Your car insurance is due for renewal and you are dreading the inevitable – the cost has gone up! Often a grudge purchase, there are techniques to make sure that you are not paying too much for your insurance.
How are insurance premiums determined?
It is always worth knowing what factors are considered when deciding on your insurance premium cost. Insurers ask a series of questions to decide levels of risk and how likely you are to make a claim. As no two risks are identical, the cost of a policy inevitably varies between insurance companies.
The areas that insurers look at to determine risk include:
- Drivers – occupation, where they live, driving convictions, medical conditions
- Vehicle – make and model, age, value, mileage, security, use
- Claims history – usually the last 3-5 years
What can you do to reduce your insurance premium?
First things first, check what level of coverage you need. These include:
Liability Insurance. This includes bodily injury liability and property and damage liability. In order to protect against liability that exceeds your amount of insurance, it is recommended that a personal liability umbrella policy be taken out too. Without this additional cover, liability that exceeds your insurance level could potentially leave you bankrupt.
No-fault Insurance. This coverage means that if you are involved in an accident you can claim against your own insurance for personal injury rather than having to legally prove it in court.
PIP Medical Expense Insurance. This pays medical expenses for anyone injured in your car due to an accident, regardless as to who was at fault.
Catastrophic Medical Expenses Insurance. This protects you against abnormally high medical costs.
Uninsured Medical Expenses Insurance. This protects you for accidents caused by an uninsured motorist and hit and run accidents.
Uninsured Motorist Insurance. This protects you against accidents with uninsured drivers. If you have collision insurance, you usually don’t need this insurance.
Under-insured Motorist Insurance. Covers against damage caused by another driver who doesn’t have adequate insurance. If you have collision insurance, you usually don’t require this cover.
Collision Insurance. This cover is for damage caused to you or your vehicle regardless as to who was responsible for the accident. Uninsured motor insurance is not usually required with this level of insurance.
Comprehensive. This insurance covers you for the loss of your vehicle due to fire, theft, vandalism, forces of nature plus accidental glass breakage. It doesn’t cover against accidents caused by other vehicles or objects.
Miscellaneous Extras Insurance. This policy includes breakdown options in particular your vehicle being towed away and labor costs.
Once you have decided which cover you need, follow these 10 tips to help you save on your insurance:
- Compare insurance quotes and never be afraid to challenge. It is important to shop around and if you find a better deal elsewhere, always go back to your original insurance provider to see if they can price match. The National Association of Insurance Commissioners has produced a map of states. Click on each State and you are taken to the Department of Insurance’s website where a buyer’s guide can be found. This is a great tool for comparing insurance premiums to help you find the best deal.
- Increase your deductibles. Take the time to play around with increasing and decreasing your deductibles to see what difference it makes to your rate – you may be surprised. You could even find that for only a small extra cost, you can reduce your deductible.
- Reduce the extras. Do you really need rental car coverage or emergency towing assistance? If you have a good driver no-claims discount, make sure that you inform the insurer as it will reduce your rate.
- Choice of vehicle. It goes without saying, a SUV is going to cost much more to insure than a smaller, less expensive vehicle. The value of a vehicle and engine size does affect the price of your premium. As a rule – the smaller the vehicle, the lower the premium.
- Keep your driving record clean. Points unfortunately don’t mean prizes on this one! Traffic violations and speeding tickets will increase your rate. Even just one speeding ticket can increase a premium by over 10%!
- Invest in anti-theft devices. Fit a security device and consider where your car is parked. Any device such as a LoJack that can slow down a thief’s efforts is a bonus. And parking your car in a secure place overnight is the news that insurers like to hear too.
- Consider telematics usage-based insurance. These are devices that are used to record your driving behaviors. It is estimated that 70% of car insurers will be using telematics by 2020. Basically, you are rewarded for good driving behavior!
- Check your mileage. The higher the mileage – the higher your premium. Avoid over insuring your miles too. If you are unsure as to how many miles you drive each year – compare the odometer readings on your maintenance and service records from the past two years to calculate the difference.
- Pay your premium in one payment. Paying your rate in one installment attracts a premium on the original cost making it more expensive in the long-run.
- Ask about discounts. Some companies provide a reduction in premiums if a driver has been on a defensive driving course. They are usually completed in one day and can be completed in person or online. Taking these courses can sometimes remove points from your record for minor violation. Low mileage and multi car premiums can all have a positive effect on the cost of a premium too.
What happens if I don’t have the correct level of coverage?
You need to be aware that by not having the right level of coverage or failing to declare information such as the addition of driving license points can invalidate your policy
Lynne White is Global Marketing Manager at Chevin Fleet Solutions, based in the UK but with global coverage. She has over 18 years-experience in marketing communications and has written content for software management, renewable energy, waste management, manufacturing, recruitment, education and hospitality sectors. Her work has been reproduced in both national and global print and online publications.