The price of motor insurance went up by seven per cent in the last quarter of 2015, and rogue claims management companies are to blame, says the industry.
The Association of British Insurers says the upward trend in premiums, which rose by eight per cent last year, will continue until the government cracks down on firms which “encourage speculative and fraudulent claims”.
A staggering 83per cent of people say they have been cold-called by a claims management company, prompting them to claim for personal injury or other financial loss according to ABI-commissioned research.
Loading article content
The ABI’s Rob Cummings said: “We need to drive the cowboy claims management firms out of town, which is why the government’s current review of the sector must result in tougher regulation.”
Meanwhile, here are 10 ways to put the brakes on the rising cost of cover. The
Many of us stick with the same insurer year after year, partly because of the widespread industry practice of auto-renewal. Most insurers automatically renew your motor policy every year, unless you take action. But loyalty doesn’t pay. Customers who have been with the same insurer for five years pay on average 70per cent more than new customers, according to research by the Financial Conduct Authority (FCA), the industry watchdog.
The savings from switching can be big. MoneySuperMarket, the comparison website, says the average annual saving from switching is £113.
Other sites include confused.com and gocompare.com, but don’t forget that a number of companies, notably Direct Line, don’t appear on comparison sites.
Don’t make any claims
Insurers reward customers who don’t make claims with discounts on their premiums. The discounts can be generous, too. Some firms knock 75per cent off the standard premium if you can manage five, consecutive claim-free years.
It can therefore make financial sense to fund any minor damages out of your own pocket as the cost of repairs can work out cheaper than the loss of your no-claims discount.
Don’t think you have to stick with the same insurer if you have built up a no-claims discount. Most insurers will recognise your claims history, though the size of the discount will vary.
You can also pay a little bit extra to protect your no claims discount, allowing you to make a certain number of claims within the policy term. The extra cost might be worth paying if you have built up a sizeable bonus.
Drive fewer miles
The more miles you drive, the more likely you are to have an accident and put in a claim, so the more expensive your motors insurance premium. So, always make sure you give the insurer an accurate annual mileage figure.
Choose your car with care
The type of car you drive can have a big impact on premiums. Insurers classify every vehicle into one of 50 groups according to a number of factors, including engine size and cost of repairs. A car in group one will be cheaper to insure than a car in group 50 because the insurance company is likely to pay out less in claims. So it might be worth checking out the insurance groups before you buy a car at www.thatcham.org.uk.
Also, resist the temptation to modify your car. Some insurers ratchet up the premiums for even minor modifications, such as tinted windows.
Insure more than one car
Many households these days own more than one vehicle, and a multi-car policy can cut down on paperwork as well as premiums. You can usually insure up to five vehicles on the same policy and save about 10per cent.
Increase the excess
All car insurance policies come with a compulsory excess, which is the amount you have to pay towards any claims. A typical compulsory excess might be £200, so if you make a claim for £500, the insurer will pay only £300.
If you can agree to a higher voluntary excess, you might be able to negotiate a lower premium. But remember that you must pay the excess in the event of a claim, so it should be within your budget.
Most insurance companies give you the option to pay your premium in monthly instalments, so you can spread the cost over the year and make the payment more manageable. But watch out! There is usually an admin fee or interest charge for monthly instalments, so the convenience can be costly. You also typically have to put down at least a month’s deposit.
Keep your car secure
You will pay more to insure your car if it is kept on the street at night because of the greater risk of theft and vandalism. So try to put the car in a locked garage when it is not in use. Think, too, about fitting an approved alarm and immobiliser.
Improve your driving skills
Motorists who take an advanced driving course can earn a discount on their car insurance. The Driving Standard Agency’s Pass Plus scheme is aimed specifically at newly qualified drivers, but there are other options available to all motorists. The Institute of Advanced Motorists, for example, runs advanced driving courses, or there’s the Advanced Drivers and Riders Course offered by the Royal Society for the Prevention of Accidents (ROSPA).
Add another driver
You can reduce the cost of insurance by adding an older, more experienced motorist to the policy as a named driver. A young motorist, for example, might add mum or dad to bring down the premium. However, you should never put forward an additional driver as the main driver. For example, if your mum or dad rarely drives your car they should not be listed as the main driver. The practice is known as fronting and is a form of insurance fraud.