Under the Road Traffic Act of 1930 it became compulsory for drivers to be insured for their liability in the event of an accident. While motor insurance had been in existence for 30 years by this point, this was the first time it had become mandatory. After World War Two the industry moved towards working with brokers who could deal with many different insurance companies. Along with the development of financial services, this offered customers many ways to spread their risk.
In line with the development of technology, today’s car insurance sector has transitioned successfully from being paper-based to now providing an efficient web based service. Customers can obtain a car insurance quote within minutes by submitting their details online. Previously there could be lengthy delays while paperwork went back and forth, but now cover can be provided almost immediately.
Types of Car Insurance
At a minimum third party cover is required which means that you have protection should you cause damage or injury to another person, vehicle, animal or property. It doesn’t however cover costs for repair to your own vehicle – for that you would need comprehensive insurance.
In order to save money and get a cheaper premium, it’s worth considering what car insurance groups are in place. Administered by the Motor Insurance Repair Research Centre, new car models are assigned to a category – with insurance group 1 cars being the cheapest to insure. There are 50 groups in total and not surprisingly, high performance models are likely to result in higher premiums.
As drivers know, it is prudent to shop around for the best deals – so car dealerships such as Lookers offering car finance deals with free insurance for instance are often good places to start any search.
How to Get Cheap Car Insurance for New Drivers
Insurance for new drivers is notoriously expensive – often trumping the cost of a first vehicle. And the reason for this? Well, it relates to the concept which underpins insurance – risk. It is estimated that 1 in 5 young drivers are likely to have an accident within 6 months of passing their test.
The average cost of a policy for those in the 17 – 22 age range is £1,357 – and that is on top of all the costs associated with learning to drive and passing the test in the first place.
There are however ways to combat these costs. Read our handy tips and ensure you get the best deal possible.
Add a second responsible driver
This can help spread risk. So if you are considered to be a high risk driver then adding in to the mix someone with good no claims history may result in a cheaper policy. The responsible driver should have as clean a driving history as possible and it may be trial and error to find the optimal person – and by extension the best deal. Remember though the responsible driver should be realistically expected to drive your car.
Don’t customise your car
It may be cool to ‘pimp your ride’ but it ultimately will cost more money. The more changes that are made to a car, the more the policy holder will be charged. If modifications are made, it is prudent to ensure that the insurance company is informed. Failing to do so may invalidate the car insurance policy.
Be mindful of the right level of excess
One way to keep the cost of a car insurance policy down is to consider setting the excess at a higher level. A higher excess will result in lower premiums but policy holders must be aware that they can afford the premium in the event a claim is made.
Don’t auto renew
Insurers are known to charge increasing amounts each year in the knowledge that inertia will stop policyholders from switching. It’s in your own interests to always shop around, particularly ahead of an existing policy coming to an end.
Telematics is a policy which prices premiums based on the quality of your driving. A device – commonly referred to as a ‘black box’ – is installed and monitors the driver’s actions while behind the wheel. The ultimate goal is to demonstrate that you are a careful driver – and see those premiums come tumbling down. Of course it could work in reverse – bad driving could increase premiums.
Insurance deals with car
Many drivers, when looking to buy their first car, will also look for cars with free insurance. Dealerships these days can very cleverly package together not only the vehicle, but the finance and insurance too. This can help first time drivers keep costs down by looking for finance cars with free insurance.
How to Get Cheap Car Insurance
While new and young drivers under 22 can find it costly to insure their vehicle of choice, even those who have been on the road for some time can face a similar challenge. To ensure you get the best possible deal, read our steps to lower premiums.
This may seem like an obvious thing to say, yet many people simply don’t do it! Saving of hundreds of pounds can be achieved simply by pitting one provider against another. A word of caution however – just make sure that you are comparing like for like cover. While some policies may seem cheaper they may not offer the same level of cover. This is where price comparison sites can come into their own. Platforms such as confused.com or moneysupermarket.com all aim to save drivers money. Simply pop your details in and let the site do the rest. You will then have a number of options to choose from.
