Don’t let them manufacture your car insurance

There are few things more exciting than buying a new car. It’s likely to be one of the biggest financial outlays you ever make and there’s a certain buzz about spending so much money, not to mention that special new car smell and your joy at getting behind the wheel for the first time.

The problem is that no-one knows about that excitement any better than the car dealers and manufacturers – giving them the perfect opportunity to take advantage by offering deals that aren’t as good as they seem. This particularly applies to car insurance where manufacturers are known to regularly bump up premiums in the region of 10 per cent.

A study by a price comparison website has revealed that by approaching an underwriter directly you could typically save £30 on your car insurance. These savings however, pale into insignificance compared to the money you could save by shopping around for car insurance – manufacturer’s car insurance typically costs 26 per cent more than the cheapest deal.

How manufacturers bump up car insurance premiums

According to the research, manufacturers are collectively pocketing an extra £15million a year by carefully packaging car insurance policies.

For example, insuring a new Astra CDTI with Vauxhall itself costs £316.05. By contrast, getting the same policy through the underwriter RBS Insurance will bring the cost down to £287.70.

However, this is only the tip of the iceberg. By shopping around motorists could make even larger savings. The cheapest policy for a vehicle of this type is available for just £246.55 – that’s an additional £41.15 saving compared to the underwriter’s policy and nearly £70 off the manufacturer’s annual premium.

Collectively, motorists in the UK are paying an extra £48 million a year by insuring through manufacturers rather than taking the best buy policies available by shopping around. On average the best buy policy costs just £238 compared to £330 to insure a car with a manufacturer.

How can you avoid these extra car insurance charges?

The problem most motorists face is that manufacturers and dealers can be very persuasive and can paint a bad deal to look like a good one. It’s easy to be lured in by their lingo and their insistence that the offer they are making can not be bettered.

As a consequence, when buying a car you must tell yourself beforehand that you will keep the insurance separate. Refusing a car insurance policy should make no difference to the manufacturer’s sales price, so why should you pay extra on car insurance just to appease them?

Instead, shop around for car insurance before you even enter a dealership. Search with a car insurance website to get an overview of how much you should be paying in insurance for the car you’re interested in. Then you’ll have a clear idea of whether the manufacturer is offering a good deal or not. If you can, print off the cheapest quote you receive when conducting an online search and take it with you. Then if a dealer makes you a car insurance offer you can show him or her that you have already found a better quote. If you want to save hassle then consider asking if the dealer can match the quote like for like.

On rare occasions manufacturers will offer good deals on car insurance. In an effort to tempt you to buy a new car, many will offer a year’s free insurance. It goes without saying that paying nothing for 12 months is a great offer that shouldn’t be ignored. However, once this period expires you must remember that premiums will typically leap and no longer be competitive. So make a note of when the 12month term ends and be sure to shop around at the end of this period.

Don’t pay the price for car insurance loyalty

If you’re buying a new car it’s easy to assume that your existing car insurance provider will offer you the best deal – however, even if it was the cheapest when you bought your existing car it does not mean it will be the cheapest again.

Insurers measure risks in different ways. So a new car, perhaps with a larger engine, may be viewed in a different way by your car insurance provider. In addition, there are many insurers that offer introductory rates to new customers that are well worth capitalising on.

The only way to be sure that you’re getting a cheap car insurance quote is to shop around and compare deals across the market.