When most people buy a car, they take out an annual insurance policy. It’s the standard way of doing things, and you’re locked into a twelve-month contract with a premium to pay all in one go – or monthly, depending on how you prefer to budget this sort of thing. In recent years, car insurance premiums have gone through the roof, especially for newer vehicles, which means your car could cost you a couple of grand each year to insure.
This adds to running costs and might make some of you rethink the type of car you buy, opting for a much older vehicle (which’s probably unreliable) just to keep your insurance premium down. It doesn’t have to be like this; you can slash your car insurance premiums by following a host of great tips, and here are some of the best…
Be Careful When Adding Named Drivers
You’re led to believe that adding a named driver to your insurance policy will always lower the premium – that’s not always the case.
Adding another driver (or two) to your policy only makes sense and lowers the total cost when:
- They’re experienced with a clean driving record
- They haven’t made any claims
- They’re 25 or older
On the other hand, if you add someone with the opposite of all the above, your insurance premium will likely go up. The same might happen if you add a named driver who doesn’t end up driving the car much at all. Some people do this because they think it lowers their premium, but they’re actually better off getting temporary car insurance whenever that individual wants to drive their car. It doesn’t affect your premium, so you don’t accidentally raise it.
In summary: adding named drivers will lower your premium, but only when they tick the three boxes above. If they don’t, then avoid adding them to your policy as you might see an increase instead.
Calculate Your Annual Mileage Properly
It’s so easy to see the mileage question when applying for car insurance, and just click on whatever number appears by default. Or – and this happens way too often – a spouse helps with your application and clicks a mileage number that’s more in line with what they drive. Regardless of why this happens, you overestimate your annual mileage, and this means you’re spending money unnecessarily.
Insurance premiums are cheaper when you drive less because you’re (theoretically) keeping the car in a better condition and reducing the chances of accidents. With that in mind, make sure you calculate your average annual mileage properly before getting a quote.
You can use a mileage calculator to help with this, or look at the clock on your dashboard and run some calculations yourself. Put it this way, 12,000 miles a year means you drive 1,000 miles a month – that’s about 33 miles a day. You’re not doing anywhere close to that if you have a short drive to work or school each day – in fact, if you rarely take your car out on the motorway, you will likely do half of those miles a year. Going from 12,000 to 6,000 miles on a car insurance application reduces the premium dramatically.
Try To Pay It All In One Go
As mentioned in the introduction, you can pay for your car insurance all at once or split the costs monthly. You may opt for the second option because it looks like a smarter way to budget things. In reality, if you want to save money, then paying annually makes the most sense. Monthly car insurance payments will always work out as slightly more than the annual premium.
For instance, you could find a quote that charges £800 for the year, but when you pay monthly, you end up paying closer to £1000 overall.
It’s really not worth it, so have a look at your finances and try to carve a way to pay for your car insurance in one go. One of the best tips is to create an emergency fund that saves up for purchases like this. If you don’t feel like you can pay out of your normal bank balance, dip into this fund each year to cover the insurance costs and save a chunk of money.
Raise Your Voluntary Excess
If you’ve searched for car insurance before, you’ll know that every quote comes with the following:
- Voluntary excess
- Compulsory excess
“Excess” is a legal term that refers to how much money you pay when making a claim. The compulsory excess is set by the insurance company, but you get to choose the voluntary excess. Increasing your voluntary excess can drop your insurance premium by quite a bit, so it’s worth doing.
Remember, you only ever pay excess when making a claim – so if you drive safely, you shouldn’t ever have to worry about it. Just be sure that the total excess (voluntary and compulsory) is enough for you to handle if you do have to make a claim.
Don’t Stay Loyal To One Insurance Provider
You’d think that sticking with one insurance provider earns you some killer discounts, right?
Wrong!
Car insurance providers will almost always raise your premium if you automatically renew with them for another year. It’s just how the industry works, so you are always better off cancelling your contract and looking for a new deal from a different insurance company.
The most ironic thing about this is that you can then go back to the original insurance provider the next year, and they could have the best deal for you. It doesn’t make sense, but that’s how things work. Set reminders on your phone to look for different car insurance deals and cancel your auto-renewal policy before you’re locked into another year of overpaying.
There are other small things you can do to keep your car insurance down, but these strategies have the biggest impact. Obviously, the main thing is to drive responsibly and avoid making insurance claims – no amount of work will lower your insurance if you’re a frequent claimer. Drive safely, follow the tips above, and you will save a lot of money.
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