You Can Save More Money with Car Insurance
As the end of the tax year approaches many savers consider moving their cash to an Isa to capitalize on the tax-free interest incentives – but they could actually save more money with car insurance. Taking a money saving approach to car insurance could put significantly more cash back in your pocket.
We’re less than a month away from the end of the tax year and for conscientious savers who have seen six successive Bank of England interest rate cuts since October that can mean only one thing – its Isa season.
Individual savings accounts (Isas) are a tax-free method of saving that allows higher rate taxpayers to earn an additional 40 per cent in interest on their savings and lower rate tax payers to earn an additional 20 per cent. Due to this tax break their rates are much more favourable than the leading fixed bonds or easy access accounts in the UK. However, you can only invest up to 3,600 a year into a Cash Isa – meaning that while the money to be earned is worthwhile, you could actually save a lot more by making financial adjustments elsewhere – and particularly with your car insurance.
How can car insurance help you save more?
According to research by a comparison website, consumers can benefit more from taking a few minutes to shop around for the best car insurance rate than they could by searching for the best Cash Isa.
While finding the best home for your savings in this difficult financial climate is to be encouraged, the financially savvy should not end their pursuit of money saving deals there. Currently, the Barclays Golden Isa offers the leading rate in the UK at 3.61% meaning you’d earn 129.96 over the first year assuming the rate remained the same. By contrast however, consumers that switch car insurance providers save an average of 207 as long as they compare several insurers.
The task of comparing car insurance providers is no longer laborious. You don’t have to traipse along the high street or make several phone calls to brokers in order to find the best deal. Instead you can simply use a comparison website – some of which will compare deals from as many as 90 different providers – to get a more complete overview of the market and be sure that you’re picking up a competitive deal.
There are many incentives to use car insurance comparison websites. Among them is the fact that they have access to online deals – most insurers offer their most competitive rates through the internet thanks to the savings they can make on overheads. They also give consumers access to new deals rather than simply accepting renewal quotes. The vast majority of insurers offer better rates to new customers in a bid to attract custom while increasing premiums for existing customers over time. So it pays to shop around.
Another advantage is that these websites are free to use. You enter your details and they will return quotes from a host of providers. Comparison websites earn money from providers when you click through from their websites to the individual companies – effectively a "referral fee". However, this is not added to your premium so it costs you nothing to use these services.
How to save more on car insurance
The average of 207 is only the money that can be saved by shopping around for car insurance – there is more money to save if you are willing to perform more money saving tasks.
For example, staying accident free could slash premiums by as much as 75 per cent if your insurer offers a no-claims discount. These bonuses can normally be built up over a period of five years. Staying free of motoring convictions will also help you save – for example, being caught using a mobile phone can increase premiums with some insurers by around 50 per cent, while two or more speeding offences could increase your premiums by more than 70 per cent.
If your spouse or partner also drives your vehicle make sure you include them as a named driver as most insurers offer cheaper premiums to those in steady relationships and particularly marriages as this gives the impression that you are more responsible. Otherwise only add people who will actually use your vehicle to a policy – adding insurance for "any other driver" can be very expensive.
Make sure you are insured for the right use of your vehicle too. For example if you don’t use your car to commute to work then don’t pay for it – very often insurers tie in commuting use with social, domestic and pleasure use. You should only pay for the purposes you require.
There are many ways to earn cheap car insurance such as increasing the security of a vehicle, parking in a garage at night or increasing your voluntary excess. Just take the steps that apply to you and you could put 100s back in your wallet.
| By Alex Gregory |
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