Running a car has never been cheap but the rising cost of insurance means that some drivers have had to resort to loans to pay their premiums.
Car insurance companies have been forced to raise prices because of the increased expenditure that many have faced due to personal-injury claims as well as fraud. Some sources claim that despite the high premiums, some insurers make little or no profit because costs have risen so high.
However, insurance is a necessary evil as it is illegal to drive on British roads without it. The laws have recently changed and it is now also illegal to own a car without insuring it, even if you do not intend to drive it.
The only exceptions are vehicles for which a Statutory Off-Road Notification has been completed and the car is kept in either a private drive or garage. Any vehicles left parked on a public highway are required to have insurance, even if they are never driven.
Loans are one way to cover the cost of a high premium but it is worth comparing different types of credit. Banks and finance providers add interest to their loans, so you will be paying more for your insurance in the long run. But car insurance companies also add an extra if you opt to pay your premium in instalments, so it is important to weigh up the comparative costs.
If you can’t afford to pay it in one go, you may find that an alternative means of finance such as an agreed overdraft works out cheaper than loans or paying by instalments, but this will vary between banks.
However, it is also possible to lower the cost of your premium. While it is illegal for someone else to take out a policy on your vehicle and add you as a second driver, it is possible for you to name someone else as the driver on your policy. Having a second person who is lower risk means the insurer will often offer a cheaper quote. Borrowing someone else’s car to drive may also work out cheaper than insuring your own vehicle.
If you have your heart set on having your own car, then when it comes to renewing your policy it can be far cheaper to look for cover from other companies rather than simply accepting the renewal quote. Insurers are notorious for charging existing customers more than new ones as people rarely bother to shop around once they have a policy in place.
And finally, when completing your application for insurance you may notice there are several questions where the insurer would not know if you were telling the truth. It can be tempting to be economical with the facts to save yourself a few pounds. However, insurers are experts at spotting fibs and omissions when it comes to a claim. If they spot anything amiss with your declaration, your claim will be made void and you will not receive a penny.