Using some common-sense cost-saving measures can steer you through the rocky road of soaring premiums, says Mark Channing
Up to 14,000 motorists have been forced to scramble for replacement car insurance following the collapse of Gibraltar-based Enterprise Insurance.
Although Enterprise’s Irish customers will be refunded for the unused portion of their insurance, their hunt for a new policy comes at a time of unprecedented price increases in the car insurance market.
The cost of car insurance has rocketed by 38% in the year to June and is up 60% over the past two years, according to the Central Statistics Office.
The huge increases mean motorists renewing their policies are paying massive premiums. Analysis by market research agency Consumer Intelligence published in May found the average Irish motorist is paying €909 a year to insure their cars.
Dublin motorists are paying even more. The average premium for a driver in the capital has soared past the €1,000 mark to €1,077, compared with an average of €858 for drivers in the rest of the country.
There is no end in sight to the price rises, say experts. Ian Hughes, chief executive of market researcher Consumer Intelligence, said: “Average motor insurance premiums are racing away and all the indications are that they will continue to climb.”
Most of the factors that determine premiums, such as your age and occupation, are outside of your control.
Other ways to cut costs meanwhile, such as swapping comprehensive cover for third party fire and theft, or agreeing to a higher excess, force you to accept a lower level of cover.
We tell you how to drive down your premium without cutting back on your cover.
The most recent car insurance survey by the Competition and Consumer Protection Commission (CCPC) found differences of up to €1,249 between insurers for comprehensive insurance, and €975 for third-party, fire and theft cover.
Despite the savings, the CCPC found that three-quarters of motorists simply renew with their existing provider. “It’s a cliché, but you have to shop around if you want to get the best deal,” said Jonathan Hehir, managing director of broker coverinaclick.ie.
“Don’t just jump on the first price that you see. Take an hour or two out to ring around and get the best price.”
Use a broker
Using a broker can increase your chances of getting the best price because they will compare quotes from an array of insurers. Coverinaclick.ie and chill.ie have access to 14 different insurers.
Brokers also have access to cheaper insurers who don’t deal directly with the public. For example, XS Direct specialises in providing cheaper cover to motorists who have previously made a claim and lost their full no-claims bonus.
However, XS Direct does not deal with motorists directly and is only available through brokers.
According to the Irish Brokers Association, only about 35% of motorists use a broker to source cover.
Add a spouse to your policy
Adding your other half to your policy can bring down your premium without sacrificing your level of cover. “If you have a spouse or a partner, it’s very important that you get a quote for a policy with them included,” said Hehir.
Having a second car in the family, even one insured with a different company, can also bring down the cost of your premium.
“A lot of people don’t realise that often insurance companies will give you a discount if there are two cars in the family, even if it only insures one of them,” said Hehir.
Make use of telematics
You can get a discount on your policy by agreeing to allow your insurer to monitor your driving. Known as telematics, insurers use special software to analyse your driving habits and improve their ability to calculate how much risk you present.
It works by you either downloading an app on your smartphone or having a physical “black box” installed in your car that tracks your driving.
Fergal Lynch of chill.ie said: “Motorists who sign up for telematics — in particular younger drivers — can make significant savings on their premium.”
AIG customers who install its XLNTdriver app on their smartphones get an immediate 20% discount on their premium with further discounts possible depending on their driving performance. Customers of broker 123.ie who download its Go Drive app can get up to 10% off their renewal premium.
BoxyMo.ie gives young drivers up to 30% off their premium for having one of its tracking devices fitted in their car.
Fix your premium
You can protect yourself from future price hikes by fixing your premium. Blue Insurance is currently the only provider to offer this, allowing you to fix for up to two years. Fixing will save you money if the cost of car insurance keeps going up.
However, if prices fall in the next 12 months you could lose out because you will be unable to shop around and switch to a cheaper provider. Most experts believe the cost of car insurance will continue to climb over the next 12 months, albeit at a slower pace.
Brian McNelis of the Irish Brokers Association said: “Premiums will probably go up a bit more but I think we’re almost at the top of the cycle.”
Think twice before you claim
For minor accidents where no third party is involved, paying the cost of repairs yourself rather than claiming on your insurance may be the cheaper option.
Insurers give generous discounts depending on your record of claim-free driving, with maximum discounts of 50% to 75% depending on the insurer. If you make a claim, you can lose the discount and have to rebuild it from scratch. This could ultimately end up costing you more than paying to repair damage to your car yourself.
“Use your common sense in relation to claims,” said McNelis. “You could make a claim for €500 that ends up costing you thousands in additional premiums over the next five years.”
Get a multi-policy discount
Having more than one policy with the same insurance company can often get you a discount. “Use the fact that you have other products or policies to gain leverage and get a discount on your motor policy,” said McNelis.
“Make sure your insurer is aware of what other policies you hold — they may not offer the discount otherwise.”
Both Liberty Insurance and Axa give 10% off second and additional cars insured, or if you also have home insurance with the company. Aviva gives a 25% discount on premiums for second and additional cars.
The average premium for drivers under the age of 25 is an eye-watering €2,681, according to Consumer Intelligence. Passing the driving test will cut the cost of a premium by 25%-30% say experts. Younger drivers may also be able to cut costs by completing an insurer’s driving course. For example, Aviva gives younger drivers a 5% discount on their premium if they pass its Ignition assessment.
Axa gives up to €400 off premiums for booking 12 driving lessons with the Irish School of Motoring through the insurer. Younger drivers can also get discounts by adding their parents on their cover.
“Insurers probably won’t ask you if you want your parents on the policy, so you should be the one to suggest it,” said Hehir.