|  The
key to getting the best deal possible
on your car insurance - without compromising
on cover – is by taking a good
look at it from the ground up. By understanding
exactly how your insurance premium is
calculated means you will change the
way you think about insurance and that
in turn will change the way you buy
it.
And
when you know you're making an educated
decision, it is easier to keep an eye
on the costs.
There
is no doubt that every insurance policy
you buy is an important one, but now,
with car insurance premiums increasing
at an average annual rate of around
14% it is an especially important time
to examine it.
However,
just because car insurance rates are
going to rise it doesn’t mean
that you have to pay more. There are
options, such as understanding a few
important "principles of insurance"
and putting those principles into action
when you buy your policy. That way you
can maintain good quality cover whilst
keeping your costs low.
First
of all, by understanding what your insurance
company uses their premium income for,
you'll be better able to design your
coverage wisely and make more efficient
use of what you are paying for.
How
is your premium spent?
How
insurance works is that you pay a premium
for a certain level of protection in
the case of a "covered event".
If, the "covered event" should
take place, the insurance company pays
up to your policy limit toward your
expenses.
However,
realistically, your premium doesn't
just pay for your "covered events"
- it helps pay for anybody's "covered
event". Your insurance premium
is mixed up in the pot with everyone
else’s and the insurer spends
the money as the need arises.
In
general, a little over 50% of the revenue
goes directly toward paying for the
cost of policyholders' accidents. The
rest is split between legal and administrative
costs and the costs of running the company.
These numbers vary from insurer to insurer
as some are better than others at saving,
and some are better at reducing their
overheads and business operation costs,
thus saving you money.
Some
insurance companies spend a lot of money
on advertising, staff and commission
payments to brokers, and agents. Bypassing
both these costs could save money on
your policy and that is why buying online
is the best way for looking for insurance.
Apart
from online insurers having less overheads
(which should make your premium cheaper),
by comparing insurance quotes online,
you can bypass the insurance broker
or agent and as such remove their fees
and commissions, while at the same time
researching the market quickly and conveniently.
Even
better, if you research with an online
insurance aggregator such as www.motorcarloans.com,
you can compare rates from multiple
providers at the same time and only
complete your information once.
Getting a cheaper premium
Apart
from selling your sports car for a 3-Wheel
van and moving to the country to get
a lower car insurance rate, there are
more realistic ways of saving money!
It
is true that failure to shop around
is the single biggest reason we overpay
on car insurance. While the cost of
an individual’s car insurance
is based on many factors (from the percentage
of the premium that goes towards the
insurer’s admin costs to the type
of car you drive) not all insurance
companies figure their percentages the
same way. Some will charge different
rates on the same driver.
This
means that for you as a driver, you
need to shop around for the different
rates (which could be very different
from insurer to insurer) to get a good
deal. By getting as many quotes as you
can and comparing the results, you will
you get the best deal on your policy.
So,
you’re looking online to get a
better deal – well done! –
but what else can you change to get
a better deal? Take an excess on your
policy! By reducing the cost to your
insurer for a damage claim, you will
get a better deal.
In
other words, in the event of a damage
claim you are saying to the insurer
that you are willing to accept responsibility
for a portion of the damage equal to
the excess total agreed upon when you
take out your policy. These optional
excess payments can reduce your initial
premium by up to 10% depending on the
amount and the insurer.
Keeping
your premium low
Once
you’ve shopped around for quotes
and have found a lower priced policy
than you've already got, it’s
important to keep your premiums low
over the next few years:
•
Your Car
It is a good practice to bear in mind
whenever you are looking for a new car,
insurance companies charge higher rates
on cars that are more dangerous, more
costly to repair, or very popular to
thieves.
•
Drive safe.
Drivers with no points on their driving
licence and no claims can earn huge
discounts on car insurance, and with
good reason. - insurance companies reward
safe drivers.
•
Drive less
While not everyone has a lot of control
over this, especially if you need you
car for work, if you can manage to lower
your annual mileage this usually means
a decrease in premiums. This is because
of the simple laws of probability: the
more time you spend on the road, the
greater your chances of being involved
in an accident.
•
Modifications
New wheels, changing the colour, adding
a spoiler, seats, or even tuning up
the engine will be classed as a modification.
Doing this will exclude you from a standard
quote and may lead to an increase in
your premium.
•
Insurance renewal time.
Almost every insurer makes its greatest
profit from you on renewal of your insurance.
Just because you found the cheapest
insurer last year or for your last car,
it doesn’t mean that they will
be cheapest this time. Shop around every
time that you are about to pay out (Read
about this full by clicking here: link
to archived newsletter number 12)
By
understanding how your insurance works,
you should now be fully armed with the
information you need to find that perfect
and cheaper policy - happy motoring!
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