09:23 24 April 2013
When it comes to the cost of motor insurance, your annual premium may no longer simply reflect the demographic you represent - where you live, your age, occupation, and so on. The increasingly prevalent 'telematics' technology assesses your driving ability and charges you on that instead - and the better you drive, the lower the cost.
Telematics - or 'black box' - policies were originally developed with young drivers in mind. But some insurers are extending the offer of telematics technology to motorists of all ages and are developing policies that do away with the restrictive limitations on the amount of miles you can cover each year.
Not only that, but there are policies out there that reward better driving with cold, hard cash - so let's take a look at how being a better driver could both save and make you money...
1. Car insurance with cashback
Insurers use telematics technology to assess the driving style of individual policyholders, rewarding better drivers with incentives such as additional miles and, sometimes, penalising those motorists that don't come up to scratch with higher premiums.
However, some telematics insurers are now rewarding safer drivers with cash incentives. For instance, Drive Like a Girl offers a premium reduction after three months on the road, which is paid either as cashback or via a reduction in the motorist's monthly repayments.
Other telematics insurers that offer this type of cashback offer include AA Drivesafe, Co-operative Smartbox, Ingenie and WiseDriving.
However, one of the most interesting exponents of this cashback scheme is Carrot, which will issue you with a prepaid Carrot MasterCard at the inception of your policy, loaded with £20 as a welcome bonus.
Then, provided you meet the required standard of driving, you will be rewarded with cashback, which is paid onto your Carrot Mastercard at the end of each quarter, up to a maximum of 15% of your annual policy price.
Other incentives dangled by Carrot include cashback on the Carrot Mastercard when it is used in certain high street retailers, and a £40 cashback reward for every friend that goes on to buy a policy as a result of the Carrot Facebook App.
2. Get a reduction on your renewal price
The accumulation of no claims discount (NCD) is a tried and trusted way of saving money on your car insurance and is one approach that all insurers tend to recommend by offering discounts of up to 75% to drivers who accrue five years or more.
Insurers will issue drivers with a proof of NCD certificate for each year of claim-free driving, and so the best way to ensure you reach that five-year milestone is to be a good driver, stay safe on the roads and don't make any claims.
Some insurers also offer NCD accelerator schemes, which enable you to accrue 12-months NCD in just 10 months. There is often also the option to 'protect' your NCD by paying an additional premium, which means that your discount will remain intact even in the event of a claim.
However, you need to bear in mind that this protection becomes less cost-effective the longer you go without making a claim, as explained in my article Should you protect your no claims discount?
3. Save on fuel costs
Although some supermarkets have recently cut petrol prices, fuel costs are still creeping towards the £1.50 per litre mark, so it makes sense to cut costs wherever possible, be that through using your car less, car-sharing or even buying a more fuel-efficient vehicle.
Another way you can bring down the amount you spend on fuel is to become a better and more considerate driver. Experts say adapting your driving style could reduce costs by up to a third:
For more fuel saving tips, click here.
4. Save on servicing and repair costs
Improving driving technique can save money by cutting down on maintenance and repair costs by reducing wear and tear.
For instance, continuous hard braking will result in premature wear on brake pads and tyres and mean they will need replacing more often. In addition, if you do not have your car regularly maintained and your brake pads wear down, this can result in damage being caused to the brake discs and rotors - at best, this could lead to a hefty repair bill, at worst, it could cause an accident.
If you're a driver fond of revving the engine then you could be doing untold damage to your engine, particularly if you rev it heavily before it's properly warmed up.
Likewise, leaving gear changes until the engine is screaming at you can also result in damage.
5. Save by proving you're a good driver
If you're a newly qualified driver, regardless of your age, it's worth considering taking the Driving Standards Agency (DSA) Pass Plus course. Not only is it designed to improve your driving ability, it can drive down the cost of your car insurance.
The course is set over six hours and involves driving under instruction in different circumstances, such as in town, on motorways, dual carriageways, rural roads, at night and, if possible, in all-weathers. On completion of the course you will be issued with a Pass Plus certificate.
Course fees vary according to who you take the course with and you must take the course within one year of passing your driving test.
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