provider in the event you need to make a claim. Many policies will have a compulsory excess that you cannot change, but you may be given the option of increasing the voluntary excess. Increasing this amount will often lower the total premium of the policy, however, remember that you will be required to pay the compulsory plus the voluntary excess if you ever make a claim, so be sure that the amount is affordable for your circumstances.
- Review any add-ons
When taking out an insurance policy, you can opt for the standard cover (which is often enough for most people), but there are usually optional add-ons providing an enhanced level of cover for an extra cost. Some add-ons can be considered a must-have for many people, such as breakdown cover with car insurance.
Other add-ons may not be as vital, however, this is down to what you deem necessary. You may be paying for various add-ons with your home insurance, such as cover for legal expenses or accidental damage, which you may not see as a necessity when you’re trying to save money. It’s easier to choose the add-ons when finances aren’t quite as tight, but if you’re looking for ways to cut costs, it can be beneficial to review any extras on existing policies and decide if you really do need them.
- Compare prices & switch
When it comes to insurance policies, it’s a good idea to shop around for the best price on the market. You may have been with the same provider for years and are therefore sceptical of switching, so be sure to check genuine customer reviews before moving to a new provider to ensure that your cover remains in good hands.
You are often able to cancel an insurance policy mid-way if you find a better deal elsewhere or have simply decided you no longer need the cover, however, you may not get the money back for the remainder of the term, and the provider may charge an early cancellation fee. If you have any add-ons, you may need to continue paying for these even after cancelling the policy, so it’s important to find the best deal when initially renewing/starting policies to ensure you don’t lose out in the long term.
Jacqueline Dewey is CEO of Smart Money People, a dedicated financial services review site. All statistics are taken from a recent survey conducted by YouGov on behalf of Smart Money People.