Car insurance for unemployed drivers

Does being between jobs, or claiming benefits, make a difference to your car insurance? If you’re a jobseeker looking to save money on your premiums, here’s how to go about it.

Does being between jobs, or claiming benefits, make a difference to your car insurance? If you’re a jobseeker looking to save money on your premiums, here’s how to go about it.

Daniel Hutson
Motor insurance expert
3
minute read
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Posted 15 JANUARY 2020 Last Updated 12 MAY 2022

Does car insurance cost more if you’re unemployed?

Unfair as it might seem, the answer is often yes. Without a job, insurance providers may consider you a higher risk. This can hike up the cost come renewal time. 

Why are unemployed drivers seen as high risk?

Insurance providers may consider that unemployed drivers are:

  • Less likely to maintain their car - With less disposable income to hand, unemployed drivers may try to save money on their car’s upkeep 
  • More likely to claim - Claims among long-term unemployed people are generally higher
  • A higher credit risk - Unemployment may make it harder to settle debts
  • Likely to be driving more often - Unemployed drivers may be travelling more and driving to unfamiliar places while looking for work
  • Distracted by their circumstances - With job search worries on their minds, drivers may be more likely to get into an accident                                                            

For these reasons, a  change in your employment status often means insurance providers charge a higher premium.

How to find lower cost car insurance if you’re out of work

While cheap car insurance for unemployed drivers may be hard to come by, there could be other ways to bring down the cost of your premium.

  • Be rewarded for safe driving 
    Consider getting a ‘black box’ – otherwise known as a telematics – policy and you could be rewarded with lower premiums for driving safely
  • Reduce your annual mileage 
    Without a hefty commute, unemployment could reduce your annual mileage. This could in turn cut your renewal costs
  • Add a named driver 
    Adding someone to your policy as a named driver may reduce your premium. Especially if they have a large no claims discount and a clean driving history
  • Remove business and commuting from your policy 
    If you no longer use your car to get to work, or as part of your job, you may be able to save money by removing commuting and  business use cover from your policy

Take a look at some other ways to reduce your car insurance premiums.

Frequently asked questions

If I lose my job, do I need to immediately let my insurance provider know?

If you don’t let your insurance provider know about any change to your employment status – this includes a change in your job title – it could lead to your insurance being invalidated. If in doubt, give your insurance provider a quick call to make sure.

Do I need car insurance?

When you’re on a low income, it can be tempting to cut back on things like car insurance. But car insurance is a legal requirement in the UK. Unless your car is registered off the road and you have a SORN, you could be fined and even prosecuted for driving without insurance.

Do insurance providers check if you’re employed?

Insurance providers ask for details about your employment status. You’ll need to answer all questions honestly, otherwise you could find your policy is invalid when you come to claim.

What if I’m a housewife/husband, student or retired?

If you’re a housewife or husband, a student or retired, then don’t describe yourself as unemployed. This could mean you end up paying more for your premium.

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