Essay : Top 10 premium-reducing tips

Carole Nash Classic Insurance Specialists

The original Mini - fun to drive and cheap to insure, as long as you keep it standard - and follow our top 10 tips for lower premiums
The original Mini - fun to drive and cheap to insure, as long as you keep it standard - and follow our top 10 tips for lower premiums.

With the price of public transport skyrocketing, petrol not looking as though it’s going to drop any time soon and pay cuts going on left, right and centre, the need to find ways to cut spending is growing day by day.

Car insurance is one of those things that we can’t get away with avoiding; if we’re fortunate enough to have a car, we must cough up the cash. So to ease the pain of parting with so much money, here are ten tips to help cut these costs.
  1. Shop around

Each car insurance company assess your risk in different ways, so it’s important to request quotes from several different companies to ensure you get the best deal. Make use of the many price comparison sites out there and you’re sure to find the best car insurance companies there are.

  1. Park carefully

Secure overnight parking can drop your premium by around 5%, so consider your options when choosing your parking spot. Those kept in a drive or garage are less at risk of theft or damage than cars that are left in the street over night.

  1. Occupation

Different occupations come with a higher risk and therefore will boost your car insurance quote. It’s also worth noting that different occupations can be known by other things, for example, a lawyer is also known as a solicitor, so try switching the names about.

  1. Security

If your car doesn’t have any security features, your car insurance will automatically be more expensive than if it did. Consider getting an alarm system fitted to save money in the long run. If you drive an expensive, high performance car, many insurance companies will insist on getting a tracking service installed before they even consider insuring you.

  1. Car selection

All cars are rated on a scale of 1-50; with group one representing the lowest risk and 50 the highest. These rates are based on desirability, the amount of power the car has and the likely cost of repair or replacement. Think about this if you are choosing a new car, as the slower, cheaper and more undesirable it is, the cheaper it will be to insure.

  1. Drive carefully

This one’s a bit obvious, but we’re going to remind you anyway. Remember that the more points you have on your licence, the more you’ll pay out for insurance. It’s not uncommon for one speeding offence to bump your insurance up by 5%, while if you’re caught drink driving or using a mobile phone while behind the wheel, your premiums could more than double.

  1. Add another driver

Adding another driver with a good driving record could have the affect of averaging out your risk and therefore lowering your car insurance. It will not always make the difference you want, but it’s worth trying out anyway. Never add your name as the main driver on a young person’s car when they drive it the most as it could cost you a lot more money than an extra £100 in the first place.

  1. Don’t modify your car

Any modifications that do not increase the security of your vehicle are guaranteed to make your insurance a lot more expensive than it needs to be as it makes the car more desirable. If you do make any modification, make sure you inform your insurer so as not to void your policy.

  1. Keep mileage down

The less you travel, the less likely you are to have an accident. Most insurance policies base their quotes on a 12,000 or 15,000 miles per year average, however, you can cap yourself at 10,000 or even 5,000 per year. If you do go for this option, make sure you don’t go over the amount of miles you have set yourself. This money-saving tip is best for families with multiple cars.

  1. Increase your excess

If you’re willing to increase the amount you’ll have to pay before your insurance company does in case of an accident, you can save a great deal in the first place. Think carefully before you decide to choose this as an option however – would you be able to afford £1,000 up front if you were unfortunate enough to be in an accident?

Keith Adams

Keith Adams

Editor and creator AROnline at AROnline
Created www.austin-rover.co.uk in 2001 and built it up to become the world's foremost reference source for all things BMC, Leyland and Rover Group, before renaming it AROnline in 2007.

Is the Editor of the Parkers website and price guide, formerly editor of Classic Car Weekly, and launch editor/creator of Modern Classics magazine. Has contributed to various motoring titles including Octane, Practical Classics, Evo, Honest John, CAR magazine, Autocar, Pistonheads, Diesel Car, Practical Performance Car, Performance French Car, Car Mechanics, Jaguar World Monthly, MG Enthusiast, Modern MINI, Practical Classics, Fifth Gear Website, Radio 4, and the the Motoring Independent...

