Why is Car Insurance More for the Unemployed?

As if you do not have enough problems if you are unemployed, but a recent story on the BBC1 Rip Off Britain programme tonight, highlighted a little known fact when it comes to the unemployed obtaining car insurance. Apparently, many car insurers take the opinion that if you are without work you are a greater risk of claiming from your car insurance. Why this is not fully understood, but the BBC programme took the case of a gentleman who was about to renew his car insurance with the same insurer; he had over nine years of no claims and was driving a 1.3L car, hardy a boy racer you might say. He informed his insurer that he was currently not working and the re jigged claim came back with a 63% increase. And research by the BBC has shown that typically you can expect to pay at least 30% more if you are unemployed; so why is this?

Insurers say that their costs reflect the amount of claims put forward by unemployed drivers as they are statistically more likely to submit a claim. They also say that people out of work have to drive more as they travel to interviews and the more you drive the more likely it is for you to have an accident. I wonder how this does not apply therefore if you are working everyday and drive at least twice a day, to and from your workplace? Insurers counter this argument by stating that the unemployed could be driving to places that are not known to them and as such, they may not be as safe as if they were travelling along a familiar route. Looking for the address of an office or shop for the interview whilst driving can also be distracting, they say. Another reason put forward is that people out of work have less money to maintain and service their cars and typically, the general state of the car will be worse than of someone who is in fulltime employment. An unemployed person might be suffering from stress and anxiety, due to lack of work and this could affect their driving ability, and crucially they state that someone who has been out of work for a long period of time may be more likely to make a fraudulent claim, as they need the money more. Quite outrageous points I’m sure you’ll agree.

So if you are in the unfortunate position of being unemployed and have to pay for car insurance, how can you minimise costs and keep the premiums low?

Up your excess

By increasing your voluntary excess – the amount you contribute towards the cost of any claim, you are stating to a potential insurer that you are willing to pay a large amount of a claim, should you make one. So decide how much you want to increase your excess by and watch your premiums head south.

Drive fewer miles

It is a fact that insurers charge higher premiums the more miles you drive, so drive fewer miles each year and choose a lower mileage for your insurance quote.

Change your car

If you have the latest souped up 3.0L Japanese model with all the add ons you can get, it might be time to lower expenses and change your car. Buying a car with a smaller engine size (1.4 or less) will not only save you money with car tax but in premiums as well. Switch your car into a lower category insurance group (see www.thatcham.org) and save even more money.

Consider the black box

If you want to prove that you are a responsible driver, why not get a black box fitted that records your driving habits in real-time. These are called telematics car insurance policies and if you can demonstrate that you are a safe driver, you will be rewarded with a lower premium.