THE TRUTH ABOUT CHEAPER MOTOR INSURANCE
WHAT ARE DRIVERS LOOKING FOR?
If there’s one thing that all drivers have in common, it is that they are all looking for cheaper motor insurance. Motor insurance is something that drivers are required by law to purchase and cannot drive on a public road without. It is not something that they necessarily want to buy, and a large number of drivers would not bother with motor insurance if it was not compulsory. However, it does have its benefits. Motor insurance protects victims of accidents by providing necessary funds to compensate them when they are involved in a car accident that is caused by someone else. Motor insurance also protects the person causing the accident as they will not be personally liable for all the costs involved. Added to this is the fact that your own car will be insured so any damage to it, or injury to you or your passengers will be paid for by the motor insurance company.
However, no matter how good an idea motor insurance is, and how necessary it is to protect road users and passengers, it is a simple fact of life that spending money on car insurance is a lot less fun than buying a new car, and all of us have other things that we would rather spend our money on. While motor insurance is necessary, there is a definite consensus among drivers of all ages and groups, that the cheaper the insurance, the better.
HOW DO YOU FIND CHEAPER CAR INSURANCE?
There are a number of ways drivers can find cheaper motor insurance. Some of these are obvious tips for example, shopping around for the best deal, however, there are also a number of special steps and strategies that you can take when shopping for motor insurance that will certainly lead to you getting a better deal and saving real money on your motor insurance. Because motor insurance is a complicated product, there are also a lot of myths out there about how you can find cheaper car insurance and how you can save money on it. This leads many to end up paying more than they need to on motor insurance.
This book will help dispel some of the myths out there about car insurance and aims to give you a better understanding of how car insurance companies really do work and how they price their policies. You can use this advice to avoid making some common mistakes when shopping for your motor insurance.
We will then look at some tips that outline shopping and bargaining strategies that will help you to find the very best motor insurance bargains possible. There is nothing better than beating an insurance company at its own game, and by having a little bit of information and understanding of the process, you will be able to walk out of a negotiations with better and cheaper car insurance.
Hopefully the information in this book will be useful to you and we would like to wish you good luck in finding the best and cheapest car insurance on the market.
MOTOR INSURANCE MYTHS
DON’T GET SUCKED INTO BELIEVING THESE MYTHS
Most of us do not buy motor insurance very often. It just isn’t something that you are used to buying like you are with your groceries or clothes. You rarely look into the motor insurance market and many find the maze of options and deals available out there daunting to say the least. Even if you have a fairly good idea of the motor insurance industry and think you know what you are doing, you can rest assured that the insurance companies selling you the motor insurance will be a lot more familiar with the bargaining process than you are. For these reasons it is important not to make some common mistakes and fall for common traps when shopping for your car insurance.
SOME COMMON MISCONCEPTIONS
Below you will find some of the most common mistakes and myths that people believe about the motor insurance industry. We aim to clarify the position for you.
Myth 1: Protecting your no claims discount means your premium cannot go up.
It is vital that you understand what it is that your ‘no claims’ gives you. It basically gives you a discount off your standard insurance rate. As long as you don’t make a claim this discount will grow. By protecting your ‘no claims’ with an extra premium, you will not lose your discount even when you do make a claim. However, it is still possible for your standard insurance rate to increase. If your ‘no claims’ gives you a 10% discount for example, and your standard rate is £500, you will pay only £450. However, if your standard rate was to increase to say £700, then even with the same 10% discount, you will now be paying more, £630. While it is rare for your standard rate to increase, it does happen depending on the risk assessment of the insurance company, and this means that the amount you pay on motor insurance can go up even if your ‘no claims discount’ is protected.
Myth 2: Speeding fines have no effect on your insurance
You have to remember that anything can affect your motor insurance premium. Your premium is calculated based on risk, the higher your risk of making a claim, the more you will pay for your insurance. While every small incident will not make a difference, they will paint a picture for the insurance company that will eventually lead to a change in your risk level. Speeding tickets will be taken into account in such instances, especially if they lead to your licence being endorsed.
Myth 3: One serious driving conviction and you can’t get insured
Again, you have to look at the entire picture. If you’ve been insured with the same company for many years without making a claim, and suddenly you get a driving conviction, it is very likely that they will be happy to continue insuring you. However, driving convictions do increase the risks associated with you, especially for drugs or alcohol, or for dangerous driving, and you can expect your premium to go up as a result.
Myth 4: It’s better not to report minor accidents as they’ll put up your premium
You should always look at the big picture. If making a claim for £100 means you lose your no claims bonus worth £200, then obviously you don’t want to make a claim. However, it is often the case that you are required to inform the insurance company of all incidents and failing to do so could void your policy. Simply informing the insurance company of a minor accident, and not making any claim, is unlikely to effect your premium.
Myth 5: If my insurance quotes are high I can simply put the insurance in someone else’s name
Most insurers have taken steps to avoid this by requiring you to state on the policy who the main driver of the vehicle will be, how many other vehicles are in the house, and who is likely to be using the vehicle. If you lie on any of these questions you risk voiding the policy. The insurer will look at who is likely to be driving the vehicle and set the premium according to this, rather than simply looking at who’s name the policy is in. At the same time, it sometimes does make sense to become a named driver on someone else’s car, especially your parent’s when you are very young.