Likes 'conditionally challenged' motors and taking them on unfeasible adventures all across Europe.
Keith Adams

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51 Comments

  1. Not sure of the veracity of this but here goes anyway; when shopping around do be wary as some car insurance providers (or is it the comparison sites) may perform a credit check of some description which could, if true, see your credit rating take a bit of a battering, I would imagine…

    Anyone know if I’m correct or, as usual, barking?

  2. Regarding security, a friend was seriously considering a 1993 XJ-S, and the insurer he went to wouldn’t even entertain the thought of one unless it was fitted with an immobiliser and tracker.
    Wouldn’t think the sort of person that steals cars would know what an XJ-S is, but there you go.

  3. “perform a credit check of some description which could, if true, see your credit rating take a bit of a battering, I would imagine…”

    I’m not sure how running a credit check is going to damage your credit rating. It’s simply a check to see what your credit score is and doesn’t affect it. If it’s a bad score then you’re likely to be asked for a deposit or even pay the premium up front rather than on monthly credit terms.
    Speaking of monthly insurance plans, check the APR they offer you, ‘ask’ them when you have your quote. It’s usually some extortionate APR and you’re better off paying for it up front on a credit card then paying it off X amount each month. Don’t have a credit card? Then get one and just use it for your car insurance. Last time i checked i was being offered 30% APR for premium credit, when even the ‘worst’ credit card i could find was offering 20%!

    “Wouldn’t think the sort of person that steals cars would know what an XJ-S is, but there you go.”
    In their time they were advertised as the fastest production car and they’re pretty old. Even the dimmest of joy riders is going to realise it’s quick and will be fun to race around in for a bit.

    “different occupations can be known by other things, for example, a lawyer is also known as a solicitor, so try switching the names about.”
    This is a good tip. Comparison sites are good for trying different job titles. For example i found that in my old job i could put “Van Driver”, “Courier”, “Delivery Driver” all perfectly accurate titles for the job i did, but van driver was cheaper than the others!

  4. “The original Mini – fun to drive and cheap to insure, as long as you keep it standard”

    This is where shopping around comes in though. I pay much less for my Modified Mini through a specialist insurer than I would do for an unmodified car through a mainstream insurer!

  5. These are good fundamental tips. There’s always more you can do depending whether you’re at New Business or Renewal stage with a company. Likewise if you’re making a mid-term change to your policy.

  6. The impact from applying for credit will vary from person to person based on their unique credit histories. In general, credit inquiries have a small impact on one’s score. For most people, one additional credit inquiry will take less than five points off their credit score. Large numbers of inquiries also mean greater risk. Statistically, people with six inquiries or more on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries on their reports.

    While inquiries often can play a part in assessing risk, they play a minor part. Much more important factors for your score are how timely you pay your bills and your overall debt burden as indicated on your credit report.

    In any case, no one can make a credit check on you without your permission, so searching comparison sites won’t harm it.

  7. “The impact from applying for credit will vary from person to person based on their unique credit histories. In general, credit inquiries have a small impact on one’s score. For most people, one additional credit inquiry will take less than five points off their credit score. Large numbers of inquiries also mean greater risk. Statistically, people with six inquiries or more on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries on their reports.”

    I’m not disagreeing with you, but being as most companies with any kind of contract payment will routinely run a credit score check. You can even run one on yourself if you sign up to one of the agencies (experian etc) Surely everyone would have a poor rating in no time? What i mean is if i take out a mobile phone contract, they run a check. If i then get a new credit card they run a check, if i decide to pay my insurance by premium credit they run a check and so on. You might easily have half a dozen different insurance policies in your name.
    It wouldn’t take very long at all to clock up six or more requests.

    Yes it’s true organisations have to ask you before running a check, but if you refuse then they simply tell you that they’re unable to supply you with their goods/services without doing so.

  8. @Dennis – viewing your own credit profile via Experian or Equifax does not leave a track on your credit profile or reduce one’s overall score, however each credit check by a company does. If you were to have a number of credit checks in rapid succession it could reduce your overall score and look suspicious to creditors. For example, you are much more likely to be declined a credit card on application if your credit profile has a number of recent tracks from similar creditors. For those with a credit score over 900 this probably does not matter, but there are plenty whose credit scores are far from ideal and so who would be ill advised to be blazé when considering the loss of points from their overall score.

