COVER YOURSELF ; Slash Rising Cost of Premiums

By SIMON READ

IF you are among the masses splashing out on a brand new motor in March, make sure there's enough left in your wallet to cover the insurance.

Because anyone renewing or arranging driving cover next month is likely to face a far heftier bill than they'd expected.

Annual premiums topped pounds 800 for the first time ever last year, according to the AA. In the past 12 years, cover has doubled - climbing 4.35 per cent in the last three months alone.

The car insurance market was once a place of tremendous competition as new companies such as esure bought business with lower premiums. But the price was is over.

The big companies - including Norwich Union and Royal Bank of Scotland, which owns Direct Line and Churchill - have passed on the rising cost of claims to customers.

Insurers insist they are being forced to rack up charges because of the increasing cost of claims, a rise in the number of uninsured drivers on our roads, and the rising expense of car repairs.

"Cars have become increasingly complex machines, so it has become more expensive to get them repaired," explains the AA's Ian Crowder. "There's also been a massive increase in personal injury claims as the result of a motor accident, which is pushing up premiums."

In research by Money supermarket.com, one in eight motorists admitted to driving without insurance. And two-thirds of drivers who flout the law like this do so while driving someone else's car.

But if you are tempted to dodge the expense by failing to take out insurance, think again.

Anyone caught driving while uninsured will be slapped with a pounds 200 on-the-spot fine, get six points on their licence and have their car impounded.

The government is also cracking down on drivers who fail to renew their insurance - even if the car is off the road and parked in the drive. Offenders will get a pounds 100 fine, or have their car clamped or towed away.

"Anyone who drives without cover is breaking the law," warns Richard Mason of Moneysupermarket.com.

"It is wrong to believe you are safe driving your own or a friend's car just a short distance uninsured, since most accidents happen in residential and familiar streets."

The only sensible option, then, is to find ways to cut the costs.

Start by getting quotes from different insurance companies to see how competitive the market is. In our example above, a 35-year-old driver could save around 25 per cent by getting a cheaper deal. The price comes down 40 per cent by limiting mileage and parking in a garage.

Another way to cut your premiums is to agree a higher excess - the amount of any claim that you agree to pay. Also by changing insurer, you could benefit from a first-year introductory offer.

But take some of the wild claims by insurers with a pinch of salt. Last month the Financial Services Authority said that more than half motor insurance ads contain misleading savings claims - and gave the companies until April to clean up their campaigns.

Remember, every quote is different and is based on your age, vehicle, location and driving record. So the chance of you qualifying for an insurer's "best deal" is slim.

"Price messages in the most part are irrelevant," agrees Emma Holyer of Direct Line.

A final tip? "Do not automatically claim if it is for a relatively small amount," advises Richard Mason.

"The subsequent premium increase could cost more long-term than just paying for the repair."

(c) 2007 Daily Mirror. Provided by ProQuest Information and Learning. All rights Reserved.