USE THE INTERNET
BUYING MOTOR INSURANCE ONLINE CAN SAVE YOU MONEY
People are gradually realising that the internet can save them money on more and more things. Motor insurance is definitely one of those things and shopping online can reveal deals that you wouldn’t find anywhere else.
ONLINE MOTOR INSURANCE WEBSITES
There are now literally hundreds of websites online that specialise in selling motor insurance. While many of these are affiliated with or sponsored by insurance companies, most of them are completely independent. They will give you access to thousands of motor insurance policies and will sort through them for you.
You can fill in all of your personal information and insurance needs into a search for and allow the website to do the rest. It will sift through all of the various options and bring you back all of the motor insurance policies that fit your requirements. Then all you have to do is look through them and find the one that suits you best. Searching for your motor insurance in this way can save you time and money. It would be impossible for most people to take the time necessary to find the deals that some search engines can come up with. With the number of insurance providers out there today, and the number of options that you have available to you, it is becoming more and more necessary to take steps to help you find the very best deals.
Insurance Company’s own websites
As well as these general insurance websites, you can also visit the websites of individual insurance companies to see what they have on offer. This allows you the security of dealing with a company you know and trust, rather than being at the complete mercy of the internet. You can quickly find all the available policies from the company or companies you are interested in and compare their prices. In most cases you will be able to fill in an online application form and get a quote for the policy there and then. This will allow you to save time. You may also be surprised to learn that many insurance companies offer better deals to their customers online as they can make savings by using the web rather than more traditional means of selling insurance such as brokers.
DON’T BE AFRAID TO ASK FOR A BETTER DEAL
SOMETIMES IT REALLY IS THAT SIMPLE
Many customers are reluctant to bargain or negotiate with companies when buying motor insurance. In many ways this is not surprising considering the size of these companies and the fact that bargaining has become increasingly rare in today’s shopping environment. However, unlike in many other industries, insurance is still a highly personal contract with every customer pretty much getting an individual price based on their own circumstances and situation. This means that insurance companies are used to adjusting their prices and most of the people you will be dealing with when you apply for your motor insurance will be fully capable of changing the price of your insurance.
Obviously, an insurance company is not going to end up giving you insurance at a price that it is unhappy with, but in the vast majority of cases, they will be willing to go lower than their opening offer to you. Simply telling them that their price is higher than you were expecting and going over some of your good points such as low claims history and a clean driving record may bring down the price a little. Also, you should not be afraid to tell them if you have received a cheaper quote from somewhere else as they may well be willing to match it or even beat it.
It only makes sense to bargain with the insurance company when it comes to motor insurance and don’t be ashamed to let them know that you are seeking the best price you can find. After all, this is exactly what they expect. They are more than prepared to make deals with customers, provided you can convince them that you are still a valuable customer and represent a low risk to them.
SIGN UP FOR FREE INFORMATION
NEWSLETTERS, EMAILS, THEY’RE NOT ALL JUNK MAIL
These days, pretty much every time you buy a product online, the seller will ask you if you would like to receive future offers and information from the company. Nine times out of ten you will automatically wish to choose no to these offers as there’s nothing worse than having your inbox fill up with junk mail for the rest of your life. However, sometimes these mails and newsletters really do give you a lot of good information on deals and offers.
There are a great many insurance sales websites that offer you such newsletters. Some insurance companies offer you the same service. While you may not be overly interested in the news and information sections of these emails, they often contain discounts and special offers. It only takes a second to sign up for these items and its even faster to scan through them and see what special offers they contain. You will then be among the first to hear of these special offers and be able to sign up for them.
If all this sounds like a lot of work, then think of the time it would take to check with all the various websites to see what special offers they have. If you are interested in getting a special offer on your motor insurance, this is a quick and easy way to do so.
CHECK FIRST WITH COMPANIES YOU ALREADY DEAL WITH
Most of us already have a relationship with certain insurance companies. This can either be from insurance we already have in our name, or because family members have taken out insurance from them. For example, if you have home insurance, health insurance or travel insurance, you will find that most of these insurance companies also offer motor insurance and will be very happy to add you to their list of car insurance customers. They may even offer a discount or other offer for existing customers of one form of insurance to take their other insurance from them. This can be a great way of getting a good deal on your car insurance and will also simplifying your affairs by making all your insurance with one company.
Another way of cashing in on this type of deal is to find out what insurance companies your family members are with. You can then contact these insurance companies and inform them that you are a family member of an existing customer. They may see you as less of a risk because of this and offer you a better deal. Your bank or Credit Card Company may also provide car insurance so check with them also.
THE MORE THEY KNOW, THE LESS THE RISK
It may seem strange but insurance companies are in fact, extremely risk adverse. The less risk they have to take on with a customer, the better the price they will offer you. If you can show them even a seemingly irrelevant factor, such as that you insure your home with them, or your parents insure their car with them, then this will provide one more small measure of certainty that will allow the insurance company to see you as less of a risk.
