Safe Home Income Plans (SHIP), the body which represents the majority of the equity release schemes marketed in the UK, has suggested that that the looming problem of funding long-term care for the elderly in the UK will force equity release products into the public eye.

The cost of long-term care for the elderly can be very expensive.  For instance, for those fortunate enough to be able to afford it, the cost of care in a private nursing home can typically be between £20,000 and £30,000 each year.  For those that cannot afford to fund the cost of private care themselves, they will typically need assistance from their local authority.

This could be a financial time bomb for the UK Government as people are typically living longer and requiring long-term care as they live into their 80s and 90s.  This is against a backdrop of repeated news headlines stating that pensions in the UK are woefully inadequate for the majority of people.  As such, many people will not be able to rely on their pensions alone to provide them with sufficient income to fund the cost of long-term care – which will mean they will need assistance from their local authority.

It has been suggested that the Government is planning on introducing a £12,000 levy on any inheritance payments to help fund the cost of long-term care for the elderly while they are still alive and under the local authority care.  The Department of Health is shortly to release a green paper regarding the funding of long term care for the elderly which will provide more details of what the Government intends to do about the impending funding crisis.

SHIP says that many of the elderly that require long-term care are typically cash-poor, but asset-rich in that they have substantial amounts of equity locked up in their homes – this is despite the substantial drop in the price of property over the past 18 months. 

In SHIP’s view, the Government cannot ignore this problem.  It says that if the Government acknowledges there is a place for equity release in funding the cost of long-term care for the elderly then the public’s awareness and interest in equity release products will increase dramatically.

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Criminal ‘crash for cash’ gangs, who intentionally cause road accidents to generate money by making false or exaggerated insurance claims, are making honest motorists pay more for their car insurance. 

Research carried out by MORE TH>N reveals that the average car insurance policy has around £40 added to it to account for the substantial cost insurers incur in paying out on fraudulent insurance claims.  If insurers face higher costs then it is inevitable that those costs will be passed onto policyholders. 

However, many motorists do not even realise that such criminal ‘crash for cash’ gangs operate and therefore may not even realise that they have been crashed into on purpose or part of an ‘accident’ that was staged.  MORE TH>N said 41 percent of drivers had never heard of this form of crime before.

It is because of this ignorance that many apparent accidents, that were in fact created by the gangs, go unreported by the victims to the police and to the insurance companies.  As such, many of the criminal gangs involved in this fraudulent activity simply get away with it – all the while the cost to the insurance industry runs into millions of pounds every year.  It is often only during the claims process when a discrepancy is spotted that the fraud is detected.

Naturally, insurers are keen to reduce the amount of fraudulent claims they receive in order to lower their costs and premiums for honest motorists.  Over the past two years the industry and the police have reduced ‘crash for cash’ claims by 11 percent.  Despite this reduction, awareness amongst motorists has remained static.

MORE TH>N noted that if more motorists were made aware of this type of insurance fraud then that would naturally lead to more unusual circumstances surrounding an accident being reported to the insurance company, which would lead high levels of detection and a reduction in insurance payouts.  This can only be a good thing since lower costs for the insurance companies would hopefully lead to cheaper car insurance costs for policyholders.  It is therefore in motorists best own interests to be vigilant if they are involved in an accident.

MORE TH>N has produced a list of top tips for motorists to be aware of so that they can avoid becoming a victim of the ‘crash for cash’ gangs:

• If you suspect you have been involved in a staged accident, don’t say anything other than ‘it is a matter for our insurance companies’
• If anyone is injured, the police should be called immediately
• If you are able take as many pictures of the accident as possible, including the driver, passengers, vehicles and any damage
• The identity of the other driver(s) is crucial so take a good description
• Establish how many passengers are in the other car and again, take a good description of them
•  Take note of any other cars involved including damage and registration numbers
• Try to find an independent witness for the accident but be wary of any witnesses quick to offer their services as they may be corrupt
•  Be wary of any companies who contact you quickly offering to repair your car, unless these are through your insurance company

MORE TH>N says that any motorists who suspect an accident they have been involved in was intentional should notify their insurance company as soon as possible.

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Results of a survey conducted by the independent consumer advice organisation, Which?, has revealed that during the past year the Co-operative Bank was the best performer in the general field of financial services in the UK including car insurance and home insurance.

Which?’s survey of the financial services market established that the Co-operative Bank outshone its competitors in most areas assessed.

In response to the award the Co-operative Bank explained that the way in which it conducts its business is different to most banks which appeals to many UK consumers who have become disillusioned with the big banks and the way they have been affected by the credit crisis. 

