How to Reduce Car Insurance Costs
As a new or young driver, you’re likely excited at the thought of having the independence of having your own car. One of the biggest financial burdens is the runnings costs of your car.
Choosing the correct car insurance
There are various types of car insurance. Choosing the correct type can save a small fortune. Finding the ideal type of car insurance for your particular needs can take a lot of calling around, but is worth the effort due to the savings.
Detailed in this article are types of car insurance cover that may suit you and tips on how to reduce your premium.
Different types of car insurance
There are many different types of car insurance including many specialised types of car insurance. Listed below are the most common types of insurance.
Third Party car insurance
Third part is the minimal type of car insurance required for you to legally drive on a public road. This type of car insurance simply covers the costs of any damage to another vehicle caused by yourself. Third Party insurance does not cover your own car. Third Party will also cover passengers in your car due to a result of an accident. How much however, depends on the particular policy.
Third Party car insurance, based on the fact it is the minimal cover, once was consistently the cheapest. Insurance companies believe that young drivers who opt for this cover are less likely to care about their car and as a result are likely to drive more recklessly. As a result, it’s not always the cheapest cover anymore. If you fall into the particular criteria detailed below, it is still a good idea to get a quote for Third Party:
- Cars of little value; £1000 or under
- Young drivers of under 25 years of age
- Have zero no-claims bonus
- Living in an area of high risk. EG: car theft
- See third party car insurance for further information
Third Party Fire and Theft
Exactly the same cover as Third Party, except covers the car if it is stolen or is set on fire.
- See third party fire and theft car insurance for further information
Comprehensive car insurance
Fully Comprehensive or ‘Fully Comp’ as it is usually referred to provides the same level of insurance as Third Party, except it also covers your own car against damages resulting from an accident.
The more expensive your car is, the more important it is to have Fully Comprehensive car insurance. Generally speaking, if your car is worth over £1000. By law, any car that is worth over £5000 must be insured by Fully Comprehensive. Comprehensive insurance will also cover you to drive others cars. Make sure you check your insurance details to validate this.
If it does, it is often covered by Third Party insurance. Other aspects that it may cover are vandalism to your vehicle, legal fees and medical fees. In certain policies breakdown cover may be covered. Ensure you discuss with your provider exactly what you are covered for.
- See comprehensive car insurance for further information
Pay As You Go car insurance
This type of insurance is literally as it suggests, you pay per mile. Being quite a new form of insurance, it can work out expensive if you’re not careful. This type of insurance cover is ideally suited to those that do not cover many miles in a year. The insurer may require that you state how many miles you intend on driving over a given period of time, or the miles can be calculated by a GPS system. The amount you pay is also based on what roads you a driving on and at what times of day. So for example high risk roads with a high rate of accidents, driving at rush hour, will cost more than a typical residential road.
If your situation changes and you find you need to cover more miles, Pay As You Go car insurance may not be cost effective and you may need to consider switching to a different cover.
Short Term car insurance
This is a specialised car insurance that covers a range of circumstances. An example of short-tem insurance can be if you have purchased a new car and and need to drive it home legally, 24 hour coverage can be arranges. If you are borrowing a car for example short-term insurance cover is ideal for this. Different durations can be arranged for this type of cover although it’s usually at overly inflated prices.
- See short term car insurance for further information
Student or young driver car insurance
As a young or newly qualified driver, it can be difficult to gain car insurance at an affordable price. Student or young driver car insurance offers a range of options that can cut down on costs. This type of insurance is often better discussed with the insurance provider to see what offers they have available.
Young drivers car insurance with speed detection
Certain car insurance companies are offering young drivers a policy that enables them to have insurance coverage but with a penalty fee for breaching the speed limit. The car is fitted with a speed limit detection system that automatically informs the insurance provider of any breaches in the speed limit. This type of insurance can be cheaper for younger drivers although depending what the penalty fee is for breaching the speed limit, can increase dramatically if you are not careful. This type of insurance can also be known as black box car insurance due to the GPS system fitted.
