What to Do as Car Insurance Premiums Rise

What to do as car insurance premiums rise

Motorists in the UK were dealt a double blow at the end of April. First Chancellor Alistair Darling announced a rise in fuel duty as part of his 2009 Budget. Then, less than a week later the AA British Insurance Premium Index revealed a one per cent rise in car insurance premiums already this year – with much steeper climbs predicted over the next nine months.

The Index found that, based on data from more than 80 car insurance providers, the average comprehensive car insurance quote increased by 1.3 per cent to £751.60. With premiums falling over the same period in each of the last five years, when the car insurance market is typically at its most competitive, it could be indicative that insurers are determined to address past underwriting losses this year.

With the industry facing escalating costs due to a rise in personal injury claims and their legal expenses, as well as the overall effect of the credit crunch, drivers are likely to be hit hard.

How can drivers keep car insurance premiums down?

Once again the AA British Insurance Premium Index revealed a "shop around" index alongside its overall average figures. The shop around index is based on an average of the three lowest premiums for each customer and is therefore much closer to the actual premium they will pay.

It revealed the average comprehensive car insurance premium to be £504.38 – slightly up from the previous quarter when it stood at £500.54. What’s crucial about this figure though is that it is almost £250 cheaper than the average quoted premium.

This means that drivers who just visit one insurer and accept what they are given could be paying significantly over the odds. Only by shopping around and comparing quotes can they be sure they are getting a competitive deal.

This doesn’t mean you have spend hours on the phone to various insurers every time your policy is up for renewal, however. Instead you simply need to use a comparison website. The leading comparison websites can now compare quotes from more than 100 car insurance providers with a single search. This gives you more peace of mind that you are finding a legitimately competitive deal.

Are there other ways to save on car insurance?

With car insurance it’s not just at renewal time that you can save. It is possible to save money even with an existing insurer as long as you are savvy.

Insurers base their premiums on risks – the higher the risk you pose (i.e. the more likely you are to be in an accident or have your car stolen or damaged) the higher the premium you will face. So you should take steps to show your insurer that you are less of a risk.

For example, young drivers are heavily penalised due to the reputation of some young males as "boy racers". As such if you’re a young male driving a high performance car you’re likely to be hit with a sky high premium assuming an insurer is willing to cover you at all. However, there are ways to address this.

Young drivers should think about their vehicle choice. Picking a small and conventional car with no modifications paints the picture that you’re less likely to race your friends or go joyriding. It’s also helpful to take a Pass Plus course immediately after completing your driving test to give you vital experience in unfamiliar road environments such as on the motorway and inner-city driving. Some insurers believe in this course so much that they are willing to slash premiums by around 35 per cent to drivers who successfully complete it.

It’s not just youngsters who should think about ways to save, however. Any driver, no matter how old, can benefit from boosting their vehicle’s security and therefore reducing their theft risk. One way to do this is to park your car in a garage overnight. Another possibility is to fit a car alarm, immobiliser or tracking device to your car though it’s worth contacting your insurer first to ask which system will earn you the biggest discount.

Driving safely and building a reputation for yourself as a competent driver will also earn you plaudits. Most insurers offer no-claims discounts in the region of 60 per cent to the most consistent drivers.

Finally, remember to mark down your renewal date and shop around for car insurance every year to take advantage of the special offers available to new customers.