Why You must Take Out Car Insurance

The credit crunch has put a strain on our finances like never before. Many of us are looking to cut corners wherever we can in order to put some cash back in our pockets – whether it’s skipping the coffee before work each morning; indulging in fewer nights out; or cutting back on our takeaway meals.

The most financially savvy among you will have addressed each of your financial products looking for ways to earn more money or reduce your outgoings. This may mean remortgaging to a loan with a better interest rate, moving your cash to a savings account offering a better rate of return or shopping around for better insurance deals. Some are even willing to forego their insurance policies altogether. However, those thinking of sacrificing their car insurance policies should think again.

Why is car insurance so important?

Car insurance is a legal necessity – you can’t drive a vehicle without it, without risking prosecution. The number of uninsured drivers on the UK’s roads is a major problem – accidents involving uninsured drivers add around £30 to the average motorist’s premiums every year.

Consequently, the police are doing all they can to clampdown on the problem meaning that if you thought you could ‘get away’ with driving uninsured in the past you may be taking a much greater risk now.

Police have teamed up with the Motor Insurers’ Bureau and have gained access to the Motor Insurance Database which provides automatic number plate recognition making life easier for law enforcers. The number of vehicles seized in 2008 rose to 170,000, up from 76,000 in 2006. It is now estimated that police are seizing more than 460 uninsured vehicles a day.

What if car insurance costs too much?

Many drivers flout the law on car insurance because they assume that premiums are too expensive. It’s an understandable concern with predictions from industry analysts suggesting that premiums may rise by as much as 10 per cent on average this year.

However, savvy motorists can save significant amounts of money if they shop around for car insurance rather than gaining one quote and assuming that is the best deal available. According to the AA British Insurance Premium Index, the average comprehensive car insurance premium in January 2009 stood at £741.66. However, for drivers that compare at least three car insurance quotes the average is slashed by more than £200 to £500.54.

Shopping around for car insurance isn’t a complicated task either. You can find cheap car insurance quickly and easily by using a comparison website to compare quotes. These websites effectively do the work for you by comparing deals from as many as 100 providers with one search.

Are there other ways to save on car insurance?

Rather than risk being fined or prosecuted for driving a vehicle uninsured, drivers should look into ways to save money on their premiums first – car insurance may be more affordable than you think.

For example if you’re a new driver, think about your vehicle choice before you buy. Insurers will offer lower premiums if you drive a conventional car with a small engine – you can always buy a high performance car when you have more experience and have built up a no-claims discount.

If you already have a car then there are still ways to save. Many insurers will reduce their premiums if you increase the security of a car with alarms, immobilisers and trackers or by parking in a garage at night and in a secured area during the day. You could also consider taking an advanced driving course to earn a further discount.

For those that don’t want to spend money to make money there are still ways to cutback on your insurance premiums. For example, you could accept a higher voluntary excess, agree to a mileage limit or pay your premiums upfront to cut out interest charges.

Think about the level of cover you choose too. Though the more comprehensive the cover the better, it’s much better to have some cover than none at all. Third party only cover is the only legal necessity in the UK – this will cover damage to other vehicles and injuries to third parties but not you or your own car. If you want your car insurance policy to offer some protection for you too, then a third party fire and theft policy is a more cost-effective solution than comprehensive cover but still insures you against fire and theft risks.