Car Insurance

Owning and running a car is becoming increasingly expensive with the cost of insurance also on the increase, it makes running a vehicle particularly pricey for new drivers. Finding cheap car insurance is no easy task for new drivers but there are a few cost cutting measures that can be taken that don’t compromise quality.

Consider the following when purchasing a car:

Insurance and tax categories
Cars are grouped into categories for tax and insurance purposes. Insurance groups are based on engine size, cost and availability of spare parts. The Association of British Insurers categorise cars into groups one to fifty, with cars falling into insurance categories one to three categorised as the cheapest to insure. Cars in these groups include the Toyota Yaris, Citroen C1, Vauxhall Corsa, Peugeot 206 and Renault Clio. Such cars are cheaper to insure because small engines such as a 1.1 are seen to carry lower risk because acceleration speed is slower than say a 6.0 engine. Similarly, age and commonality of a car will affect insurance premiums; middle aged cars are most attractive in terms of insurance as they are less likely to breakdown than older cars and are cheaper to replace than new cars in the event of a write-off.

New drivers should also consider the tax group their car falls into. Cars that are cheapest to tax (group A) are generally those with smaller engines, lower C02 emissions and more environmentally friendly fuel sources. To this end, eco cars, such as the Toyota IQ, are free to tax and cars that consume more fuel such as the Landover Freelander will fall into a more expensive group to tax.

Consider the following measures when purchasing car insurance:

Shopping around
It’s advisable to compare quotes from multiple insurers to get the best value price. Try using price comparison sites, they compare car insurers on your behalf, allowing you to choose from the results they obtain.

Level of cover required
There are 3 types of insurance cover available:
‘Third Party’ insurance is the minimum type of insurance required to be road legal. It covers other road users in the event of injury as well as damage to others’ property. It doesn’t cover the drivers own vehicle, that’s the risk.
A slightly more inclusive policy is the ‘Third Party Fire and Theft’ option. This covers the additions of fire, theft and theft damage to the drivers own car, in addition to protection of third parties.
The most comprehensive option is the self-named ‘Comprehensive’ policy which offers everything covered in ‘Third Party Fire and Theft’ with potential extras including loss or damage to the driver’s vehicle, windscreen cover and medical expenses to name just a few. These extras are not always included as standard and may need to be added additionally so check each policy carefully.

Realistic mileage
Accurately estimating your mileage is advisable. Those who travel fewer miles may well receive cheaper premiums than those who intend to drive greater distances. For example, in a recent quote comparison, a newly qualified driver with an estimated mileage of 22,000 miles could look to pay £3874.89* for their insurance. In contrast, a 13,000 mile annual mileage could come in at £3338.35* in insurance, a £536.54 saving.

Adding experience
New drivers can benefit from adding a more experienced, responsible driver as a named driver on their policy. In a recent comparison, a new driver could look to pay £3874.89 for their policy but with a named driver, this reduced to £3315.94, a saving of £558.95.

Excess
Increasing the voluntary excess in addition to the compulsory excess required by the policy could also save pounds. For example, if a new driver were to purchase insurance with a £250 voluntary excess, the premium could cost £3874.89, yet by increasing this to £500, the premium could reduce to £3315.94, a saving of £558.95, that could cover the excess fund! But drivers should be mindful to consider the amount they could afford to contribute should a claim arise.

Expense
Payment can be spread across a number of months or paid outright. In cases of expensive insurance, it may be tempting to pay in manageable instalments. However, this luxury comes at a cost; a premium could cost £4308.84 over a series of 10 months compared to £3874.89 when bought outright.

Modifications
Adding go faster stripes to a vehicle will add to any driver’s insurance premium but new drivers are perhaps among those who should avoid modifications most. To demonstrate, a new driver who added a rear roof spoiler and valance to their vehicle could look to pay £4479.47 for their car insurance compared to £3874.89 without such additions, a £604.58 difference.

Claims
Small claims, those less than £500, should be avoided as they will increase the cost of the renewal premium, affecting the no claims bonus accrued. In addition, if a high voluntary excess has been set, the cost incurred may not differ greatly.

* Prices provided by Gocompare.com, correct on 22.02.2011. Prices based on a 19 year old male driving a 2006 Peugeot 206, 1.4 engine, having held a full licence for 2 months.