- See black box car insurance for further information
Things not to do
Here are some reasons that car insurance companies can use to invalidate your cover:
Modifying your car
Modifying your car in any way that effects the engine, bodywork or wheels and not informing your insurance provider may in the event of an accident, make your insurance policy void.
Change of circumstances
Not informing your insurance company of any changes such as moving house or changing jobs, in the event of a claim can lead to complications. Worst case scenario it can invalidate your insurance.
Lying to the insurance company
It may seem tempting to leave out a few minor details when applying for car insurance. Perhaps just don’t tell them about that speeding ticket you got, or perhaps you’ve gone over your designated mileage or simply just changed the wheels for a nice set of alloys. If you are involved in an accident and it is your fault, if your car insurance becomes invalid due to your lack of cooperation at the start, you will be liable for all damages to other parties involved.
Ways For Young Drivers to keep car insurance down
Many new or young drivers choose to take a Pass Plus driving course once they have completed the driving test. A Pass Plus course is short at only around 6 hours and has no formal test at the end like the standard driving test. The Pass Plus course will teach you to drive safely on varied road and weather conditions.
The cost of the course varies from location from around £150 to £200. Depending on your area, your local council may provide you with up to a 50% discount. Once the Pass Plus course has been completed, you can provide your certificate to your insurance company who can offer you a discount of up to 30%. Not all insurance companies participate in the Pass Plus scheme however, and if they do, you still may be able to find a cheaper quote elsewhere.
How to keep car insurance costs down
Each and every application for car insurance is different. Many factors are considered from your age, the type of car and where you live. Here are some tips and advice for keeping your car insurance premium as cheap as possible. Below are the top 10 tips for reducing car insurance costs.
1. Best car for insurance rates
Choosing your car carefully is by far the best way of saving money off your car insurance premium. The Best cars for young and new drivers section will offer you some advice on suitable cars to choose. Before you decide on any car, get a quote. Even if it appears that the car may be cheap to insure, you could be in for a shock. Remember, it also depends on where you live, how easy the car is to steal and the potential of the car being stolen.
2. Park and drive your car carefully
By leaving your car in a garage or if possible, off-road, the chances of accidental damage that might be claimed for is significantly reduced. By keeping your car in a garage will reduce the chances of your car being stolen, therefore helping to reduce your car insurance costs.
It sounds obvious to drive carefully, but as a young or new driver, accumulating points on your licence will increase your insurance premium significantly. The biggest offenders for young drivers is speeding offenses. The degree in which your insurance increases with a speeding offence depends on the at which you were driving over the limit and if you are caught more than once. Using your phone whilst driving is dangerous and more common for younger drivers to do so. This offence is likely to dramatically increase your insurance.
3. Fit security devices
Fitting an alarm and/or immobilizer to your car will significantly reduce your insurance premium cost. Thatcham alarms are approved by car insurance companies and may reduce your insurance by as much as the alarm system costs if not more.
4. Increase your insurance excess
The higher the excess, the less you pay. In the event of an accident for example, you pay an excess. Insurance companies offering you the ability to pay a high excess should reduce your premium costs significantly.
5. Reduce your annual mileage
By reducing your annual mileage, you could opt for a policy that limits the miles you do.
6. Older drivers on your insurance policy
Having your insurance policy with an older more experienced named driver can reduce your insurance policy costs.
7. Car usage
If you use your car for traveling to work or for business use, this will help to inflate car insurance costs. If at all possible, use your car for social means only.
8. Paying for your car insurance
Paying for your car insurance on a monthly basis may seem a little easier on your wallet, you will however be paying interest on this. When getting quote, ask what the overall difference is in price if you pay up front compared to monthly installments.
9. Multi policies
If for instance you or your parents have house insurance with a certain company, they may offer a good discount when adding another policy.
10. Get as many quotes as possible
Use all the online comparison sites and get as many quotes from other providers as possible. It’s surprising how much money you can save.