The 2014 predictions for car insurance bring some relief from the soaring prices that have made opening premium renewal envelopes over the past few years such an ordeal for UK motorists.
The AA's British Insurance Premium Index showed another fall in the final quarter of 2013 to £789 for the average annual premium, down from £812 in the third quarter, confirming an end to shooting prices that topped out at an average £870 in July last year. That's up from just £324 in 1994, over a period in which home insurance has barely budged.
While good news, insurance experts say prices are unlikely to come down more this year, so policyholders still need to work hard to reduce individual premiums.
In addition, new regulation affecting the way insurers price their products are likely to slow down any price drops. This includes the ruling in December 2012 banning insurers from discriminating between men and women.
Then there are proposed new rules aiming to crack down on England and Wales's astronomical whiplash bill, estimated to add £90 to every policy. The upheaval means insurers are putting less weight on factors that we've been previously told are important, for example, parking in a garage or mileage. Here, we reveal what can really affect your bill.
The no-claims bonus is one of the biggest factors in reducing your car insurance, if not the biggest.
We put together a quote via Admiral for a 36-year-old builder in Luton, Bedfordshire, driving a 2008 Ford Focus diesel, to see the difference various factors made. Admiral's quote was £866 with a 10-year no-claims bonus, but cut that to five years and the premium shot up by more than £250.
Based on Admiral's pricing, it's cheap to protect your no-claims bonus, adding just £4 to our initial quote. That protects your no-claims bonus, even if you make two claims within three consecutive years. But three claims within that time will reduce your no-claims bonus by two years, according to Admiral's small print.
Guaranteeing your no-claims bonus is more expensive, adding £44 to our quote, but it means your no-claims bonus will not be affected if you make a claim.
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I'm female, will I now pay more?
Insurance companies are trying to charge women less – even though they haven't been allowed to since December 2012 – by identifying their sex through their jobs.
Insurance broker the AA told Moneywise that professions more likely to be carried out by women are now attracting lower premiums. Its insurance specialist Ian Crowder gave the example of midwives, which the broker has identified as receiving lower premiums of between 5% and 8%.
Scott Kelly, head of motor insurance at GoCompare, told us that another way to identify female motorists is via their car. “There are vehicles that more women buy than men, for example, the Ford KA,” he says. He hasn't seen any variations yet, but admits it could happen now.
He also says that while average premiums for women jumped from £748 on 1 November to £932 on 19 December, the differences for men and women over 35 will be negligible.
Is it still cheaper to park in a garage?
We've all heard at one time or another that your insurance goes down if you're able to say you park your car in a garage but increasingly that's not the case. On our dummy quote for the Luton builder, his £866 bill was reduced by £118 if he parked his Ford Focus on the driveway instead of in a garage. Street parking was even cheaper, knocking £136 off.
It's a classic case of computer statistics affecting the quote, and one theory is that house burglaries often target keys for nicer motors, which are routinely parked in the garage or the driveway. Another, put to us by Admiral Group's head of UK pricing Rhodri Charles, is that a proportion of those who tick the ‘garaged' box either don't have one or aren't using it, and their claims are pushing up bills for bona fide garage users.
Try all three options on your online renewal form or check with the broker when you phone up for a quote.
Will I be rewarded for driving less?
Logic says insurance gets cheaper the fewer miles you drive. Mostly it does but not by a huge amount, and in some cases it can actually go up. Our fictional builder insuring with Admiral was quoted £866 for 10,000 miles a year in his Focus, but dropping that to 5,000 miles only saved £44.
Bizarrely, 6,000 miles was actually cheaper than 5,000 miles by £4, while 3,000 miles was more expensive than both.
However, our real-life example, Simon, found he would pay just £16 a year more with quotemehappy.com to double his annual mileage from 5,000 to 10,000 miles. It's possible you might be charged more to increase your mileage during the life of the policy. At that point you're not in such a good bargaining position.
Should I consider installing a black box?
More insurers are offering to cut bills in return for monitoring driving behaviour via onboard telematics (the so-called black box). These measure forces such as speed, smoothness and what time of the day you drive and if your driving is proving sensible, they'll give you a rebate on your insurance. Crowder says the firm's Drivesafe telematic policy has generated rebates of up to £1,000.
GoCompare has introduced a separate comparison section for telematic insurance providers, but should you join the ranks? Only if your bill is sizeable enough, which generally means new drivers. It can also work for someone doing low mileage, such as a housewife.
Kelly at GoCompare says the average installation price of the box is about £200. That's built into the insurance, but unless you're paying more than £1,000 a year, the savings won't offset the fitting cost. It also costs to move it, so hold off if you're going to change your car. For example, insurance company Ingenie charges £65 to switch it over to a new car.
More tips to help lower your premium
- Adding another driver nearly always makes it cheaper. The Admiral quote for our Luton builder dropped by a sizeable £175 when he added his wife to his policy.
- The excess is the amount of any claim you have to pay, but increasing that amount doesn't always cut your premium. On our Admiral quote, the price was the same for £500 as it was for £350. But cutting the excess to £100 bumped the quote by another £111.
- If you have the use of another car, let the insurer know. This can often bring down the price. Our dummy Luton quote dropped by an impressive £108 simply by alerting Admiral to our builder having access to another car.
- Consider which job title you state. Riskier roles within the same profession will be charged higher premiums. For example, an editor is often deemed less risky than a reporter within the journalism profession.
- Comprehensive insurance will often be the best deal for all but the young. The AA's British Insurance Premium Index in January showed the average ‘shoparound' (in other words, the cheapest) quotes for third party, fire and theft insurance was £790, compared with £596 for comprehensive.
Does Pass Plus pay off?
This course gives drivers who've just passed their test extra tuition, including an introduction to motorway driving. Insurers will sometimes give discounts within a year of taking it. Direct Line, for example, offers a 5% discount in the first year. However, as it told the House of Commons Select Committee on Transport in 2011, it doesn't like the fact Pass Plus doesn't come with a test.
On the forum Student Room, TommyWannabe put up a post saying that last year he saved £200 on his insurance with Direct Line after paying £132 to take the course. However, another forum user PhoenixFortune said his Direct Line saving of £40 wouldn't cover the course cost.
Some local councils will offer discount vouchers for part or even all the course. Rutland County Council said in December it had given out 1,000 free vouchers since 2008.