  9. Not sure what difference protecting your no claims bonus makes, as insurers just increase your premium after a bump rather than reducing your no claims. Is this a scam?

  10. What about the no claims bonus scam? ie I have been driving since 1986 and only made one claim so therefore should have 20 odd years NCB.

    At renewal I seem to have “lost” 15 years and am now down to 5 years NCB. Looking at the small print “we only recognise a maximum of 5 years NCB” Thanks for that!

  11. I find it amazing that the location can make such a difference. Sticking in my parents’ address would reduce my premium considerably. I don’t spend enough time there to get away with that one with any confidence, but if somebody has 2 addresses they live at, it’s worth considering…

  12. I’ve used comparison websites which have been useful to a point but last renewal, I was about to change to the cheapest quote with equiv cover (More Than). However through a deal with my Trade Union I was able to get cover with another broker for £62 less.

    Of course the cheaper new customer quotes only last a year or two…

  13. @ Jon R – They do, especially worse when you use a comparison site as there is a chance that multiple searches will be done by the various insurers being contacted. It won;t affect your credit profile specifically though lot’s of searches can sometimes alert lenders and the like to look more carefully. Some insurers perform what they call an “unrecorded enquiry” which you will see on your file but o-one else will, but others perform an “insurance quotation” search and this is visible to some other organisations.

  14. @ Mikey C – I recently moved within the same town, same postcode area and everything but my insurer wanted to put my premium up by over £100?? When I challenged this they said they quote at street level, so if they believe one street to be worse than another it will affect your quote. When I checked the polic website for crimes in the area there was no difference in the number of reported crimes for either address. I think the Insurers are increasingly using any change as an opportunity to get more out of you. Disgraceful and I hope the inquiries recently launched into insurance can help sort this out.

  15. One more tip when renewing, try your own company as a new customer. I did this with my insurance company the other year and got a quote ~£150 less than my renewal letter said. After the chap in India refused to match the price I declined the renewal and signed on as a new customer.

  16. No claims bonus isn’t a scam.

    There has to be a cap on it otherwise eventually you’d end up getting 100% discount. Genuises out there will realise what that would mean!

    Would you prefer to have 5% per year so to achieve the 60% bonus you’d have to be driving 12 years instead of 4-5? I already know the answer.

    Protecting your NCD usually attracts a premium of 12.5%-20% depending on the company and DOES NOT PROTECT YOUR PREMIUM, IT PROTECTS THE LEVEL OF DISCOUNT YOU’RE ENTITLED TO.

    If you can imagine; you’re entitled to 60% discount of a premium of say £1000.00 before you had a claim, you’d pay, £400.00.

    If you have a claim and protect your bonus, you’ll be entitled to 60% still but the premium before bonus may now be £1500.00 so you’d pay £600.00

    If you had a claim and didn’t protect your bonus, you’d be entitled to 40% usually (stepped back from 5 to 2 years but some companies vary) so it’d be 40% discounted from the £1500.00 meaning you’d pay £900.00

    When you consider you’d pay 15% of the 400.00 originally to protect your bonus (£60.00); that spend of £60.00 could save you £300.00. You’re technically insuring your insurance.

  17. On the postcode thing; it’s not just crimes which affect postcode ratings.

    If there is a particularly dangerous bend or an accident blackspot that can affect the area rating. Likewise if there has been a particular street which has experienced a high number of claiments for an insurer, they will (rightly) rate it higher. It’s not just based on theft risk.

    I remember being in an Underwriting meeting a few years ago and we changed an area rating for a street in Leeds to rate HIGHER for garaged vehicles than Driveway; the reason? 6out of 9 of the vehicles insured that year on that street that we insured had suffered damage whilst IN a garage.

    The year after it was re-assessed.

    I recently moved half a mile (5 streets) and had my premium reduced by 10%

  18. On the postcode list, it’s somewhat disjointed:

    GU7 – B, GU35 – C, GU12 – A

    In my mid it should be:

    GU7 – A, GU35 – B, GU12 – C

    Never mind that GU34 borders with GU35 (I’m on that boundary), and that’s a B. And I appearently live on the wrong side of it!

