Rising Cost Of Motoring

Both AA and Swinton this week have reported that car insurance premiums could increase by at least 10% and possibly as much as 20% over the course of 2009.

This would then put the average UK motor insurance premium at around £480 - £500. The reason behind such increases is in the main a result of the surge in personal injury and fraudulent claims followed by claims made by those who have unfortunately fallen victim to uninsured drivers.

With the recent increases in road tax which have seen some drivers paying around £400 a year, and the fluctuation in fuel prices, consumers are looking to get as much control over the cost of being on the road as possible.

Such savings can be gained by shopping around at renewal as opposed to automatically renewing the premium with their existing insurer. Motor insurers will make very little profit off a customer in the first year attracting them in with introductory offers and discounts so it's common to see no decrease or even an increase in premiums in the second year as the insurer attempts to recover their costs.

Research shows that a 30 year old male with a clean licence, driving a VW Golf can get annual car insurance from £284 which at nearly £200 less than the national average premium is already a substantial saving.

Although an increase in premiums may be inevitable it's still possible to bring the cost of your own premium down by making some small amends when obtaining your quote for example;

• If you have a garage use it - some insurers will give a discount for keeping your car in a garage when it's not in use rather than it being left on the driveway or an open road.
• Fit an alarm and immobiliser if your vehicle doesn't already have one, the greater the security the less likelihood there is of anything happening to your vehicle and again this will lead to a reduction of up to 2-3% of the premium.
• Younger drivers may want to consider adding an older parent/relative to their policy. Some insurers will provide a discount if there is an older driver on the policy
• Be accurate when calculating your annual mileage, you may not do as many miles as you think, for example someone who only does 8,000 miles a year but tells their insurer 12,000 could actually end up paying 5% more than necessary. However, be honest with mileage when buying your policy as any false declarations may lead to a claim being declined.
• Take into account any change in your circumstances. For example, since your last renewal you may have retired or no longer require your car for commuting. Not only does this give the potential benefits of reduced mileage but also the addition of commuting on a policy may not be required now. Such a change could lead to savings of up to 10%.
• You may want to consider a higher voluntary discount as by selecting £500 instead of £250, our research shows your premium could be reduced by as much as 10%. By opting to pay a higher amount yourself in the event of a claim you're sharing the risk with the insurer who can pass the savings back to yourselves.
• Look at what is included in your policy. Many will pre-select options such as legal cover which you may already have separately and could be costly adding another £20-£30 to your premium, likewise the option to add on motor breakdown cover may be there, in most cases this can be bought cheaper again as a separate product. Check your bank account or credit card to avoid any duplication of insurance. Some premium bank accounts offer legal protection and breakdown cover as part of standard offering.
• Finally, be mindful when protecting your no claims discount, it's a common mistake to assume that by having this extra cover you are protecting your premium from any increases in the event of a claim, when in fact you are protecting the % discount your insurer gives you and if you make a claim you can still expect your premium to increase. Typically the cost of protecting no claims is around an extra £15-£20.

By not only shopping around but also taking 5 minutes to consider your own circumstances and needs of a policy can lead to some significant savings, and although the increase of the costs of insurance and motoring in general may be unavoidable there are still some significant savings to be made which can help to soften the blow next time you're paying at the petrol pump!

Moneyextra.com recommends you take independent financial advice before acting on any article

2009-01-14 16:28:59 © Moneyextra.com