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Getting the cheapest car insurance
Buying the cheapest policy used to be simple. You went to a broker who looked through a list of insurance underwriters to find one that offered the lowest quotes based on your address, the car you were driving and your accident/conviction record. These quotes were based on their own experience, backed up by statistical records. However, individual underwriters had a lot of discretion about how much to charge. Because a lot of the work in calculating the quote involved real human beings, often discussing prices over the telephone, the system was not very efficient and consequently the commissions that brokers charged was quite heavy; often up to about a third of the total premium.
Then computerisation came along
Computerisation speeded the quote process up considerably. Less manual effort was needed to work out profitable premiums so costs fell; at the same time more modern-looking companies entered the insurance market. The commission that brokers earned fell in the face of increased competition.
Then the Internet came along
The ability to bypass brokers completely by buying online slashed costs even further; then the introduction of price comparison sites meant that many motorists had no need to speak to a broker at all, and the increased efficiency meant that commissions fell even further!
All good news for the motorist?
Commissions payable to intermediaries, such as brokers and the owners of price comparison systems, have fallen to an all-time low, which has meant lower costs for most motorists. On the other hand they are missing out on the advice that a trained broker can give them, with the result that some people have bought the wrong policies for their needs. There is still a place for an independent broker for many drivers with non-standard issues such as expensive cars, convictions, bad accident records, etc.
...And in the future?
The use of telematic (black box) technology is likely to increase, giving more personalised quotations. Driverless car technology could disrupt car insurance completely; even if a car has a driver innovations that help with parking, staying in a lane, keeping a good distance from the car in front, etc etc are likely to reduce accidents, and premiums too. Check out the articles below to keep up with the latest developments; then perhaps you will be able to buy very cheap car insurance too.
- Insurance call handler jailed for insurance fraud: Even an insider cannot get away with it.
- New measures to slash personal injury claims: Is this a heartless outrage, or an overdue end to the compensation racket?
- Reducing car accidents through technical innovation: The fewer the accidents, the lower the premiums.
- How to save money on car insurance: Here are the tricks of the trade.
- Would short term cover be cheaper? It's usually quick and easy to insure a car from just a day upwards.
- Is 3rd party more economical? It isn't necessarily so.
- Negotiate - It costs nothing to ask! Most people just accept a quote, but there is often room for negotiation.
- Booking early may lower your premium: If you're a last minute type of person the insurers may see you as a greater risk.
- Getting a new car may save you money: A modern car may be packed with safety features which were unheard of a decade ago.
- How to invalidate your insurance cover: Having a claim refused is no joke.
- Beware of the hidden extras: Insurers and brokers make a lot of money from them.
- Could telematics lower your premium? Be careful, there are disadvantages too.
- How do you describe your occupation? A slightly different way of describing your job could change your premium considerably.
- How insurers may try to trap you: Don't assume that insurers have your best interests at heart; they are here to make money from you.
- Insuring a write-off: Just because a car has been badly damaged doesn't necessarily mean you have to scrap it.
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Telephoned quotations are provided by Alternative Insurance Brokers, of Anglia House Carrs Road, Cheadle, Cheshire, SK8 2LA, registered in England No 8253536. Alternative Insurance Brokers is a trading name of Alternative Propositions Limited which is Authorised and Regulated by the Financial Conduct Authority, registration number 602443.