A guide to car insurance

01/02/2011

For those of us with a keen interest in cars, the interest and enthusiasm usually stops short of car insurance. But this is at the detriment to our pockets. Whether your motor simply gets you from A to B or your sporty roadster is your pride and joy, it's worth keeping an eye on the car insurance market. This will help save money in the long run when making decisions about your car, its body work, engine and any modifications.

So when you're purchasing your next car or considering modifying your current wheels, take a moment to ponder the effect it may have in the long term:

Consider the size of the engine.

When purchasing a car, a large purring engine may be what you're looking for but if you're also looking to save on insurance and petrol in the long run, you'll have to check the blind spot. Insurance companies assume that greater acceleration speeds carry more risk so a bigger engine is likely to add to your insurance expense. Consider a Ford Focus Style with a 1.6cc engine; this could cost £410.93* to insure, whereas a slightly different model with a bigger 2.6cc engine, the Ford Focus ST3, could cost £690.92* to insure.

Think carefully about the model you choose.

The body work on a sporty model is often far more attractive than the alternative, somewhat weedy, standard model. But when you look at the maths, the sporty models become less sexy. Take the Ford Focus Style once more, this standard 5 door model could cost £410.93* to insure. This is less than half of the premium required for the sportier Ford Focus RS, a smaller, 3 door model, which is on average £10,000 more to purchase and which could cost £1038.19 to insure. Whilst these cars have quite different selling points, the prices speak for themselves if you're looking to save in both the short and long term.

Consider the implications of modifying your car.

Modifications to your vehicle will come at a cost to your insurance premium due to the availability of adapted spare parts. If parts are rarer and thus take longer to acquire when a claim arises, you are likely to require a courtesy car for longer periods, adding to the cost of a claim. As a result, insurance premiums will be higher for cars with modifications. Take the standard Ford Focus for example. This could cost £410.93* to insure. Yet the same model with alloy wheels and a complete body kit could cost £635.01* to insure. So whilst it may be tempting to stylise your wheels, it's worth noting that it's not just the initial cash outlay that comes at a cost.

So once you've purchased your motor and added any modifications, you may want to check out these additional money saving tips to cut down the insurance costs further:

Compare car insurance premiums using online price comparison sites.

If you have a sporty or modified car, the comparison site will search a number of specialist insurers for the best quotes. Remember the cheapest quote isn't necessarily the best quote, you'll need to check what is and isn't included in each quote. The internet makes it easy to compare 21st century car insurance information and quotes to a local agent or another online provider.

Set your voluntary excess high.

If you can afford to raise your voluntary excess (the excess you agree to pay in addition to the compulsory excess) to £500, it may reduce the premium for some drivers. For example, an experienced driver could pay £347.92* with an excess of £500 rather than £410.93* under a policy with a £250 excess. Whilst this potential saving is attractive, it is important to consider the amount you could afford to pay out if you did need to make a claim.

Pay in one instalment.

If you have the funds available, it's worth paying for your car insurance in a one-off payment rather than paying more across a matter of months. For example, a policy may cost £410.93* on a one- off payment but £452.03* in a series of ten monthly payments. Such a saving could cover your petrol bill for the week!

Avoid small claims.

If you've had a small prang, and the damage to your wallet is relatively small, it may not be worth making a claim. If you were to claim, your premium is likely to increase when it comes to renewing.

Be honest.

All drivers will benefit from being honest. If you lie about any of your details in your application, or fail to update any details that change, the insurer will be unlikely to pay out if you make a claim. This would be costly insurance!

* Prices provided by Gocompare.com, correct on 25.1.2011. Prices based on a 30 year old male driving a Ford Focus 1.6 engine having held a full licence for 12 years and a 7 year no claims bonus.