Mobile phones – a danger to your car insurance costs

Talking on your mobile phone whilst driving has been an offence since 2003, but the majority of us seem to think it’s a risk worth taking.

The government has decided that it’s time to crack down on our mobile phone habits by making the punishment for the offence increasingly severe. The new legislation could have a dramatic affect on the expense of car insurance premiums, but many motorists are unaware of how or why.

MoneyExpert is on hand to advise on how the mobile phone legislation will affect us and to offer general advice on how to save money on your car insurance.

New driving legislation

From the 27th February 2007 the penalty for driving with a mobile phone in hand will be £60 fine plus three penalty points to your licence. This means the fine has doubled from its original £30, but more worrying for most drivers is the inclusion of the penalty points. With thousands of drivers on nine points already the choice between using your mobile and losing your licence should become a major deterrent.

The addition of penalty points to the legislation has been noted by insurers and those being caught are likely to face a hike in premiums. A recent survey of eight insurers by the AA found that for a basic speeding offence half raised their premiums by around 16% and for a second offence seven out of eight raised their premiums by around 30%. One insurer said they’d refuse you cover completely.

Insurers will respond that raising premiums is the responsible thing to do when you look at the research. Those driving with a mobile phone, even a hands free set, are four times more likely to have an accident while their concentration levels are halved. MoneyExpert suggests that you consider the consequences of driving with your phone next time it rings, as it’s going to cost you one of these days!

MoneyExpert’s general advice

Motor insurance premiums rise every year and currently they’re at an all-time high of around £1,000 for third party cover. Keeping off your phone is one of the factors likely to benefit your premiums, but there are plenty of other factors to consider. The "flashiness" of your vehicle, the engine size, where you live and how much you drive a year will all affect your premiums.

Keep your eyes on the price

Apathy: some insurers will play on your apathy and increase your premiums in the hope that you cannot be bothered to shop around and look for a better deal. You should always receive at least three quotes but despite this, up to 20% of motorists only obtain one quote when they buy their car insurance

If you do decide its time for a change then look to buy online. Many car insurers offer a discount of 5% or more if you purchase your car insurance online.

It’s also not a good idea to pay by direct debit, despite the benefits you get of spreading the cost. Average premiums increase by around 22.7 per cent if you opt for the privilege of paying monthly. Insurers argue that they are making a loan to customers when they let them pay by this method, but this means that the extra cost could wipe out any savings that you have earned through researching the market for the best deal.

It’s also worth considering a specialist insurer. Some insurers are geared towards offering certain motorists a better deal than average. For example, some focus primarily on safe drivers or women and because of this claim to offer them a competitive deal.

Finally, consider opting for a higher excess – the amount you pay before the insurer picks up the bill – as the more you are prepared to pay up front, the more it reduces your bill.

Have a look around

So long as you haven’t been involved in anything resembling Mel Gibson’s dangerous driving rampage, it’s likely that there’s a great car insurance deal available to you. The key to finding it is taking time to have a good look around.

However good your deal, remember that insurers will be looking to raise your premiums if you get caught driving on the phone.

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