  19. People’s perception of a postcode or the housing there etc means absolutely NOTHING.

    It’s ALL down to £’s and pence. Claims experience of the insurer

  20. As i understand it the postcode thing simply relates to the number of claims made by people living in that postcode.

    That doesn’t mean the incident that the claim relates to actually took place in that postcode, simply that the claimant lives there.

    So they just look at it along the lines than people living in a certain street make more claims than elsewhere.

  21. “6out of 9 of the vehicles insured that year on that street that we insured had suffered damage whilst IN a garage.”

    And that could simply have meant that a block of garages caught fire, but ‘statistically’ speaking it means your car is more likely to catch fire than elsewhere. So the risk goes up.

  22. That’s right but as I said, there is an element of any accident areas or dangerous roads there being flagged up and the area rated higher accordingly.

    I know this because I’ve been involved with this.

  23. @Dennis 23

    If hard and fast statistics relating to areas and demographics isn’t used, how on earth could you possibly determine risk?!

    And in the case of that 6 out of 9, that was not the case, just to clarify 🙂

  24. Where I live there are a fair number of expensive cars around, so would this be a factor in my insurance premiums, as presumably if I crash into a Cayenne or X5 it would cost my insurance company more than if I crash into a 8 year old Nissan Almera!

  25. That would only come into play 2nd hand, if you will; ie, the claims payout in that area should be proportionally higher, as such a higher rating would be applied that way. So same end result, but a slightly different way of reaching it

  26. We can drive any where,park anywhere we like,it’s just where the car is registered,you may live in the “safest area” but work in nights in a “rough area” or vice versa, it’s just a con,your house is always in the same place.

  27. Which is why many insurers ask “Where is the vehicle parked over-night”

    Things we’re told we have to buy, often feel like a con, however the ‘con’ doesnt feel as harsh when, having paid out 400 quid for 12 months insurance and we smash into a car causing 30k worth of damage to their car, have our own paid out for also and have no consequence or liability other than a proportionate increase in premium the following year….

    A bit of perspective is needed

  28. “If hard and fast statistics relating to areas and demographics isn’t used, how on earth could you possibly determine risk?!”

    I wasn’t disagreeing with you.

    “Which is why many insurers ask “Where is the vehicle parked over-night””

    In my experience most ask for your employers address too and ask where the car is parked while at work.

    Mine is garaged and my insurers know this, there is a clause in my policy that states that no claim will be paid in respect to damage or theft if my car is parked with in 1/4 mile of my house at night without being garaged. Stops people lying about their car being garaged, every time someone blocks my garage i end up calling the police to get it moved or at the very least i then have a reference number. Then if my car is damaged i stand a chance of claiming off the person blocking my garage!

  29. The foolproof way of reducing your premiums is to stop driving,because they way the motorist keeps getting stung it wont be far off.

  30. We’re the victims of our own greed. When people realise they’re not ‘entitled’ to a £1500 whiplash claim, just because they’ve had an accident, perhaps then we can move forward.

    Those £1500 payouts have to come from somewhere 

  31. Although the claims industry doesn’t help with that. I keep getting texts telling me i can make a claim for personal injury because i made a claim last year. My car was parked with no one in it in the company car park and someone reversed a van into it. Even the damage to the car was minor!

  32. That’s not the insurance industry, that’s the 3rd Party Claims companies who feed directly off commision for compensation and car hire who are doing that.

    They’re a CANCER to the industry and have probably 2 years left before they’re ousted.

    Disgusting  

  33. I know that’s why i said ‘Claims industry’.

    But saying that, the only people i contacted about the claim were my insurer, so the only place the ‘claims company’ could have got the details from were my insurer or the third parties insurer.

    Problem is i think, my insurer put me in touch with their contractor who handles, repairs and replacement cars. When i pointed out i was looking for a cash settlement to do the repairs myself and didn’t need a hire car as i have the use of another, they sent me back to my insurer. So my own insurer were actually encouraging me to claim for a hire car which i didn’t need, if it had been a ‘fault’ claim then it would simply have driven up the cost of the claim and therefore my renewal premium!

    I think another tip is to think carefully about whether it’s worth making a claim. Mark, what’s the minimum amount you think it’s worth claiming for?

