Here’s The Best Time to Buy Car Insurance To Save Money
A new study by NimbleFins shows that when you buy car insurance has a massive impact on the price you’ll pay. Making the purchase too late can hike the price a whopping 29% or more, costing motorists hundreds of pounds extra. Luckily, the study reveals a sweet spot for the purchase – it’s typically cheapest to buy car insurance three weeks ahead of the renewal date.
Why car insurance costs more when you buy last minute
Insurers are cautious of buyers who leave things to the last minute. While we don’t know for sure why this is, it’s probably safe to assume that risk-averse, responsible drivers are more likely to ensure their insurance is sorted well ahead of time. If so, then it’s understandable that insurers view drivers who are prepared and buy insurance early as less risky than a motorist who leaves their car insurance to the last minute.
Also, to some extent, car insurers may be taking advantage of drivers buying last minute. They can charge a higher premium for people buying last minute as they may not have any other options than to pay the high price. If someone is picking up a new car tomorrow and has not arranged their insurance, they’ll have no choice but pay an inflated premium if they want to drive home legally. Insurers need to make a profit so will raise premiums where they can.
Best time to buy car insurance
Buying insurance with a forward-dated start date can save a driver anywhere between 17% to 29% or even more. The sample driver in the NimbleFins study could save £262 per year on average by purchasing their policy 3 weeks in advance of the coverage start date. Some insurers charged more than £1,000 extra for an immediate start date.
The study by NimbleFins analysed over 200 Ford Fiesta car insurance quotes for a sample 45-year-old driver with a range of start dates from today to three weeks from now.
When you buy not only impacts your premium, it also affects the choice you have. Many insurers won’t sell a policy with an immediate start date, so there’s more selection when looking for a car insurance policy well in advance. The study gathered 46 quotes for a start date three weeks away. However, only 23 of those companies offered a policy with an immediate start date. That means leaving the decision late will severely limit a driver’s choices.
Insurers that were unable to quote for an immediate start date included AXA, Aviva, Churchill, LV, M&S, More Than, RAC, Sainsbury’s Bank and more.
It also doesn’t pay to look for a policy too far in advance. Many insurers won’t sell a policy more than a month before the start date. And there’s a reduction in benefit buying past the two to three-week mark. That is, buying four weeks out is essentially the same price as buying three weeks out in most cases.
When to renew car insurance
Motorists can typically renew their car insurance in the month leading up to the renewal date. Before accepting the renewal offer, motorists can survey the market to look for better offers that offer a combination of a cheaper quote and better features. For instance, a motorist might be able to secure free legal and breakdown cover from a competing insurer for the same premium, and opt to switch.
As discussed above, motorists can save a considerable amount of money by starting these checks 3 -4 weeks out from their renewal date. While it can feel like a pain to have to renew your coverage, it’s absolutely imperative that you do. It can help to put a reminder in your diary – shopping for insurance is not very exciting and can easily be forgotten or left to do another day. But being timely can really have a big impact on your finances. And ensure you are driving within the law, because it’s illegal to drive in the UK without a valid insurance policy.
When comparing quotes, look not just at price but also at product features like breakdown, legal, and personal injury cover. Also compare the excess on different policies. It may not be a good idea to choose the cheapest premium if the excess is 3X higher than another policy that is a touch more expensive, for example.
How to renew car insurance
If after scouring the market you decide to stay with your current insurer, renewing should be quite straightforward. Most have a rollover clause that automatically renews a policy. This is done to ensure motorist don’t drive uninsured. Some insurers charge a small renewal fee, but most do not.
Keep an eye out for your renewal documents, which should be sent to you around a month in advance. They’ll confirm your coverage, advertise the new premium and give you instructions whether you want to renew or not.