Keep down the cost of insuring your new car

New car insurance isn't always the first thing on your mind when you contemplate a new car but it's worth taking time out from looking at cars to consider your insurance costs.

During the month of September the Driver and Vehicle Licensing Agency (DVLA) is likely to issue around 460,000 new licence plates, more than twice the number in preceding months. The new registration season may tempt you into a car showroom. If so, you should do some homework before splash out on buying a new car.

Make, engine size, and colour (not necessarily in that order, depending on your inclinations) are always a bone of contention but don't forget your car insurance. It's a cost that's often overlooked. You need to ask the dealer a few questions about the insurance classification of the car of your dreams.

The current insurance classification bands are 1-20 with the most expensive or rare cars in the top brackets. Among the highest group cars (Group 20) are the BMW M series, Aston Martin, Audi TT Roadsters, Ferrari, Porsche 911. At the other end of the scale, the lowest group cars (Group 1) include the Fiat Panda, Citroen 2CV, Vauxhall Corsa and Seat Marbella.

The dealer may offer you a period of free insurance as an incentive to purchase. Be sure to check the insurance policy details and what your premium would be after the free period. Although it may be hard to predict running and repair costs, check the manufacturers figure for fuel consumption (bear in mind how accurate these are likely to be). You could also enquire as to how often the car need servicing and what the re-sale value is likely to be.

If you renew your car insurance every year with the same insurer then you should take the opportunity to review your insurer and search for other, more competitive alternatives. A driver's profile will constantly change (your age, occupation, address, type of car) and these factors will affect your premium and the type of insurer capable of offering the most competitive product and price.

If you're looking for competitive car insurance, your search should begin online but there are plenty of obvious things you can do to make sure you minimise your insurance costs:

• Don't modify your car: Modifying your car will affect your insurance premium. Manufacturers work closely with insurers so that a particular model of car can be insured to a standard. If you modify the car then the factors on which your premium has been based will have changed and the number of insurers that will insure you is cut dramatically.
• Drive Carefully: Careful drivers who build up a history of no claims will be rewarded with lower premiums so it pays not to treat the roads as a race track!
• Security: Fit an alarm or an immobiliser or use a steering lock. If you have a garage use it to store your car, don't just leave it on the road. If you have a detachable stereo make sure that you remove it from the car.
• Voluntary Excess: If you agree to accept a voluntary excess, the amount you agree to pay in the event of an accident, you can reduce your premium.
• Low mileage discounts: If your annual mileage is low, inform you insurer as this can cut the cost of your insurance by 15%. Using your car to commute to work will make your premium more expensive.
• DON'T LIE: When you enter into a contract with an insurer it is entered into in utmost good faith. If you lie this can allow an insurer to refuse payment in the event of a claim. During the policy period you must keep the insurer up to date with any information which may change the premium you pay. For example, if you change address then you are obliged to inform your insurer. This is because your car may be more or less liable to damage, or be involved in a crash. If you are caught speeding and points are applied to your licence you must inform the insurer. Any modifications to the vehicle must be reported to the insurer. Failure to inform your insurer of any updated information may result in your policy being deemed invalid.
• Don't automatically buy comprehensive insurance: If your car has a low value you can save a third off your premium by insuring your car for Third Party Fire & Theft.
• Don't Buy a High Performance Car if you are under 30: If you are under 30 and drive a sports car then expect a high premium, especially if you are male. Insurers will take numerous factors into account including your age and the group rating system of the vehicle to be insured. Most family cars fall into groups 6 to 12, unless they have high-powered engines.

09 September 2005 © Moneyextra.com

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