Protecting your no claims bonus and other insurance tricks may seem financially savvy, but in reality can actually cost more
Drivers desperate to reduce the strain of car insurance on their wallet are often willing to try anything that will cut the cost.
However, many ways of easing the burden may not actually save you anything or may even cost more.
Here are the money-saving tricks that can catch drivers out:
1. Protecting your no claims bonus
When you make a claim on your car insurance policy your premium goes up the following year. But if you remain claim free you build-up a ‘no claims bonus’, which equals cheaper premiums.
Most insurers allow you to pay to protect your no claims bonus after a certain number of years, so that even if you do need to make a claim your no-claims bonus remains intact.
But it generally only pays to protect your no claims bonus if you make a claim within the first year of protecting – and even then the saving may be as little as £8 in five years.
Here’s the full explanation.
2. Paying monthly
Paying your insurance monthly is a manageable way to foot the bill, rather than forking out in one lump sum.
But insurers charge customers an average £89 a year for the luxury of doing this, according to analysis by MoneySupermarket.com.
The average premium for someone who pays their car insurance monthly is £621 a year, whereas those who buy it all upfront pay an average £532.
Of course, £500 or more is a large sum of money to find. If you’re disciplined it could be worth taking out a credit card that doesn’t charge interest for a year or more, simply to pay for the cover.
“Cash strapped motorists could consider other financially-savvy ways to spread the cost of their premium, such as using a 0% purchase credit card,” said Peter Harrison, car insurance expert at MoneySupermarket.
3. Taking a Pass Plus course
The cost of car insurance is rarely as expensive as when you’re a newly qualified driver. Many driving schools offer Pass Plus courses to help new drivers learn motorway driving and improve skills.
Though the course typically costs at least £100, it’s often billed as a way to save money on car insurance.
However, drivers should be very wary of doing the course for the sole purpose of getting cheaper car cover, as many insurers don’t offer any discount for the course at all.
A handful of providers do provide cheaper cover to Pass Plus – Direct Line and Churchill offer a discount of 5% – but it’s a good idea to run quotes to work out if you will save before signing up.
4. Speed awareness courses
Speed awareness courses are sometimes offered to drivers who are caught over the speed limit as an alternative to taking points and a fine on your licence.
Even though the courses are more expensive than the fine, it is again touted as a way for drivers to save on car insurance in the long run.
But, as with making a claim, a motoring offence will bump up an insurance premium when it comes to renewal regardless of points on your licence.
That said, an awareness course is a good idea for many drivers, and is proven to make people safer on the roads.
But if you take the course on the basis that it will not result in a premium hike, you could find you’ve been misled. Some insurers bump up your premium regardless of whether you take points and a fine or opt for the course.
5. Making a no-fault claim
Insurers will increase your insurance if you make a claim – even if the damage is completely and utterly no fault of your own. A claim typically adds around 10% to next year’s cover cost.
Therefore, for small claims, such as scratches or dents, it could be more cost effective to pay the bill from your own money rather than lodging a claim.