How you can save more than £600 on your car insurance
"The past two years have seen the biggest-ever rises in premiums as insurers struggled to close a widening gap between premium income and claims costs," says Simon Douglas, the director of AA Insurance.
"Although historically costs had been rising, premiums had not and, at the end of 2009, for every £100 taken in premiums £123 was being paid out."
That gap has now been closed but it means we're all facing much steeper car insurance premiums. So what can you do to keep your premiums as low as possible?
1. Switch your insurance provider
One in four drivers automatically renew their car insurance with their existing provider each year. But spending a few minutes comparing premiums with other providers can save you a lot of money. This leads to an average annual saving of £348, according to research by moneysupermarket.com.
2. Think about your job title
When you are applying for car insurance try entering a few different versions of your job title.
Insurance firms use your job title as one of their risk factors when working out your premium and just a small change can save you a fortune.
For example, if I shop for insurance for a small hatchback I can get a rate of £420 for the year if I say I'm a journalist but if I say I'm an editor it can drop to £395. Both job titles are correct so this is entirely fair and legal.
3. Add a driver
This may seem counter-intuitive but if the second driver is older and/or has a clean licence it can cut your premiums.
In the case of Graeme Lambert a 29-year-old journalist from Dunstable, adding his 26-year-old girlfriend to his policy cut his premium by £200 as she had a clean license and her profession as a teacher was seen as low-risk by the insurer.
4. Pay up front
If you choose to pay for your insurance in monthly instalments you'll pay for the privilege. The insurer is extending you credit by allowing you to do this so it will add to the overall cost to reflect this.
For example, a quote for a small hatchback is £490 if I pay for the year in full but it rises to £530 if I pay monthly. So it's far better to pay the whole premium upfront. If you can't afford to do this, consider paying on a 0% credit card and paying it off each month – that way you can spread the cost without paying a penalty.
Car insurance is one of the few remaining areas in life where you can haggle. If you want to stick with your current insurer but want to reduce your costs give them a call and quote the cheapest premium you can find on the web.
Most car insurance sales people have a standard discount they can give without having to get authorisation and another discount they can use if they clear it with their supervisor. Just be prepared to cut and run if they won't match the price.
Saving: Depends on your negotiations skills
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.