Page last updated at 09:07 GMT, Wednesday, 3 February 2010

Cutting the cost of your car insurance can be easy

Money Talk
By Peter Lawton
Consumer editor of What Car?

An accident caused by Mohammed Patel, who has been jailed for four-and-a-half years after admitting his part in a 1.6m "crash for cash" conspiracy in Greater Manchester.
Scene of a crash fraud caused by Mohammed Patel in Manchester

You have been a very well behaved motorist this last year.

You have not reversed the car into the house, you have not been snapped by a speed camera and you have not been in an accident.

Another year of no-claims discount notched up, but still your insurance renewal quote has gone up.

Report after report tells us that premiums have risen at record rates, with personal injury claims and fraud blamed for the seemingly unstoppable increases.

One study, by Consumer Intelligence, says the average bill rose 19.6% through 2009 to £564.69.

It says young motorists aged between 17 and 24 saw their premiums leap 24.9% to an average of £1,275.

So, take it on the chin, shrug your shoulders and hope things get better next time around?

That is the worst thing you could do.

Shop around

Unless you've already taken a master class in cutting your premiums, the chances are you'll be able to save a packet.

You also should not assume that [comparison] sites will automatically provide the cheapest quote possible

You will be able to guess some of the advice already, but What Car? also has some more surprising tactics for saving cash.

The most basic tip of all has to come first, however - shop around, shop around, shop around.

Many businesses rely on the inertia of customers to turn a tidy profit, so do not let them.

Online comparison tools can cut down the legwork, but it is worth trying more than one to see how the comparison sites, well, compare.

You also should not assume that these sites will automatically provide the cheapest quote possible.

Our research shows that in many cases you can do even better by approaching a provider direct.

Use comparison sites to narrow your search down, then, before getting in touch with insurers direct to see if they can do even better.

Once you are armed with a few quotes you can also start to play one provider against another - let them fight for your money.

'Fronting'

What is the next most obvious ploy, particularly for younger drivers?

Peter Lawton
There are many ways to keep down premiums, says Peter Lawton

The old chestnut of getting yourself on your parents' insurance as a named driver?

If you only occasionally drive the car in question there is no problem with this, but if you are the main driver you could run into hot water if you need to make a claim.

Insurance companies call it "fronting" when the policyholder is not actually the main driver.

They could get difficult over settling a claim and, in a worst case scenario, you could also end up with up to six points on your licence.

Adding policies

Mum and dad can still play their part, however, mainly by switching the roles in this situation.

Young men, again, stand to benefit by finding a friendly female to add to their policies

Put them on your insurance instead and it could well cut your premium.

When we tried this for Francis - a 19-year-old bloke looking for cover on a Ford Fiesta - we reduced his bill by £117.

Putting other lower-risk drivers on your insurance can have a similar effect, so young men, again, stand to benefit by finding a friendly female to add to their policies.

We are still not finished with mum and dad, either.

Telling the insurance company you will be able to drive other cars will also lower your risk, so get your name on their policy and your partner's, too.

We saved Francis £22 like this.

Realistic values

Playing around with the excess on your policy - the money you have to stump up before the insurance company starts paying out - can have a dramatic effect.

It is a wee bit risky since you have to fork out more if you do claim, but Francis' bill dropped £67 like this.

Being realistic, and clever, with the value of your car on your policy can also help.

There is no point insuring a Ford Fiesta for £50,000 since the insurance company will only give you the market value.

Even reducing the value of your car by £5 can help, especially if that drops it below a price band or threshold.

A car valued at £9,995 can be notably cheaper to cover than one valued at £10,000.

Reducing your exposure to risk by reducing your mileage saved our guinea pig £24.

By agreeing to a limit of 5,000 miles he was less likely to be involved in an accident, but some insurers are going further than this.

Insurer Young Marmalade uses a black box in your car to monitor use and operates bans on things like driving at night; until you have got a bit more experience, this may work for younger drivers.

Well worth doing

Keeping optional extras to a minimum - things such as legal cover - can also help, as can paying annually, rather than monthly.

We may be starting to count the savings in the pounds rather than the tens of pounds, now, but use all of the tips together and you could save hundreds.

We managed to slash Francis' premiums from £811 to £539, so it is all worth doing.

Did we mention you should shop around?

The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent, professional advice for your own particular situation.



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SEE ALSO
Compensation culture 'ups costs'
28 Jan 10 |  Business
Young drivers suffer rising costs
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'Crash for cash' scam man jailed
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29 Jul 09 |  Business
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29 Apr 09 |  Magazine

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