PAY FOR YOUR MOTOR INSURANCE UP FRONT
Insurance companies almost always offer you the option of spreading your payments over the term of the insurance policy. This might mean for example that if your insurance is for one year, they will happily accept twelve monthly payments at the start of each month. This is because even though you are not paying the entire amount at the beginning of the policy, you will not benefit from any period of insurance without paying for at least that period in advance.
The down side of this of course is that you will pay more. This is because the policy will be drawn up, and the price will be calculated based on an annual insurance policy and even though you pay for each month in advance, you still owe the rest of the period until you pay them. Basically, insurance companies charge you interest on the unpaid portions of the insurance policy while you owe them.
You should try therefore to pay the entire amount of the policy up front at the beginning of the term. This will result in cheaper insurance and thus save you money in the long run.
If this is not possible, then you should check with the insurance company and ask them how much interest you are being charged if you choose to pay for the insurance monthly. If it transpires that you are being charged a very high amount of interest, then you should at least consider alternative sources of financing. One would be to pay for the insurance on a credit card that offers you a lower rate than the insurance company is going to charge you. This means at least you pay less interest on the amount you owe.
FIND OUT THE COMPANY’S NO CLAIMS POLICY
NOT ALL COMPANIES LOOK AT NO CLAIMS BONUSES IN THE SAME WAY
You should look at the terms of the insurance company’s no claims policy before you buy any insurance from them. While all insurance companies these days will offer you a discount on your motor insurance for not making claims, they will not all operate their discount systems in the same way. This can make a big difference to you when you buy your insurance.
Some motor insurance companies will give you a no claims discount after five years. This means that you need to have a claim free record for five years to qualify for their no claims discount. Others however, will give their discount based on four or even three years of claims free driving.
If you have had an accident say four years ago, there are many companies out there that will not give you a no claims discount at all. However, by shopping around, and becoming aware of the no claims policies of the various insurance companies, you can find companies with shorter qualifying periods for which you will easily qualify for a no claims discount. This is a very simple way of making sure you get the substantial discount that is available for drivers that have not made any claims, particularly if you have had an accident three or four years ago.
Another thing you may have to consider is waiting till you qualify for a no claims discount. For example, if you are say four months from meeting the qualifying period for a no claims discount, than it does not make sense to pay for a year’s worth of motor insurance that does not take into account the fact that you will be falling into the qualifying period after four months. To make the most of this situation therefore, you will have two options. The first is simply to wait for more months till you reach the qualifying period and in this way you will benefit fully from the no claims discount. The second option is to simply buy four months worth of insurance, which will take you up to the time that you reach the qualifying period, and then you can buy an annual policy that will give you the full discount. A variation of this would be to tell the insurance company that you will meet the period after four months and see if they will take that into account when they are pricing your policy.
Always be willing to tell the insurance company about any circumstances you feel should reduce their risk and accordingly, the cost of your insurance. It is a sure way to save money.
USE YOUR NEIGHBOURS TO HELP YOU FIND A SAFER PLACE TO PARK YOUR CAR AT NIGHT
Have you ever noticed how motor insurance applications always ask you where the car will be parked at night? It shouldn’t come as a surprise to learn that there is a huge difference in safety and risk depending on where your car is parked every night. If you car is parked in your driveway in a safe residential area, or better still, in a garage beneath your bedroom, it is at significantly less risk of being stolen or vandalised than if it was parked on a busy city street near bars and night clubs for instance.
While most insurance claims are a result of road accidents and damage that occurs while the car is being driver by the owner, a significant number of claims arise from cars being damaged while parked, especially at night time. This is usually the result of vandalism and we have all seen the cars parked on the side of the street after a busy weekend night, with the wing mirrors torn off or some other pointless damage having been inflicted on the vehicle. These types of claims end up costing motor insurance companies a lot of money each year.
Another serious risk to vehicles is theft. This can have the potential of resulting in huge claims on insurers as not only must the stolen car be replaced, but stolen cars often end up in accidents or causing damage to other vehicles also. Because most car thefts occur at night time, it becomes all the more relevant to the insurance company to know where your car is parked at night time.
If you can park your car in a safe driveway or a garage, then you will usually expect to see a dramatic reduction in the amount you have to pay for your car insurance. This takes full account of the reduced risk of having your car parked in a safe place every night. If you do not have a garage or a driveway, then you can sometimes still get this discount by perhaps arranging with your neighbour to use their driveway. Some people who do not own cars of their own will be very happy to let you park your car in their driveway. It makes little difference to them and it is saving you money on your car insurance.
Another thing you can think about is renting garage space. Many places have such garages for rent and if this is located somewhere near enough to your home to make it convenient then it is certainly worth considering. You will of course have to calculate the cost of renting the garage for the year to see if it is worth doing. However, many people will see this is a worthwhile investment simply because of the worry it saves them, knowing that their car is safe and will not be damaged while they are asleep. Also, depending on your car, you may be very concerned about it, especially if it is an expensive car, and therefore, parking it somewhere safe is something that you will be anxious to do in any case. In these instances, the fact that it will save you money on your insurance is just a bonus.