How to beat the actuaries
Here’s what to do if your car insurance premiums are soaring, says Paul Lewis
Wendy has been a widow for 30 years, so she was surprised that the insurance policy transferred to her new car had her down as married. “But when I corrected them, they put my premium up by £100!” she says. “Can you tell me why widows have to pay a premium, especially after 30 years of no claims?”
Wendy is victim of ‘actuary-itis’ – a swelling of your premium caused by close proximity to a number-cruncher. It’s an odd fact of car insurance that being married reduces your premium. That is because actuaries say couples make fewer claims than single people. So, Wendy, it’s not so much a premium on widows as extra for being single.
That’s not the only anomaly. Sometimes just ringing your insurance firm can put your premium up. If another vehicle did slight damage to yours, you might call your insurer to ask if it’s worth making a claim; then, even if you decide not to claim, when your policy comes up for renewal the price can rocket. Again, blame the actuaries, because people whose cars get damaged – even if it wasn’t their fault, and there is no claim – are, statistically, a greater risk.
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In fact, the price of everyone’s car insurance has shot up recently. One comparison website claims premiums are up 58% in a year. The Association of British Insurers (ABI) admits they have risen but puts the increase at more like 33%. It blames the growing cost of repairing cars and the rise in thefts.
What can you do? Well, never accept a renewal premium from your insurer. Go online to see if there’s a better one then call to see if they will reduce it. You can also increase the amount you pay of any claim (called the excess); raising it will reduce your premium.
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It’s cheaper to pay annually, too, if you can afford it, as most firms add hefty interest costs to the pay-monthly option. And make sure you’re not paying for extras you don’t need, like a courtesy car if yours is off the road. Consider telematics: a black box that records when and how you drive can reduce your premium.
Finally, adding a responsible second driver to your policy may bring the premium down. Why? Actuaries say you are less likely to make a claim. Ker-ching!