October will see the second rise in Insurance Premium Tax (IPT) in less than 12 months, when IPT increases from 9.5% to 10%. Gocompare.com’s Matt Oliver comments on the unwelcome hike and offers tips for drivers on beating rising car insurance premiums.
Matt Oliver car insurance spokesperson at Gocompare.com said; “With motor insurance costs rises across the board, in part thanks to the rise in personal injury claims, this latest rise will likely be bad news for motorist already feeling the pinch.
“It’s worth remembering that insurance premium tax is paid as a percentage of your car insurance premium. This means those who already face the highest premiums, such as young drivers, will be hit the hardest by this hike.
“Unfortunately, there’s no way around the IPT rise, however there are steps that drivers can take to ensure they are getting a good deal on their car insurance and not paying more than they need for the right cover. Shopping around for your car insurance is one of the best ways to save a significant amount and beat rising premiums. Independent research found that drivers could save as much as £255.751 on their car insurance by shopping around through Gocompare.com, making it a few minutes well spent.”
For more information, visit Gocompare.com’s guide page on IPT.
Buy in advance
Some insurers may view people who purchase insurance further in advance as more risk averse and therefore less likely to take chance behind the wheel or miss payments. Gocompare.com found purchasing insurance 30 days in advance could be £103 cheaper than buying it the day before.
*Based on a 35 year old accountant, living in South London and driving a 2013 1.6L BMW 1 Series. Difference calculated by comparing the average of the top 10 cheapest premiums returned.
Potential saving: £103
Be accurate with your mileage
Overestimating your mileage can have an impact on your premium. On average, the difference between driving 10,000 miles and 9,000 miles a year can be as much as £36, dependent on your circumstances*.
*Based on a 25 year old shop assistant living in Birmingham and driving a 1.4L Volkswagen Golf
Potential saving: £36
Clash of the titles
Your occupation is one of the key considerations insurers use to calculate the cost of your premium. While it’s incredibly important to be accurate and honest with your insurer about what you do for a living, when an insurer asks for your occupation, you will usually have to select one of the pre-defined titles they have on their system. This means for some people, there may be more than one job title that accurately describes what they do.
It's also worth noting that if you're retired or a homemaker, you should select those options and not just say that you're unemployed or out of work. Typically unemployed drivers face higher insurance costs than homemakers or retirees, so be sure to check that you're not paying more than you should be. The difference between being housewife/husband and unemployed was £139.69**.
*Based on a 40 year old driver living in Bristol and driving a 1.4 L 2013 Vauxhall Corsa. Difference calculated by comparing the average of the top ten cheapest quotes returned, with the only changing factor being employment status.
Potential saving: £139.69
Save £345 with a named driver
Fronting, which is when a more experienced driver (usually a parent) claims to be the main driver of a younger motorist’s vehicle to get cheaper insurance premiums is illegal and a form of insurance fraud. However, adding another person like a spouse or parent who will be driving the car to your policy as a named driver could reduce insurance premiums significantly.
*Based on a 17 year old student living at home in Cardiff and driving a 1L Corsa, 2008. Difference calculated by the average of the top five cheapest premiums returned vs the top five cheapest premiums returned when a 50 year old accountant was added to the policy as a named driver.
Go fully comp
A common misconception is that third party only is cheaper than comprehensive cover, but in many cases this isn’t true.
In fact in some circumstances, fully comprehensive cover could even be cheaper than a third party only policy. This is because, some insurers may view those looking for comprehensive cover as caring more about their vehicle and therefore more likely to be careful on the roads.
Cover type Annual premium*
Fully comprehensive £641.57
Third party only £846.53
*Based on a 28 year old journalist living in South London and driving a 2013 1.2ltr Volkswagen Polo.
Potential saving: £204.96
In most cases, paying for your insurance in one annual instalment is often cheaper than opting for monthly payments. This is because insurers typically charge interest to spread your costs monthly.
Using a credit card with a 0% interest free period could allow you to manage your own payments, without paying interest on the balance. With cards offering up to 24 months interest free on purchases, in one example Gocompare.com Car Insurance found using a credit card to pay for your insurance could work out £113 cheaper than opting for monthly payments from an insurer*.
However, it’s important to remember to pay the balance off before the end of the 0% period otherwise, you will be charged interest on the remainder of the balance on the card.
Potential saving: £113
Most people will already know that in most cases, the best deals go to new customers, and car insurance is no exception. Regularly shopping around is the best way to save big money on the cost of your renewal.
Independent research found that customers could save £255.751 on average by shopping around with Gocompare.com, meaning it can really pay to spend a few minutes online.
Potential saving: £255.75
See Gocompare.com's guide to find out how to save more money off the cost of car insurance.
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Notes to editors:
1 Based on Online independent research by Consumer Intelligence during 01 July 2016 to 31 July 2016 – 51% of consumers could save up to £255.75