Protect your no-claims bonus
Achieving a long no claims bonus is the single best way of cutting car insurance costs in the first place, and a good way to continue this is to protect it. While it may increase the premium by a few pounds, if you consider the offset cost against the potential loss of a 90 percent discount on premium of a few hundred pounds, the choice is very clear.
Secure your car
Fitting an approved alarm, immobiliser or tracking device can achieve a discount of 5% or more. It’s worth remembering that many newer cars come with these as standard, so if you are insuring a brand new vehicle make sure you check if you have them and let your insurance company know.
Cover fewer miles
While this may be easier for some than others, the fewer miles the car covers the greater the saving. For instance a cut of 5,000 miles per annum could save a typical 35 year old driver around £50 in premiums.
Use your garage
Insurers like cars to be kept in garages overnight as it reduces the risk of damage or break-in. Aside from the benefit of not scraping ice off in winter, there is also more likelihood of the car being stolen if parked on the road.
New car package
When changing cars, and if in the market for a brand new one, asking dealers what offers they have that include free insurance is always a good idea. Manufacturers have recognised that offering cars with free insurance (and often finance options too) is another way to appeal to customers. So if you find a deal that works for you, it’s certainly worth considering the whole package.
What is car excess?
Car excess is a fixed amount that you are expected to pay in the event that you make a claim. For instance if your excess is £200 and you make a claim for £1,000, your insurer will keep the first £200 and give you the remaining £800. When car insurance is first taken out you have the option to set the excess – and in return can see a reduction in monthly premiums.
The trick however is to get the balance right. Too low and your premiums will be higher. Too high and in the event of a claim you may lose a considerable sum.
Voluntary vs Compulsory
Compulsory excess is applied to your policy no matter what and is decided by your insurer.
If you’re a young or inexperienced driver, don’t be surprised if your compulsory excess is higher than someone who is older or has been driving for a while. And if you own a prestigious or high-performance car, there may be an additional premium to pay.
Voluntary excess is different, because you set the amount of excess you’re willing to pay. A higher voluntary excess is one way people choose to lower the cost of their insurance premium.
When you get a car insurance quote, it’s worth looking at how changing the voluntary excess affects your price, and choose an amount that you’re comfortable with.
But remember that, if you make a claim, you’ll have to pay both the compulsory and the voluntary excess.
No Claims Bonus Explained
A no claims bonus can save you huge amounts of money each year, yet do you know what they are and how they work?
Simply put a no claims bonus (NCB) is a count of the number of years in which no claims have been made against the insurance policy of a car. Its value can be vary between insurers, but a NCB of 5 years and above, could result in as much as a 75% discount on premiums.
In the event of a claim it is generally accepted that some or even all, of the no claims bonus will be lost. The exception to this is where the fault lies with another driver. In that case your insurer may be able to reclaim the payment from the other cars insurer and the no claims discount will remain unaffected.
In more complicated cases where fault can’t be agreed on, insurers may end up deciding to split the cost of the claims and both drivers no claims bonus could be affected.
It is possible to protect the NCB which then allows for two ‘at fault’ accidents without affecting the bonus. In the event of an accident the NCB remains intact – even if your insurer can’t claim back their costs.
Of course this won’t guarantee that premiums can’t increase after the fact, as insurers will use your claims history in order to calculate a premium.
In the event that you change vehicle the NCB is normally able to be transferred to another car. This also applies to a company car where the driver is named on the company insurance policy. The onus is on your insurer to provide proof of the NCB which will allow you to present to another provider if required and to prove its continuity. If a policy is cancelled there is a grace period of 2 years whereby you can still use it. Thereafter it expires and the process will start over from the beginning.
There are exceptions, however, to watch out for. Named drivers for instance are not generally allowed to build up their own NCB. This is because it’s normally the record of the main driver that the claim-free history will be supporting.