There are lots of common misconceptions surrounding car insurance and what may or may not make your policy cheaper. From parking your car in a garage, to lower annual mileage must therefore result in a cheaper premium.
In this month’s article we will be looking at 10 common misconceptions, and helping you to understand what is fact, and what is fiction, in the minefield that is car insurance.
Myth 1: Lower mileage means cheaper insurance
It is often assumed that if you drive fewer miles, your annual car insurance premium will be lower. However, this is not necessarily the case. Those people who don’t drive as frequently might be regarded as not being confident when they are behind the wheel, and therefore could be more prone to accidents.
With your car insurance quote, it is important to be as accurate as possible with the figure given for your annual mileage. The average annual mileage of a car in England for 2019 was 7,200. Given the national lockdowns in 2020 and 2021, plus the fact that the number of cars per household is increasing, this figure is likely to be even lower for 2020 and 2021. If you are uncertain as to how many miles you drive per year, you can check your MOT certificates or service history, as these will show the mileage increase year on year.
Myth 2: Third party cover is cheaper than fully comprehensive insurance
It may seem more logical that a lower level of cover would mean a reduction in the annual policy price, but this is often not the case. Drivers who opt for a lower level of cover tend to make more claims. This has caused the cost of these third party policies to increase. For the majority of drivers, comprehensive car insurance can cost the same, or sometimes even less, than third party or third party, fire and theft cover. With comprehensive cover you have the added peace of mind that your own vehicle will be covered for any damage.
Myth 3: My annual car insurance premium won’t increase if I don’t make a claim
In an ideal world, this would absolutely be the case because you are adding to your ‘no claims discount’ for every year you don’t make a claim. However, there are external factors to take into consideration that affect the cost of your insurance. For example, most insurers have a maximum number of years of ‘no claims discount’ that can be taken into account and applied to your annual policy price. Once you reach the maximum number of years applicable, you will stop increasing the discount.
Insurers also take your age in to account. When you reach a certain age you will be considered an increased risk, and may see your annual premium rise. Your annual premium may increase if you change to a ‘high risk’ job or if you move to a house with a different postcode.
Myth 4: My job title on my policy isn’t important
The occupation that you declare is just one of the many factors that insurers take into consideration when determining the price of your annual premium. For example, someone who drives for a living can expect to pay more than someone who has an office job, due to the increased risk associated with more time spent on the road. In 2020, the occupation with the highest insurance premium was a ‘Driver’, with the average annual cost of a policy being £479.80 compared to a ‘Mechanic’, paying an average annual price of £298.61.
Changes to your job title could increase or decrease your premium. However, if your declared job title doesn’t accurately reflect your line of work, you run the risk of any future claims being rejected and potentially your policy being invalidated.
Myth 5: A comprehensive policy in your name allows you to drive any vehicle
Many drivers assume that having comprehensive insurance on your own vehicle automatically covers you third party to drive another vehicle. However, this isn’t always the case. Indeed, this used to be a standard feature of comprehensive policies, but it is far less common now.
It is important to check your policy for ‘driving other cars’ (DOC) cover. Even if you are covered for DOC, you will only be covered for third party liability in the case of an accident. You must have the car owner’s permission to drive the vehicle and it is common for insurers to exclude this feature for anyone under the age of 25.
Myth 6: Parking your car in a garage means a cheaper premium
It is a common misconception that parking your car in a garage when it isn’t in use will result in a cheaper annual premium, compared to if you park your car on your driveway. However, the difference this has on your policy price is minor. This is because you are considered more likely to damage your car going in and out of your garage, than you are pulling on to or out of your driveway.
Myth 7: Taking out a policy in your parent’s name will reduce the price
If a parent names themselves as the main driver on their child’s car insurance policy, to make the premium cheaper, this is called ‘fronting’. Not only could this invalidate both your child’s and your car insurance policies, but you could also be convicted of fraud. It will also be very difficult for you to get insurance in the future.
Adding a parent’s name to your policy as an additional driver isn’t against the law and could help to decrease the annual premium, but DON’T put your parent down as the main driver.
If you are a young driver looking to reduce your annual premium, there are much better ways to do this. For example, black box insurance, which is priced depending on your driving and not solely on your age.
Myth 8: Black Box policies have a restrictive curfew
Most black box policies no longer have set curfews. Although this was a feature in early black box policies, insurers now base annual premiums on driving behaviour such as mileage driven, speed, braking and accelerating. Driving at night or early in the morning may affect your driving score on some policies as statistically, this is the time of day that accidents are most likely to occur. However, there are now very few black box policies that restrict the time of day that you can drive.
Myth 9: You don’t have to tell your insurer if you were involved in an accident that wasn’t your fault
If you’ve been involved in an accident that wasn’t caused by you – for example, someone has hit your parked car – you may be under the impression that your insurer doesn’t need to know about it. However, you must report any incidents, no matter how small, to your insurance provider.
If you don’t declare the incident, your insurer may cancel your policy or refuse to pay out if you need to make a claim.
Reporting an accident that wasn’t your fault, and this can be proved, should not affect your no claims discount. However, it could still impact your premium when it is time to renew the policy.
Myth 10: I won’t have to pay the excess if a claim wasn’t my fault
If you have to make a claim that wasn’t your fault – for example, someone runs in to the back of your car at traffic lights – your insurer will usually waive the excess if there is proof that you weren’t to blame, and they are able to claim the costs of the repair back from the other involved party.
However, you may be expected to pay the excess whilst the accident is being investigated, and before any repairs take place, therefore it is important to take out a policy with an excess that you can afford.
Tony Buckingham, Managing Director of Buckingham Insurance says, “These are just a number of common misconceptions when it comes to car insurance. If you have any questions regarding the level of cover you have or need, please don’t hesitate to contact us or telephone one of our friendly staff on 01246 575 625 (Clowne) or 01773 748 627 (Ripley). They will be more than happy to answer any questions you may have.”