    For example the claim i mention was non-fault and i went through my comprehensive policy. It wasn’t long before my renewal, and the cost of the claim was £300 (£100 after my excess), however after making that claim my renewal went up by £350! This was eventually reimbursed to me after the third party had settled the claim, how ever if I hadn’t had witnesses or any evidence it would have been far more expensive for me to make a claim than to pay for the damage myself.

    Is there a rule of thumb for an amount that isn’t worth claiming for? Like if the claim is less than a certain percentage of your premium it’s cheaper to pay yourself. 

  34. It is a scam.
    Yes, it is going to be cheaper in secured parking / garaged, but for some on-street is the only option. (This is also why electric cars wont take off in cities).
    There is the anecdote of the guy who has a 406 coupe / Ferrari bodykit, and it costs less to insure than if it was a bog standard 406!
     

  35. This is the kind of half-arsed thing that perpetuates the myth though, the modified 406 will be on a very restrictive classic or specialist insurance policy, not on a mainstream standard insurance policy like the 406 standard coupe will be. 

    It’s embarrassing how, people trust annecdotes on insurance to formulate their judgements… Imagine if we lived the rest of our live’s like that.

    What you have to remember is, when it comes to annecdotes and people saying ‘how much i get my insurance for’ invariably it’s cow-pat.

  36. @Dennis.

    There isn’t a rule of thumb per se, however we do seem to have moved into a period of time where people do put a claim in no matter what, that’s because the perception exists – rightly, or wrongly – that becuase you pay your premium for a year you’re ‘entitled’ to claim.
    Whilst the ‘entitlement’ is there (by entitlement I simply mean the option to claim legitimately within your policy limits,terms and exclusions) there still has to be the calculation made by the insured as to the economic viability of making a claim (everyone knows how it works), this is why sometimes it can be better to have higher policy excess as it deters from making smaller claims which can be more harmful to your claims history and policy rating than they’re worth.

  37. There’s the balance though; it’s the likelihood of payout which can put standard prices higher though.

    Standard car more likely to be a daily driver, not drove with the same attention/affection a be-spoke model would?? It’s not foolproof, as there’s the human element involved, but I expect that’s the rationale

  38. What you have to remember is, when it comes to annecdotes and people saying ‘how much i get my insurance for’ invariably it’s cow-pat.”

    I agree, you always get people post on forums asking “who do you recommend for a good insurance price for my Morstin-Mintego?” And you get a load of people reply saying oh i pay XXX with insurer/broker X. In reality though the replies are meaningless as insurance quotes are just so personal. Even when my sister got a mini, i gave her the name of the large specialist broker i used for mine and she found them more expensive than others. When i phoned the company she eventually found cheapest they were one of the most expensive for me.

    With the modified 406 example. I expect what happened was as a standard car it was insured with a mainstream insurer, then when he modified it he found the mainstream one would no longer touch it and he shopped around the specialists who were cheaper. It’s quite possible if he’d shopped around the specialists before it would have been cheaper anyway!

    Something else that might come into it, when someone parks next to a ‘Ferrari’ in a car park they’re generally very careful not to open the door against it. A ‘406’ they’re less bothered!

  39. I suppose if one were to phone ones insurer before making a claim and ask “if i made a claim of x amount, how much would it put my renewal premium up?” Then they would likely give you some idea of whether it would be worth it?

  40. Nope, they wouldn’t. You’d more than likely get the generic answer of “We can’t tell you that until your renewal” but you can do it easily by simply going onto a comparison website and trying with and without to see the difference NOW

  41. Does the amount of a claim affect the renewal or is it just ‘a claim’. So if you made a claim for £1000 would it affect your premium less than one for £5000?

  42. Some insurers don’t bother to collect the data, more do now and there’s a kind of unoffical point of £12,000 as a noteable point, as it were

  43. ahh ok, so basically if you make a claim it will probably affect the premium the same regardless of it being £1000 or £3000, but if you made a claim of £20k then it would more than likely make a bigger difference.
    Although if you had a claim that cost more than £12k then it would probably be something so serious, that your insurance renewal would be the last thing on your mind. 

  44. Read reportage in the mail on sunday supplement if you still have it even the police are in on the scam,which reminds me of my uncle saying police-cleanest job in the world,the dirty bastards.

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