It said that at the heart of the Co-operative Bank is an ethos to provide quality and ethically enhanced products, excellent customer service and that it operates on a fully funded basis – this means it only lends out money it has already received as deposits from customers.  This is the reason why the Co-operative Bank has been pretty much immune to the effects of the credit crunch.  As a result of this business ethos, the Co-operative brand appeals to many consumers.

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Since the advent of the internet, more and more UK motorists compare and review car insurance quotes online before making a decision to purchase; the days of sitting by the telephone with a Yellow Pages and ringing round several insurance companies at renewal time are well and truly over.

However, despite the number of consumers prepared and willing to shop around for the cheapest car insurance quotes online, many are not keen to reduce the level of their cover.

Datamonitor is an organisation which provides independent data, analysis and opinion across several sectors, including the financial services industry.  It says that even though many UK consumers are financially struggling during the current recession, only 5% admitted they would reduce their car insurance cover from comprehensive to third party only cover in order to save money.  A further 13% said they would consider increasing the excess or reduce the total sum insured under their policy in order to reduce the cost of the premium.

These findings are odd since 44% of motorists said they always shop around and compare car insurance quotes to get the best deal at renewal time.  Only 9% of motorists said they fail to shop around and simply allow the car insurance to rollover with the same insurer each year.

Datamonitor noted that the increasing number of motorists searching for cheaper car insurance has been driven by price comparison websites, with 34% of motorists using such websites.  This compares with just 23% of consumers who use price comparison websites for their home insurance.

Datamonitor said that in future car insurers will need to shift their marketing campaigns away from providing the cheapest quote possible and instead focus on the importance of motorists having adequate car insurance for their needs at the best price.

Consumers who use price comparison websites frequently believe that the cheapest quote is the best for them, when in actual fact it might not be.  In order to treat their customers fairly insurers will need to promote the benefits of having car insurance and what features are available for the price being paid, rather than basing their whole marketing campaign on providing the cheapest quote possible.

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Figures released by AA Insurance reveal that the average quoted premium for comprehensive car insurance increased by almost 9% during the past 12 months.

The figures are based on the AA’s Insurance Premium Index.  The index has tracked both home and car insurance premiums since July 1994.  It is now widely accepted as the industry benchmark for measuring insurance premium trends.  For car and motor insurance, the index tracks a total of 1,000 motor risks from 85 insurance companies and brokers.

The cost of car insurance has been steadily creeping up over the past few years.

The average quoted premium for an annual comprehensive car insurance policy has risen to a new high of £741.66.  While for third party, fire and theft insurance – which is usually purchased by younger drivers – the average quoted premium is now £618.91.

The AA expects the trend of increasing car insurance costs to continue.  It explained that UK insurers’ costs have been increasing over the past few years which are naturally passed onto policyholders.  There are a number of reasons why costs have been steadily increasing for the insurance companies. 

One such reason is the substantial increase in the number of personal injury claims and their associated legal expenses.  According to the Association of British Insurers, personal injury claims and their associated legal costs amounted to over £6 billion during 2008 alone.

In addition, and perhaps not unsurprisingly, the number of cases of detected insurance fraud rose during 2008 as consumers hit hard by the recession sought ways of raising money.  Naturally, it is reasonable to expect that a number of fraudulent claims were processed without being picked up – again increasing the insurers’ costs. 

The insurers are therefore under severe financial pressure and it is inevitable that they will pass on these increased costs to policyholders in the form of increased premiums.

The AA also noted that some insurance companies are becoming increasingly selective about who they choose to insure.  For instance, nearly half of the UK’s car and motor insurance companies will not provide cover for younger drivers anymore in view of the higher level of risk, and potential cost, they pose to insurance companies.

It has now become the norm for millions of UK consumers to shop around and compare insurance quotes online before making a decision to purchase.  The benefit of comparing quotes online and using price comparison websites is the ability to save hundreds of pounds on the various forms of insurance available, such as car and home insurance. 

However, consumers should ensure they fully read and understand what they’re covered for when purchasing insurance online.

For instance, it has been shown that many UK consumers who purchase home insurance online fail to establish the exact type of locks fitted to their windows and doors before completing an online application form – many wrongly assume that the locks meet minimum safety standards and that they will therefore be covered if they are the victim of a burglary.  It is apparent that many consumers fail to read the final, vital questions and notices when completing application forms online which ask important questions.  For instance, many fail to understand the importance of accurately answering questions such as: “are the locks British ’safety-standard’, a five-lever mortice lock conforming to BS3621, or a cylinder rim deadlock?”

Consumers who breeze through price comparison websites without fully reading and accurately answering questions could find themselves with no cover if their home is burgled and they try to make a claim on their home insurance.

