Contrary to some urban myth, it is perfectly possible to save money on your insurance premiums without necessarily putting the quality of your cover at risk.
Let’s be clear, if you are struggling to pay your insurance premiums and need to call upon the services of even highly-regarded short-term loan providers like wonga.com to help, then something has gone badly wrong and you need to take action to get your premiums down.
Here are a few classic ideas.
Significant numbers of policyholders have been with their insurance providers for a long time. Some have simply slipped into the seductive arms of auto-renewals, meaning that it might be some years since they last checked whether their premium was still competitive against other policies in the marketplace.
An article in the Telegraph said that always shopping around for insurance ‘could save policyholders £1.5bn’.So, make the effort to get out there and check whether you’re still getting a price-competitive deal – though do remember to make sure you are comparing like with like, as the cheapest might not always be best.
Self-evaluate your risks and behaviours
There is a direct relationship between the premium you pay and your insurance provider’s perception of how much risk you and your situation constitute.
It should be something of a no-brainer to realise that anything you do to reduce those risks might result in a corresponding reduction in your premium.
So, for example, if you have motor vehicle insurance and you are including cover on it for a very young and inexperienced friend or family member, well, expect to see your premium soar away to the stars. Tough as it may be, removing them from your policy might bring your premium way down.
There are many other such examples that a professional insurance provider will share with you in terms of helping you to reduce your costs.
Increase your excess
The excess is a perfectly normal, if sometimes resented, feature of insurance policies. It essentially is the policy provider stipulating how much they will expect you to contribute towards the cost of a future claim. (You can find out more about excesses here).
Excesses really shouldn’t be controversial because it is actually an insurer’s attempt to help keep the premium down.
You may be surprised to know that if you voluntarily agree to increase the excess on your policy, it may result in a surprising reduction in your premium – sometimes perhaps being as much as 40% in the case of some policies and providers.
Pay your premium in one or as small a number of instalments as possible
In an understandable attempt to avoid writing big cheques, some people pay their premiums by monthly instalments – particularly if the renewals fall at a difficult time of the month.
Do your maths carefully here, as sometimes the extra cost of paying by instalments may be substantial.
If this is just a simple monthly timing issue, it might be worth doing some sums to compare the insurance provider’s instalment costs against the costs associated with a short-term advance from a specialist online provider.