Six costly car insurance mistakes

There's a right way - and a wrong way - to slash the cost of your car insurance. Make sure you know the difference.

There is no point in spending hundreds of pounds a year on car insurance only to find, when you come to make a claim, you’re not properly covered and your insurer won’t pay out.

But this is the risk thousands of motorists are taking by failing to read the small print on their policies, or by trying to cut corners and reduce their premiums.

There are a number of legitimate ways to bring down the cost of your policy, as we explain below. But there are also some money-saving tactics that motorists would be well advised to steer clear of.

DON’T turn to your parents for help

Young drivers get a raw deal from insurers. Statistics show that motorists under the age of 25 are more likely to be involved in accidents, so premiums for this age group are always higher.

This has given rise to a practice known in the insurance industry as ‘fronting’: where a parent insures their son or daughter’s vehicle as the main driver, and puts the child down merely as one of the named drivers on the policy.

This can knock hundreds of pounds off annual premiums, but unfortunately, it's fraud and against the law.

If a claim is made on a fronted policy, the insurer can refuse to pay out for damage to the insured vehicle, and can even pursue the policyholder for the costs of any payments to third-party motorists.

A report from the Motor Insurers’ Bureau last month suggested that one in five motorists admitted to having been involved in fronting at some point.

• Watch our Don't make this car insurance mistake video

DON’T gloss over past mistakes

If you leave recent insurance claims or motoring convictions off your policy application, you’ll most probably get a cheaper quote.

But, again, this is a type of fraud and the insurance you end up with could be practically worthless: any insurer that discovers a customer has been economical with the truth is within its rights to refuse to honour claims.

And don’t kid yourself that you might not get found out: it is now very easy for motor insurers to obtain information about previous customers from their rivals.

DON’T hide modifications from your insurer

The insurance quote you get for your car is partly based on its performance: vehicles with more powerful engines are more likely to be involved in accidents, so they cost more to insure.

This is why you have to tell your insurer about any modifications you make to your motor, especially if they improve its performance or increase its value (and therefore its appeal to car thieves).

Of course, you’ll have to pay more to insurer a modified car - but if you don’t, you insurer can declare your policy invalid.

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DON'T drive carelessly

By avoiding accidents and convictions for motoring offences, your premiums will eventually come down.

Some insurers offer schemes which allow you to build up a full year’s no-claims bonus in just six months.

If you are thinking about making a claim for relatively minor damage, stop and ask yourself whether it is really worth it: remember, on any claim you make you’ll be charged an excess which could be a few hundred pounds. And losing your no-claims record is likely to bump up the cost of the next few years’ insurance premiums.

DON'T ignore Pass Plus

Recently qualified drivers can cut their premiums substantially by taking the Pass Plus qualification.

This is a course of six extra lessons given by an advanced driving instructor, at a typical cost of around £150 - 200.

It helps show insurers you are a lower risk than other new drivers, and can reduce quotes by up to a third - so you could easily save the cost of the course in the first year. Find out more at DirectGov.

DON'T forget to shop around for cover

Comparing quotes from a wide range of providers is the simplest way to get a good insurance deal.

If you stick with your existing provider year after year, chances are they will be charging you much more than new customers.

Insurers rely on their policyholders’ inertia to make profits: don’t fall into this trap, and make sure you shop around whenever your policy is due for renewal.

If your current provider won’t match its rivals’ quotes, take your business elsewhere. Make sure you check out the lovemoney.com car insurance service today.

Finally, if you need more helping with cutting your car costs, why not ask the lovemoney.com community for help using our excellent Q&A tool.

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