How often do you change your car or home insurance policies? Is it something you religiously shop around for on a yearly basis or an admin task that is pushed to the bottom of the list and forgotten about?
If it’s the latter you’re not alone as most people tend to stay with a provider for a number of years but doing this could also mean you’re missing out on big savings.
The cheapest deals are reserved for new customers and therefore by switching at the end of your contract there’s a good chance you’ll be offered a cheaper price for a new policy.
Scott Faulkner (pictured with girlfriend Rosie), saved £227 by switching insurance policies
Scott Faulkner recently switched both his home and car insurance policies and found himself £227 richer.
He did it online making a £120 yearly saving on his car insurance and £72 saving on his home insurance policy. The new policies give exactly the same cover – but are with new providers and significantly cheaper.
Scott and his girlfriend Rosie (pictured), who live in Solihull, saved £192 off their policies and got an extra £35 cashback (they switched via the cashback website TopCashBack) which they’re now planning on using on a holiday.
He said along with getting the same cover, he also managed to find a policy for his car insurance which also included breakdown cover.
Regularly switching your insurance policies is usually the main way to lower the cost. This is because if you stay with the same provider, the price is likely to creep up slowly and you’ll end up paying far more than a new customer would.
However, if you want to stay with the same provider, you could always try haggling down the price at renewal. You can do this by shopping around and finding out what price you would get as a new customer with a different insurer.
Call your insurer and ask it to match this price, if it refuses you’re free to leave – or you could ask it to throw in an extra such as free breakdown cover as Scott managed to.
Insurers are able to push up policy prices by relying on customers not switching regularly
Along with switching insurance policies there are a number of other ways you can cut down the amount of money you’re spending on car and home insurance.
Here we’ve listed four of the easiest ways to knock down the price of your policies.
1. Never auto-renew your insurance policies
Insurers have to by law inform their customers what the price they paid the previous year was, but they are still allowed to automatically renew insurance policies – if the customer doesn’t actively opt out of auto-renewing and contact the insurer to cancel the policy.
But if you remain loyal to your insurer, be it for car or home insurance – or any other product, you’re probably going to end up paying out more than you need to.
Instead make a note when you sign up of the date the policy ends. When this is approaching look around to other insurers and see what the prices are like. If you can find a better offer, you’re free to move once your policy has ended.
2. Young drivers can cut costs by adding a second driver
Younger drivers pay on average the highest amount for car insurance and according to MoneySuperMarket, the average price was £1,183 for a fully comprehensive policy in June 2017.
It’s higher because drivers in this group are considered riskier by insurers – however there are some options to cut the cost.
Even though younger drivers are considered to be of a higher risk, if you add a driver who is considered lower risk – a parent, for example, or someone with a good driving record who doesn’t use their car much, could counterbalance the younger driver and drive the price down.
This works well for younger drivers but can apply to anyone who is deemed a risky driver – someone who has made a few claims on their policy, for example.
However, the second driver needs to be someone who would drive the car, such as a family member or friend, and the main driver of the car needs to be the main driver on the insurance policy.
Also be aware that if you put the safer driver as the main driver and they aren’t, this is fraud and it is against the law.
3. Paying monthly rather than annually can push up your costs
When you sign up to a car or home insurance policy there will be the option of paying yearly or monthly. If you choose to pay monthly, you’ll end up paying more over the year therefore if you can afford to it’s usually best to make a lump sum payment.
This is because interest is added to the monthly amount so your payments are higher – even though you’re still getting the same policy.
Paying your insurance monthly will cost more as interest is attached to the payment
If you can’t afford a lump sum, it may be worth looking into other options. Using savings (if you have the cash) or using a 0 per cent credit card – if you know you’ll be able to clear it and the interest will be less than that charged if you’re making the monthly payments.
4. A higher excess can bring down your policy cost – but only if you can afford to pay
When you buy a new policy, you will usually have the option of setting the excess amount. If you choose a higher excess this usually lowers the overall price of the policy.
However, while this can make the cost cheaper, especially if you don’t need to claim, if you have to make a claim you will need to have the cash on hand to pay the excess.