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You've got a problem. The renewal slip for your car insurance has just arrived in the post. But, despite a blameless and incident-free year at the wheel, your insurer has increased the cost of cover by £100.
Insurance prices are rising so quickly that, if anything, you have got off lightly. But that doesn't make you feel any better, so use the following Q&A guide and money-saving checklist to chop your premium down to size.
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Why have prices shot up?
It's not a sudden increase in the number of claims because they haven't risen. Nor are cars more expensive to repair. As modern cars designed for cheap, quick repair (like the Ford Focus and Peugeot 306) become more widespread, costs should fall. Nevertheless most insurers paid out £1.20 in claims for every £1 of premiums they received. It's time to balance the books.
Why did they pay out so much?
The rise of US-style injury claims services, operating on a 'no win, no fee' basis, has hit insurers hard. As has a change in the law whereby the health service can reclaim up to £10,000 in treatment costs from the driver at fault.
Where do I start?
Shop around. It sounds obvious, but insurers say that a quarter of policyholders renew at the end of the year without even comparing quotes. Remember, the price of a typical fully comprehensive policy is rising at 20 per cent _ or £100 _ a year, so you'd be crazy not to call as many companies as you can! Still not convinced? Well, research carried out by the Automobile Association shows that an hour logged on to the Internet or on the phone can easily save a third on the renewal quote.
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But I called around last year and my current insurer came out as easily the cheapest. Won't they still cost less than the rest?
Probably not. Insurers put together a cocktail of discounts to attract business. But many keep the best deals for new customers. If you are already on their books, you may not benefit. Insurance companies are forever tinkering with the way they assess risks, based on the number and types of claims paid. You may live in the same house, have the same job and drive the same car as you did then but changes with the insurers risk assessment criteria can mean they may not want your business as badly. Even if you were their perfect customer a year ago!
Is the cheapest deal automatically the best?
No, unless if it comes from a big-name company and the cover offered matches what you currently have. Some insurers cut premium prices, but then charge hefty fees if you decide to vary the policy, for example by adding drivers or changing the car, after a few months. Some will arrange a loan car quickly after an accident and arrange for yours to go for immediate repair. Others leave all the to-ing and fro-ing to you. Ask plenty of questions before you agree cover, and study the small print to satisfy yourself that the level and quality of cover is sufficient.
What can I do to beat the price down?
First, consider what you are currently paying for. If your 19-year-old son is included on the policy but is away at college, it's time to remove him. If cover includes driving to work but you always take the train, then amend the policy or find a company that charges less if you don't use your car to commute.
I have a flat in London but my parents live in Cornwall. Should I insure my car using their address?
No. The rate you'll be quoted for a remote region will save you a fair bit. But if you crash on your way to work, the insurer will want to know why you were so far from 'home' so early in the day. Companies are wise to every dodge. They also check the information you supply against other databases. If your car is registered at one address but insured at another, they'll want to know why.
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I've just passed my driving test. Even though my car is old and has a small engine, every insurer I've contacted wants over £1000. That's as much as my car is worth. Please help.
Try Pass Plus. It's a scheme run by the British School of Motoring to enable new drivers to improve their skills. It provides three hours of motorway driving, followed by three hours general driving. There's no exam to pass you receive a certificate to say you have completed the six hour-long sessions. Most insurers recognise the certificate and cut premiums by the equivalent two years' no claims discount. Costs £106, but should reduce your insurance bill by £200-£300.
Will spending money on security features bring down the cost of insurance?
Depends. If you've a high-performance model, or anything valued above £30,000, your insurer may insist on a satellite-tracking device. It costs around £300 to install and £80-£120 annually for the monitoring service. Upgraded immobilisers can earn 5-10% discount - according to the insurer. Mechanical security devices don't usually attract discounts. Garaging the car will make a difference if you live in a city centre that's notorious for vehicle crime. But in the suburbs, it doesn't make much difference to policy costs. However, if garaging your car is a condition of insurance, then you must do so. If your car is stolen on the one night of the year that you don't bother, you'll probably be excused. But if the claims assessor visits and finds that your garage has been converted into a granny flat, you're in trouble.
What about using a specialist insurer?
If you're aged under 40, over 55, drive fewer than 5000 miles a year, run the household's second car, drive a small car or a classic, there's a tailor-made service. Any or all are worth trying. But don't assume that they'll beat the big names on every occasion.
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What about a broker?
Worthwhile if you've made a claim or two, have points on your licence, or drive a performance car. Because they are paid a commission by the insurer on what they sell, they probably won't match the rates big companies will offer you direct if you drive an ordinary car and have some no-claims discount. But if you're a poor risk or have unusual circumstances, they'll know how to fix you up. To find a good one, go on friends' recommendations. Or call several and stick with the one that sounds most accommodating.
My car is old and worth £3000, at most. Should I reduce cover for it from comprehensive to third party, fire and theft?
It's worth considering. But you may only cut your bill by a fifth. And, of course, if you're to blame for an accident, you'll have to pay to repair your own vehicle. If you're injured, too, and unable to work, you'll get no compensation.
It's unfair that so many people drive uninsured and get away with it. What's being done about this?
An estimated one in 20 drivers has no insurance and that adds £30 a year to what you pay. But their days are numbered. From June, police patrols will be able to check at the kerb-side whether a car or driver is insured using data provided by all major insurers. It'll take a matter of seconds.
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NEXT: MONEY-SAVING CHECKLIST
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BACK TO BUYING A CAR HOMEPAGE
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