Can we really buy cheap car insurance? There are newspaper headlines from time to time about people who have paid peanuts for their cover; one lady once claimed that she had got her annual premium down to 95p by getting cashback from both a cashback site and the insurer! However if it was as easy as that we would all do it, and car insurance companies would go bankrupt within a very short time.
The fact is that, even after searching for the lowest cost motor insurance on a price comparison site, most people will pay round about £800 a year. Young people, particularly if they've only just started driving, will probably face bills of several thousand pounds a year. Motorists in their 50s, 60s and 70s will probably pay in the region of £400 a year, with those driving sensible cars and living in rural areas getting their cover for even less. Most people do indeed pay more than they could if they really tried to find the cheapest possible policy, but sometimes this is not the best way to save money.
Young people are in the worst position where car insurance is concerned. Statistically they are far more likely to have accidents, partly because they lack experience and partly because youngsters often see their cars in a different way to the rest of us; it is a status symbol particularly if it is fast. They tend to show off to their mates and to themselves and they take greater risks. The result is that all insurance companies charge them a lot more because on average they are far more likely to make claims.
One way of cutting this down is the introduction of blackbox policies. Monitoring systems are usually installed in cars and they run continuously, reporting back any bad driving habits such as fast acceleration, hard cornering, exceeding speed limits or violent braking. They also monitor the times when the car is being driven, where it goes to, and what time of day it is in use. All these factors can be used to calculate how safely the car is being driven and what risk it provides to the insurer. Premiums can then be based upon this information.
One great advantage of these blackbox (or Telematic) policies is that drivers who have these systems fitted in their cars are more likely to take care of the way they drive; they don't want their premium to increase or even find that the cover has been withdrawn completely because they have added up too many penalty points. However they are not perfect.
Complaints have been made to the Financial Ombudsman that blackbox systems in cars which have been taken into a garage for MOT tests, which are very stringent, have recorded apparent speeding or braking infractions which had been due to the way in which the car had been tested. These have resulted in motorists being penalised and some have even had cover withdrawn completely. This is a very serious matter since if they have had a policy cancelled they are under an obligation to tell any future insurers, who will take that into consideration when deciding what premium to charge, or even whether or not to take the customer on at all! There have also been cases where people have lent their cars to others, who have then exceeded the speed limit or gone round the corner a little too fast. All these infractions have been registered against the car owner.
There is also a safety aspect to consider. If a car suddenly dives in front of you on a motorway do you brake hard, in which case you will receive penalty points? What happens if you have to accelerate to get out of a potential accident situation, which momentarily makes you exceed the speed limit? Telematics systems are still in their infancy and there have been a lot of complaints by people who have fallen foul of them. Some companies have received far more complaints than others so if you are thinking of fitting one of these systems to your car it will be best to look at online reviews of the company that you are thinking of being insured by, and see what their level of complaints are.
To sum up; we usually get what we pay for. Yes there are some ways of reducing the price of your insurance cover but they can all have drawbacks so you should think carefully about going for that very cheapest policy. It may have a sting in it's tail.