Different ways of paying for car insurance
The cost of car insurance can be a huge strain on your finances. To help cash-strapped motorists hunting for more affordable ways of buying their car insurance, many providers now offer a choice of ways to pay for their premium.
Paying in instalments
Many car insurance companies allow customers to pay in monthly instalments rather than in a single lump sum up front at the start of the 12 month policy. Be warned, however, that you will usually be charged a surcharge, which can be significant, if you choose to pay monthly. Insurance companies also often claw back extra cash from their customers by up-selling higher levels of cover to them, because these become more affordable when the cost is spread out over 12 months.
No-deposit car insurance
As more customers use price comparison websites and become more willing to switch providers, increased competition has given rise to a 'no-deposit car insurance'. This allows customers to pay on a monthly basis, but without charging the huge deposit at the start of the 12 months.
Finding good value car insurance
There are several things you can do to make sure you get the best car insurance deal possible.
- Compare quotes from several car insurance firms to find the best deal, and ask your friends and family whether they have any recommendations.
- Watch out when you complete your insurance application form: a lot of underwriting is automatic and you can score differently by making small adjustments to your answers. A classic example is occupation, for example accountants and insolvency practitioners may do identical work, but each job title impacts differently on insurance: accountants are regarded as 'safe' whereas people involved in bankruptcy work are seen as a higher risk. As long as you provide accurate information this should be fine.
- If possible, pay for your entire 12-month policy at the beginning of the year – and if you can't, check what you are being charged to pay in monthly instalments. If it's a significant amount, check out alternative providers.
- Consider limiting your annual mileage. The lower the mileage, the less time you spend behind the wheel, and the less risk for the insurer – reflected in your premium.
- Work out whether you really need the 'optional extras'. Would you be stuck if you didn't have a courtesy car when your own car is in the garage? Or could you manage sharing lifts or using public transport?
- If your vehicle has a low value, consider Third-party insurance which is usually cheaper but does not cover you for damage you inflict on yourself or your own vehicle, or if your vehicle is stolen.
- Fit your car with approved security devices such as wheel locks, immobilisers, alarms and tracking devices to deter and stop thieves – and let your insurer know about them.