It’s no secret that insurance is a grudge purchase; that is until you need it. The truth is that times are tough and everyone is trying to lower their expenses.
While the monthly car insurance debit begins to look like an easily cuttable expense – especially because you don’t see the immediate benefit of it, it’s important to remember that murphy is almost always around the corner waiting to enforce his law when you decide to tempt fate and cancel the policy.
So what are your options when you desperately need to lower your expenses but want to keep your car insurance?
Here’s some advice from the Guru’s at CompareGuru:
Self-Insure the car but don’t neglect third party insurance
This option is only available to those of us that have decent savings and could cover the cost of their own vehicle if it was written-off. This is normally a known value because you know the value of your car and you could compare it to your savings account and see if you had the money available.
What isn’t known however, is the damage inflicted on someone else by your negligence while driving (third party insurance). Imagine if you accidentally crashed into a brand new sportscar and didn’t have insurance? Most people wouldn’t be able to cover the costs of the new sportscar – this is where third party insurance steps in.
Increase the excess to reduce the monthly premium
Your tolerance for risk will determine if this a viable option for you. Some people are adamant that they want a low or zero excess in case they have an accident and that is fine – you are a risk adverse person.
Other people see the risk equation differently and believe their risk of claiming and paying a higher excess is less than their definite commitment to paying a higher premium. For this type of person, you could consider increasing your excess to lower your premium and put that monthly saving into a savings account.
Trade in the luxury vehicle and get something smaller and more practical
This is a hard pill to swallow for most people but the reality is that a more expensive car will generally mean a higher premium. You can save money on your insurance, petrol and car repayment by choosing to drive a cheaper car. This is a lifestyle decision which will generally be met with push-back, but it is an option for someone who is series about reducing their monthly expenses.
Add your car to your household insurance policy
A lot of people may not realise this but you get a discount on your car insurance if you add it to your household insurance policy. This is because the higher risk insurance (the car) is off-set by the lower risk insurance (the household).
Read through the policy and question the different fees
Small, additional fees like a broker fee, may be justified in a lot of cases but you may also be paying for something which you aren’t getting a benefit from. At CompareGuru, we don’t charge you additional broker fees but we give you the full benefit of having a broker.
