You’ve probably felt the pinch already, but with car insurance premiums at their highest level, and set to rise further, it’s now been estimated that the average policy costs a staggering £462.
We’ve all seen the headlines recently. More rises are coming and are predicted to increase all our premiums by around £75 for the “average” driver, while younger, those under twenty-two and older, those over sixty-five will be the worst hit, with increases suggested of up to a staggering £1000.
Last month, The Ministry of Justice decided to reduce the discounted rate from 2.5% to minus 0.75%.
To put it simply; accident victims are paid all compensation in a lump sum, to help support them for the rest of their lives. It was concluded that, back in the day, or sixteen years ago, in fact, that victims could earn more by investing the lump sum, thus, earning more. To make this fair on insurance companies, the payout was reduced.
Now, taking in sixteen years of inflation, and taking away the assumption that everyone invests in government bonds, everyone will now be paid the extra amount. A huge win for the victim, but a much higher cost to the insurance company.
How is this going to effect me?
Well, over the coming year, your premiums will rise, without a doubt, and it’s not just yours, but millions of businesses will be affected too.
Already 12% higher than last year, and add in this new hike, car insurance is now more expensive than ever, with the younger and older generations taking the biggest hit.
How to Save
Remember car insurance isn’t logical
You may think that third party is the cheapest option because it offers the lesser cover, but you couldn’t be more wrong.
Insurers base everything on how risky they think you are. Think of it this way, if you’re a new driver, chances are you’re going to bang into something at some point, hence, you’ll have to pay more.
If you have a few years no claims behind you, your proof that you are a safer driver and look after your car by storing its safety, then you’re deemed less risky.
By picking comprehensive cover, the insurer already feels like you are TRYING to lower the risk, hence, normally the lower price.
Add a second or third driver
I know it sounds crazy, but by adding a driver or two that the insurer deems “experienced” could cut your costs by £1000!
It doesn’t just work on younger drivers either. It worked on mine recently. By just adding my husband, who is six years older and who has five years no claims, reduced my premium to £265. Remember, by law, insurers can’t discriminate over gender, but driving experience and history can really make a difference.
Try different insurers and adding different people; see what happens. Never add someone as a main driver if they’re not. It’s fraud and could make your claim invalid.
Tweak your job description
Something as simple as changing your title from an editor to a journalist could save you hundreds of pounds. MSE has a great car insurance job picker tool, that can help you see if changing your role could save you cash.
Paying monthly is a killer
Think of it like a high-interest loan, as that’s what it is. Most companies charge a whopping 25% APR, which is a crippling amount.
If you can’t afford to pay it off in full, then have a scout about for a 0% spending credit card, or at the very least a low APR one, making sure your repayments are big enough to clear it in time.
With prices rising now, it’s more important than ever to make sure you are paying what you can afford. Switching early could save you a bundle in the long run, especially if you’ve never tried it before.
If you haven’t claimed on this policy, cancel it, and get a refund for the remainder of the year.
Sometimes, there’s an admin fee, anything from £25-£50, but your savings should far outweigh this. Tip: The longer you’ve got on your policy, the more likely you’ll save by switching.
Remember, loyalty doesn’t pay!
Anyone else get frustrated when your renewals quote double last year and sticking your details in as a new customer lowers by half? Yep, we’ve all been there.
Use price comparison sites, call around for some over quotes then call your insurer directly and haggle, if they match it, or better beat it, you’re quids in!
Keep it simple
If you’re lugging the kids to and from gymnastics and only do the school run, then those tinted windows and fat boy tyres your brother in law talked you into are properly a bad idea. Apart from security, and changes made to a car will be added on to your insurance premium.
The best way to save? Add extras like an alarm or an immobiliser and watch your premium drop considerably.
By agreeing to pay more excess if you have an accident, could bring your premium down by hundreds.
Make sure you can afford the excess, though, just in case, and remember if it’s set at £500, and you could get the damage repaired cheaper yourself, then it’s worth doing that.
All these tips may take a little time, but they really can save you money, and in my case, hundreds of pounds off your car insurance policy.