A simples guide

On the lookout for deposit free insurance?

As we all know, when something sounds too good to be true, it usually is. Alas, when you are offered cheap car insurance with no deposit, you might be disappointed when you explore the detail.

Sorry, it just doesn’t exist

When something is defined as deposit free, it means that you’re able to purchase it without putting down any money at all upfront. However, all car insurance policies require some kind of payment upfront before the cover can start.

So why the confusion? Well let’s just say that companies offering deposit free insurance are being a little bit choosey with the language they use. What these companies are basically offering is the opportunity to spread the premium payments.

Whilst you don’t have to pay a deposit per se, you will have to pay at least the first months cover.

Spreading the cost

This of course is no bad thing and for many people, spreading the cost of car insurance is most welcome. Rolling back the clock a few years the vast majority of insurance policies had to be paid upfront, in full.

Fortunately, those times have changed and with the help of companies like us customers are able to shop around, not only for the best price, but for payment terms that suit them.

Most insurance companies will now offer the opportunity to spread the cost of the premium over the year, with twelve monthly instalments the usual option. Before you jump at this opportunity it is worth remembering that this option is usually more expensive than simply paying for the whole policy upfront.

You will need to decide, based on your own personal circumstances, whether it makes sense for you to spread the payments or whether you can afford to pay in full upfront.

Shop around

We all want to save money on our car insurance and it really does pay to shop around to compare insurers and their prices.

Some insurers will seek to grab your attention with bold statements like our old friend ‘no deposit required’, but be sure to always check the details. 

Terms and conditions

Every car insurance policy comes with a number of policy conditions. Whilst it might be tempting to focus on the headline price, you do need to check all the attached terms and conditions. If you don’t, you risk breaching a condition that might invalidate your cover.

It might also mean you don’t get the best value for money. The terms and conditions can be used to your advantage and there’s a number of ways you can save money on your policy.

Managing the excess

When you take out cover you will see there is an amount quoted called the ‘excess.’ If the worst happens and you have a bump, this is the money you will have to pay before the insurance policy kicks in. 

There are various types of excess. Compulsory excess is set by the insurer but voluntary excess is the amount you choose to pay on top of compulsory. If you set the voluntary at zero, you would only have to pay the compulsory excess (if there is one) in the event of a claim but your premium may be higher. There are also other types of excess such as a young driver excess that is charged to drivers under 25 so make sure you read all of the T&Cs so you know what you’re paying for.

The temptation then, is to make this amount as small as possible. But, increasing the excess amount may be a good way of helping to reduce the insurance cost and could make a difference. Just make sure this is an amount you can afford and balance this risk against the overall cost of your premium.

Restricting your mileage

Restricting the number of miles you do a year may help you save money on the policy. Most policies now contain an annual mileage limit. It’s simple. The lower this figure, the lower your insurance policy is likely to be as you’re spending less time on the road and therefore reduce your chances of needing to claim on your insurance premium. But make sure you give an accurate mileage estimate for the year as if you decide to underestimate and then make a claim, your policy could be voided. 

Avoid those points

Yes, you know the points we’re talking about. Not surprisingly, insurers like less risk and reward less risky drivers with lower premiums. If you’re driving poorly and racking up some penalty points, it is likely that the insurers will do the same to your premiums.

Build no claims

Similarly, if you’re not making claims on your policy you could find your premiums come down at renewal. No claims bonus is a significant way to reduce premiums as insurers reward drivers who have not had a claim in the previous 12 months. If you are able to build this for a number of years, it can have a big impact on the cost of your car insurance.

You should always shop around and compare prices when buying a car insurance policy. There is now significant choice at your fingertips and finding the best policy for you is now easier than ever – so start now. 

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