Car insurance costs are likely to jump following Norwich Union's decision to increase its premiums. This means now is an excellent time to shop around.
The cost of car insurance looks set to increase significantly if insurers follow the hike in premiums just announced by Norwich Union. The largest car insurer in the country has decided to bump up prices by an average of 16% and by as much as 40% in the case of higher risk drivers such as young men with little driving experience under their belts.
The reason is mainly because of an increase in personal injury claims - up by 10% in the last year. Car repair claims are also up by 6%. If other insurers are experiencing similar increases, it's likely they follow Norwich Union's lead and that is, of course, Norwich Union's hope - otherwise they'll find they've priced themselves out of the market!
Anyway, if it's time for you to renew your car insurance, it's more important than ever to shop around. You can also keep the costs down by making use of the following tips:
Avoid monthly premiums
Insurers charge as much as 30% extra for allowing you to pay your car insurance premiums on a monthly basis, almost double the typical rate of interest you'd have to pay if you used a credit card to pay the full premium up front. If you need to use a credit card to pay in full, use one with a 0% introductory offer on new purchases so that you don't have to pay interest at all.
Ask for low mileage discounts
Most insurers will discount the cost of your car insurance if you don't do much in the way of mileage. So if you don't use your car that frequently or if your trips are usually short, make sure you let the insurer know so you can take advantage of any discount.
Increase the excess
The higher the excess you're prepared to pay in the event of a car insurance claim, the lower your premiums will be.
Protect your no-claims bonus
Driving for six years or more without making a claim will typically give you a discount of up to 65% on your premiums - a saving well worth protecting.
Fit an alarm or immobiliser
This is particularly important if you do not have off-road parking.
Use your garage
For some reason many people use their garage to store junk rather than for parking the car! Letting the insurer know that you actually use the garage for its proper purpose should result in a reduction in premiums.
Choose your car carefully
If you're in the market for buying a car, avoid those that have a large engine size and that have a high specification. Buying 'lower rated' cars can save you hundreds of pounds in insurance premiums. Besides, bigger savings accounts are much better than bigger engines!
Take an advanced driving course
Some insurers are beginning to recognise the value of drivers who have passed an advanced driving test as they are 50% to 75% less likely to have an accident. Authorised courses cost less than £100 and could lead to a car insurance discount of as much as 25%.
And finally, while it pays to shop around for cheaper car insurance, it's now more important than ever to read the small print to check what you're covered for. Norwich Union is among those insurers who have decided to do away with the 'driving other cars' cover in their policies. These clauses allow you to drive cars that you don't own as long as you have the owner's permission although it is usually designed for emergency use only and cover is limited to third party only. Some other insurers are following suit and as it is insurance cover that drivers tend to expect, it could result in thousands of motorists driving around unaware they are no longer insured.
Compare car insurance quotes here at the Fool.