How to get and keep lower Insurance, (Motor Insurance - Comments & Tips)

Member Name: Johnny Phoenix

Product:	Motor Insurance - Comments & Tips
Date:	02/05/02 (2243 review reads)
Rating:

Advantages: Lower Insurance premiums, Less Paperwork, Same service, less cost

Disadvantages: takes a little work.

Motor Insurance is something we give little thought to until either we have an accident, theft or renewal. When you are looking for a quote there are certain things that you should bear in mind that might help to lower the premium yet grant you the same level of cover.

Insurance company’s calculate the cost of your premium based on the probability that you will have cause to make a claim. The salesperson you speak to will enter your information into their database and it will take a base cost of insurance and use multipliers to assess the risk to the insurance company. The greater the risk the computer assesses, the more they charge for the policy.

There are a few ways of reducing your insurance policy however.

TIP 1: Taking a Voluntary Excess
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If you have an excess on your policy, this is basically you saying to the insurance company that if the cost of damage to your vehicle is below a certain amount, you will not make a claim on your insurance. Or if it is a lot, you will pick up the tab on the excess part. This lowers the risk considerably so by way of thanking you, they lower the premium since you are taking on some of the risk yourself.

There are two types of excess, compulsory and voluntary. The compulsory excess is usually applied to young or inexperienced drivers as defined above and has already been taken into account in the premium price. However, if you ask the insurance company to add on voluntary excess – the more you increase your excess, the smaller your premium will become. There is a limit to how high you can set your voluntary excess, the highest voluntary excess on a private insurance policy that I have heard of is £400.00. The upside of taking a large voluntary excess is that you keep your premium low, the downside is that if your car is damaged or stolen you have to pay the excess or have it deducted from any claim you make.

TIP 2: Direct Insur
er over Broker?
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I usually change my insurance company every year and personally I would never use a broker again. The reason is that apart from the above calculations, one other factor involved is profits. The insurance companies have special deals with brokers that mean the brokers get paid a fee for getting the customer insured with them. I have no doubt that the brokers are independent but the fee paid to them by the insurance company comes out of their profit. Therefore, this fee is taken into account when calculating the cost of my premium.

When there are so many Direct Insurers, I don’t see the point in getting involved with a middleman who may well get me a policy with a company who would be glad to insure me directly. In addition, it slows down and increases the paperwork in the event I have cause to claim. Instead of reporting the accident directly to my insurers, I would have to report it to the brokers and they would then report it to the insurers. The insurers would then contact the brokers for further information and the brokers would contact me. Thus I would be paying for an unnecessary extra link in the chain – better to get insured directly and deal with the insurers directly. It will save on paperwork and also it will be one less factor to be taken into account when calculating the cost of my insurance.

Tip 3: Protect your No-Claims Bonus
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No claims bonus is generally 30% for the first year, 40% for the second, 50% for the third, 60% for the fourth and 65% for five. Once you reach full no-claims bonus 65% or more depending on the company, you will be given the option to pay for a no-claims protection policy. This is an extra fee, but in my opinion well worth it because in the event that you have an accident, most insurers will knock two years no claims bonus off.

This can be quite costly if your base insurance is sa
y £1000.00 and you have full no claims, you are obviously only paying £350.00. If you had an accident, you would go to 50% no claims and have to fork out £500.00. With no-claims protection you would be able to make one claim a year without the claim affecting your no-claims bonus. No-claims protections cost varying amounts but usually not more than £50.00. As an added bonus you can have two claims in any three years without it affecting your no claims as long as those two are not within the same insurance year.

TIP 4: Guarding against Injustice.
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If you have an accident, regardless of whether you are at fault are not, your no-claims bonus is stepped back two years until the matter is sorted out. By sorted out, it is not enough that the other side accepts responsibility. As the insurance company is fond of saying it is not a “no-blames bonus”. As long as the insurance company has an outlay that they have paid out that has not yet been recovered or as long as there remains the threat that a claim will be made on your insurance the no claims remains affected.

Therefore, even if the claim is settled on a 50/50 basis your insurance company will recover half of their outlay but they will also have to pay 50% of the other sides outlay. There is no such thing as “Knock for Knock” anymore that was disposed of many years ago although some people still believe it exists.

There is nothing more annoying than losing your no-claims bonus because of an accident that wasn’t your fault because the other driver lies about the accident. There are ways of lowering the possibility of this happening to you.

1. Carry a camera in your car and providing it is safe to do so, take a photograph of the position of the vehicles before they are moved. It only needs to be a cheap happy snapper type camera, which cost less than £10.00. These are particularly useful in cases where you have b
een stationary at a junction and the other driver hits you whilst trying to cut a corner. If they then decide to say that you actually pulled out on them, without photographs showing where the vehicles were, you might be faced with a case of one persons word against another and the claim might get settled on a split-liability basis. This would affect your no-claims and may cost you hundreds of pounds. If you could have saved the headaches and financial cost by having a £10.00 camera in your glove box, wouldn’t that be worth it?

2. Do not assume that because the accident is straightforward that you do not need any witness details. Take them anyway, just in case the other driver decides to change his story later. Too many people think that because the other driver hit them in the rear, the facts speak for themselves and don’t bother taking witness statements. Then the other driver turns around, lies and says that they didn’t hit anyone in the rear, they themselves were reversed into. Better that they argue and get 50% than admit responsibility and get 100% of the blame.

TIP 5: Paying The Insurance Company
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One last tip is if you damage your car and lets say it’s a very small amount of damage and the insurance company outlay is £100.00 or so. Because they have an outlay, they affect your no-claims bonus by two years. If you actually decided to refund their £100.00 outlay, they would no longer have any reason to affect your no-claims bonus.

Say you have a £1000.00 insurance policy with four years (60%) no-claims bonus.

If your insurance company has an outlay

First Renewal - Your no claims would be at 40% - you would pay £600.00.
Second Year - Your no claims would be at 50% - you would pay £500.00.
Third Year - Your no claims would be at 60% - you would pay £400.00.

Total Premiums in three years - £1500.00

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If you refunded the £100.00 outlay

First Renewal - Your no claims would be at 65% - you would pay £350.00
Second Year - Your no claims would be at 65% - you would pay £350.00.
Third Year - Your no claims would be at 65% - you would pay £350.00.

Total Premiums in three years - £1050.00 + £100.00 Reimbursed to Insurance Co. = £1150.00

Total saving over three years £350.00.

If the insurance company only has a small outlay which is affecting your no-claims bonus, you will have to work out whether it is going to be cheaper for you in the long run to pay their outlay and preserve your no-claims.

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