Millions of Brits could soon access cheaper car insurance thanks to new ‘risk rating system’- but there’s a catch
MILLIONS of Brits could soon access cheaper car insurance thanks to a new “risk rating” system spreading across the industry.
Drivers may have to spend a little more upfront but could save hundreds every year as a result.
Thatcham, the firm which administers the system that providers use to price their policies, has rolled out an updated version of the software.
Previously the programme, then known as the Group Rating System, sorted every car model on the market into an insurance group from 1 to 50, with the former being the cheapest.
This was based on factors including the average cost of repairs, the rate of theft and the security devices that came as standard.
However, as the criteria remained largely the same for 25 years, this didn’t take into account rapid advances in motoring technology.
Now the company has unveiled its new Vehicle Risk Rating (VRR system), which is set to revolutionise the way premiums are worked out.
How to get cheap car insurance
CAR insurance is an essential cost that you hope to never use but will need to cover the costs of theft or damage to your vehicle.
It’s a legal requirement to have car insurance, and going without it could land you with a £300 fine, six penalty points on your licence and even a criminal conviction.
But there are several ways to slash your premiums.
Pay upfront
Insurers give you the choice of paying for insurance monthly or upfront.
Paying monthly spreads the cost of your cover but the insurer adds interest charges which means the average motorist pays around ten per cent more overall.
If you pay for your car insurance annually you don’t pay any interest.
A typical motorist can save up to £225 a year by paying in one go, according to comparison site MoneySuperMarket.
Increase your excess
The excess is what you agree to pay each time you need to make a claim on your policy.
You can usually choose your own excess when setting up a policy and it can be as low as £100 and as high as £500 or more.
The higher your excess, the lower your premium and vice versa.
This means you could bring the cost of your insurance down by agreeing to pay more if you do need to make a claim.
But before you hike your excess, make sure you would be able to pay in the event that you do need to make a claim.
Tweak your job
Certain jobs are seen as more risky than others for insurance purposes.
Making small but accurate changes to your job title can save you money.
For example, swapping your role from “chef” to “caterer” can save you £20, comparison site GoCompare found.
And changing your role from “fast food delivery driver” to “delivery driver” could save you £40.
But lying about your job could invalidate your policy so make sure any changes are legitimate and accurate.
Shop around
Not all comparison sites have the same range of insurers so to get the best price it’s a good idea to check two or three from Go Compare, Comparethemarket, MoneySupermarket and Confused.com.
Insurer Direct Line is also not on comparison sites so check its prices directly.
You can also get a free cash bonus by going via a cashback site such as Topcashback or Quidco.
Save the date
Renewing your car insurance sooner rather than later could save you some cash.
New cover becomes more expensive the closer you get to the renewal date.
But you can buy your car insurance up to 29 days before the policy start date and ‘lock in’ the price you’re quoted on that day.
A typical driver can save up to £265 buying new cover at least 27 days before their current policy ends, according to Go Compare.
Unlike its predecessor, VRR takes into account modern safety technology when assessing a motor’s risk factors.
Advancements in driver assistance software, such as collision alerts, lane-keeping functions and automatic braking, will be considered as cars are ranked in a new set of 99 groups.
For example, Thatcham’s testing found that rear-ending crashes decreased by up to 50% when the automatic brake kicked in.
However, there is a bit of a catch for drivers as the new ratings will not apply retrospectively.
This means that to benefit from price reductions linked to safety tech, you would have to buy a new car.
In practice, that equals a payment of at least 13,795 – the price of the UK’s cheapest new car, the Dacia Sandero.
Either that or motorists can wait until 2024 models hit the second-hand market and see a drop in price.
Nonetheless, Jonathan Hewett, chief executive of Thatcham, said: “I would expect insurers who fully adopt the new Vehicle Risk Rating model to be able to offer better value to their consumers.”
Mark Shepherd, head of insurance for the Association of British Insurers, added: “The new rating system is a great step forward to allow more detailed risk assessments of the changing automotive landscape.
“We also hope it will encourage manufacturers to consider things like security and repairability more closely when designing new cars for UK roads.”