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You would expect third party cover to be the cheapest because it is the lesser cover, just covering the person you bump into and their car. Yet don’t expect car insurance to be logical.
With some insurers the mere fact you have selected comprehensive, which includes your car too as well as fire and theft, means you'll be assessed as a lower risk (based on actuarial history) and that can outweigh the fact you get more cover, to make it cheaper.
There are no hard rules here, it’s a matter of trial and error, yet if you’re just looking for the very cheapest cover, never only check third party
It may seem counter logical, but covering an extra driver can reduce rather than increase your cost – in some cases by £100s or £1,000s. Here are seven quick tips on how to do it most effectively…
This isn’t just for young drivers. While it works well for young drivers (see our Young Drivers' Car Insurance guide) as they are automatically seen as a high risk and know many people, like their parents who may be lower risk, it can work for anyone – but of course, it's especially powerful for those with costlier insurance.
The better the driving history and lower their risk, the more impact it should have. Those with a good driving record are likely to help make the most savings, but anyone who's a lower risk can help. By law insurers can’t discriminate over gender, but age, driving experience and history can make a difference.
Different insurers respond in different ways. One may cut your costs adding your uncle, another may increase it. A quick way to check is by varying quotes on comparison sites – it's easy to do, see our top comparison sites list below.
The second driver should be someone who would reasonably drive your car. So don’t add Lewis Hamilton, unless you happen to be his brother (and even then racing drivers are likely a very high risk so I wouldn’t bother) - but your mum, son, best mate or gran should be ok - as long as they would drive the car.
Never add someone as main driver if they’re not. This is known in the industry as 'fronting' and is fraud. If you do it and are caught, you can face a criminal conviction and your insurance will likely be invalid.
A monthly payment plan for your insurance is essentially a high-interest loan. For example, if your premium is £1,000 but you are paying an APR of 25%, your insurance will actually cost £1,140 once you factor in the interest.
So either pay in full, or if you can't afford it, use a credit card with a lower APR rate (or better still, a 0% credit card for spending, ensuring your repayments are big enough to clear it within a year).
If paying by credit card, check if the insurer or provider charges a fee for doing so - though the fee is usually less than the interest charged on monthly instalments.
At its most simple, car insurance covers you if your car is stolen or involved in a road accident. It also protects other road users if you cause damage to their vehicle or property.
The cost of insurance - your premium - is based on how much of a risk insurers perceive you to be. For example, if you are a youngster ready to hit the highway after just passing your test, or you have had more than a prang or two, you will pay more.
However, if you can prove you are not a risk by keeping accident-free and storing your car safely, you will pay much less.
Last year, ten days before his 21st birthday, Bradley Dreyer was skateboarding against traffic alongside a row of parked cars in Sonoma, Calif. when a drunk, uninsured motorcyclist crossed the double yellow line and hit him from behind. Dreyer, who had been studying to be an ER nurse, sustained a severe brain injury.
With the help of lawyer Guy Kornblum, Dreyer’s parents got their own insurer, State Farm, to pay out both the full $100,000 of uninsured motorist coverage on their auto policy and their $1 million in umbrella coverage. But given Bradley’s continuing needs, they now wish they’d carried even more coverage. “We have to face difficult decisions,” says Bradley’s mom, Mary Kate Dreyer. “We don’t want to rob him of treatment now, but we need to preserve his estate for the future, what could be lifetime care.”
Pull out your policy now. There may be smart ways you can cut your premiums, such as raising your deductibles, dropping collision insurance on an older car, demanding special discounts or consolidating your policies with one insurer. But you might also need to pay for more protection from uninsured drivers and catastrophic injuries, warns Kornblum, who’s dealt with the fallout from severe auto accidents for 44 years.
The easiest way to save is by increasing both the collision and comprehensive (damage due to vandalism, fire, flood) deductibles for damage to your auto. As a practical matter, if you have a $500 deductible and $700 of damage to your car, would you even put in a claim? Many folks wouldn’t for fear it would raise their rates. That’s one reason it makes more sense to have a $1,000 deductible, says Mark McConnell, a claims officer in Roanoke, Va. with ACE Private Risk Services. Consider “full glass” coverage if you’re worried about a ding to your windshield; it’s cheaper than a lower comprehensive deductible.
2. Get uninsured motorist coverage
This protects you and family members living with you should you be hit by a negligent driver who is uninsured or “underinsured,” even if you’re walking, bicycling or skateboarding at the time. According to the Insurance Research Council, at least 16% of drivers, and about a quarter of those in New Mexico, Mississippi, Alabama, Oklahoma and Florida, are uninsured. Underinsured? In California an “insured” motorist in the assigned risk pool can carry as little as $15,000 in bodily injury coverage per person and $30,000 per accident.
In many states uninsured motorist protection isn’t mandatory coverage, warns Diane Giles, a vice president at Marsh, a broker representing several high-end insurance carriers. That means you could have a policy without it, particularly if you shopped on price. The amount of uninsured/underinsured motorist coverage you carry should match your auto policy’s primary liability limits–meaning the maximum amount your insurer will pay the other guy if you cause an accident. Typically, that amount is $100,000 per individual and $300,000 per accident on a primary auto policy. That limit, in turn, should be where your umbrella kicks in. (Some umbrellas require your auto policy to cover as much as $500,000 per accident. Make sure there’s no gap in coverage between the two policies.)
3. Carry a big umbrella
An umbrella, or “excess,” policy kicks in where your liability coverage for your auto and home ends and is a necessity if you have any assets to protect. A $1 million umbrella is common, but $2 million is more realistic these days. “The more assets a person has, the bigger target they are” for lawsuits, says ACE’s McConnell. Recent jury verdict data show that 14% of personal injury liability cases result in awards in excess of $1 million, he notes. If you have teenagers driving, consider increasing your umbrella. The second million is cheaper than the first.
Warning: Although uninsured motorist coverage was included in the Dreyers’ old umbrella policy, many insurers now either don’t offer it or charge extra for it. Expect to pay $125 to $250 a year extra for $1 million of such coverage. “You need it,” insists Kornblum, who personally carries a $10 million Chubb umbrella with $5 million in uninsured/underinsured motorist coverage.
You can often save on an umbrella by buying it through the same insurer you get your auto policy from; go to an independent agent and ask for combined quotes from several carriers. Be sure to compare what each umbrella covers.
