Life insurance is already one of the most affordable forms of cover, but there are ways to cut the cost of your premium still further.
Save £600 on your home and car insurance
Save £600 on your home and car insurance
With insurance premiums soaring, these 10 tips could save you £50 a month!
Over the past year, premiums for car insurance have been shooting up, as insurers face higher payouts from personal-injury claims, rising legal costs and increased levels of fraud.
Costly car insurance
Indeed, in the 12 months to September 2011, premiums rose by an average of a sixth (16%), according to the AA's latest quarterly British Insurance Premium Index (BIPI).
In fact, the past two years have seen the largest year-on-year increases since the AA began tracking car-insurance premiums in 1994.
What's more, the AA claims that "the gap [between premiums and claims] has now closed sufficiently to allow insurers to start pricing more competitively once again." Hence, now would be a great time to review the cost of your car cover.
Home insurance gets pricier
Although some form of car insurance is a legal requirement for driving on British roads, home insurance (for buildings and contents) is almost as vital.
Alas, the cost of buildings insurance hit its highest-ever level in September – it climbed by a seventh (14.3%) in 12 months, according to the AA's BIPI. In addition, the average cost of a contents policy climbed by 5.8% over 12 months.
In summary, protecting your home and car has never been more expensive.
Ten tips for cheaper cover
If we get another bout of severe weather this winter, then expect more car accidents and property damage. Hence, as the dark nights draw in, I reckon now is an excellent time to sit down one evening and shop around for cheaper cover. Here are 10 tips to help you to prune your premiums:
New customers always get a better deal than loyal, existing policyholders – especially online.
For the record, the AA calculates that shopping around for comprehensive motor insurance could slash the average yearly premium from £1,450 to £921. That's a saving of £529 this year, or more than a tenner a week. Thus, don't overpay by lazily renewing; instead, get online and start searching for quality quotes.
2.Pay yearly, not monthly
With car insurance being so expensive, many insurers allow you to pay in monthly instalments. The bad news is that making 12 payments instead of one could mean paying interest at rates of up to 30% APR.
If you need to spread your premium over the course of a year, then use a 0% on purchases credit card, which gives you interest-free credit for up to 15 months.
3.Keep your car secure
Neither you nor your insurer wants you to make a claim. Hence, keeping your vehicle safe will reduce the risk of a claim and, therefore, lower your premium.
If you have a garage, then use it to store your car, instead of household junk. Alternatively, if you have off-road parking or a driveway, keep your car there instead of on public roads. Likewise, always lock your car when leaving it unattended, even on a garage forecourt. Otherwise, your vehicle could be stolen in the 30 seconds it takes to pay for your fuel.
4.Claim every discount
The most important -- and largest -- premium reduction is your no-claims discount (NCD). For careful motorists with year after year of accident-free driving, this NCD can reduce premiums by seven-tenths (70%).
Of course, improving your driving skills can reduce the probability of having an accident. It may be worth paying to take the Advanced Driving Test offered by the Institute of Advanced Motorists (IAM). After passing, your insurer may reduce your premium. For younger drivers, the six-lesson Pass Plus course can produce premium discounts of up to a third (33%).
Other discounts can be obtained by fitting approved anti-theft devices (car alarm, immobiliser or tracker) and by adding another car or named driver to your existing policy.
5.Choose a voluntary excess
By electing to pay a voluntary excess of, say, £250 to £1,000 on top of your policy's usual excesses, you can further reduce your premium. Then again, don't choose an excess so high that you can't afford to pay it if you're forced to make a claim.
6.Don't accept your renewal premium
Every year, when the renewal notice for my home insurance arrives, I shop around for cheaper quotes and then call my existing insurer to haggle for a better deal. Almost without fail, it agrees to lower my premium or match my lowest quote.
Therefore, use your renewal notice as a reminder to shop around for cheaper cover. By bargain-hunting, you could save £85 a year on a combined buildings and contents policy, according to the AA's BIPI.
7.Buy only what you need
For me, home insurance is 'catastrophe cover', so I would claim only if I suffered serious losses due to fire, theft or flood. That's why I don't buy expensive add-ons such as accidental damage, personal possessions (contents cover away from the home), home emergency, legal expenses and identity-theft protection. In my experience, this additional protection isn't worth paying a higher price.
The single most common reason for making a claim on home insurance is 'escape of water'. Furthermore, the number of claims for property damage due to broken or frozen pipes and/or roof tanks surges during the winter months. Therefore, to reduce the risk of flooding or water damage in your home, check your pipes and water tank to make sure that they are properly lagged and protected from freezing.
9.Secure doors and windows
By fitting approved locks to all external doors and windows (including patio doors and French windows), you make your home harder to break into. Consequently, insurers will give you a discount if you have BS 3621 five-lever mortice deadlocks on your front and rears doors, as well as window locks with removable keys.
Lastly, fitting approved burglar alarms will knock another 5% to 10% off your premium, but be sure to have your alarm serviced once a year. Similarly, several smoke alarms (check batteries every three months) could produce a further saving -- and even save your life.
What are you waiting for? Don't you want to be £600 a year better off? Find cheaper cover today!
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