For instance, if, when assessing a claim, the home insurance company decides that the locks fitted to the doors are not up to the minimum standard, or not as described when the application form was completed, then it could refuse to pay the claim and treat the policy as being invalid.  

It may seem like a minor thing to check what type of lock is fitted, but it is imperative that homeowners do this.  This will ensure that they are covered in the event of a burglary.  Notwithstanding this, it could also mean cheaper insurance quotes if the most secure type of locks are fitted – home insurance companies typically offer discounts if the most secure type of lock, a five-lever mortice lock conforming to BS3621, is installed on ground floor doors and windows. 

Unfortunately, establishing the type of lock fitted can be cumbersome for homeowners since they need to physically take the lock out of the door to do this. Fortunately, there is some assistance available for homeowners.  They can ask their home insurance company to send them a diagram which clearly shows the different types of locks.  Homeowners can also find pictures of the various lock types at www.sterlinginsurancegroup.com. 

If, after trying to establish the types of lock fitted, homeowners are still unsure what type(s) they have installed it is wiser to tick “no” or “not known” on the application form rather than trying to guess or assume that a five-lever mortice lock or a cylinder rim deadlock is fitted.

It should be noted that ticking “no” or “not known” on the application form can lead to more expensive home insurance compared to a quote based on the most secure types of locks. 

If consumers are unsure about any aspect of their home insurance quote when comparing quotes online they should speak directly to the insurance company who produced the quote to satisfy themselves that they fully understand the key features of the policy. 

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Many UK consumers are struggling financially in the current recession and many are looking at ways to cut the cost of household bills. 

Research from internet car insurer, Esure, has revealed that more than 20% of consumers have cut-back on the level of car insurance over the past year. 

Some consumers may think they can save themselves money by cancelling existing insurance policies, but this may prove to be a false economy if disaster strikes and they find themselves unprotected and out of pocket, possibly by thousands of pounds.

It is important to remember that insurance is there to protect consumers and their possessions.  Some types of insurance are essential and are required by law, while some types of insurance are a luxury which may not necessarily be a necessity, depending on that consumers particular circumstances.

In order to assist consumers weigh up their options and to see if there are any ways in which they can save money on the cost of their insurance policies, Ukfinancemarket.co.uk has drawn up a brief summary of the different types of insurance available and what scope, if any, is available to save money.

Essential insurance
 
To begin with, the types of insurance every UK consumer must have.

Car Insurance

The UK law stipulates that if you own a car you must have car insurance.  Therefore, cancelling your car insurance altogether to save money is simply out of the question – you must have car insurance to drive on the UK‘s roads. 

However, it may be possible to save money on car insurance by opting to reduce the level of cover you have by shopping around and comparing car insurance quotes online.  Alternatively, reducing the level of car insurance cover from, say, fully comprehensive to third party, fire and theft could result in savings.  However, if you are contemplating reducing the level of their cover should fully understand the implications a reduction in cover will have in the event an accident or claim.

Home Buildings Insurance

In addition, if you have a mortgage then the lender will insist that you have adequate buildings insurance in place to protect its collateral for the loan (mortgage) it has given to you in the event it is damaged.  For instance by a flood or fire.  Comparing home buildings insurance quotes could save money on the cost of cover.

In summary, therefore, for car insurance and buildings contents insurance the only viable option available to save money is by shopping around and comparing quotes online to get the cover you need at a cheaper price.

Nice-to-have insurance

Next, the types of insurance which are not essential, but would be nice-to-have.

Home Contents Insurance

Many consumers fail to understand the importance of having home contents insurance.  Consequently many consumers don’t even have any home contents insurance – the Association of British Insurers recently released a report that one in four homes in the North West do not have any home contents insurance.

Those consumers that do understand the importance of home contents insurance frequently under-estimate the total value of their contents and possessions in the event they had to be replaced.  They could therefore find themselves under-insured in the event of a claim following, say, a burglary or a fire.

It is a fact of life that fires, floods and burglaries do happen.  So if consumers are able to afford home contents insurance then they should at least have some cover in place.  Consumers who shop around and compare home contents insurance online could save themselves money by getting the right amount of cover at the cheapest price possible.

Travel Insurance

Travelling abroad without travel insurance is not particularly wise.  The last thing you want when you are on holiday, perhaps many thousands of miles away from home, is to be worrying about large medical bills if you are taken seriously ill.

For those consumers who travel abroad regularly it could work out cheaper over the course of a year if they purchase an annual multi-trip travel insurance policy, rather than several single trip travel insurance policies for each trip.  Shopping around and comparing travel insurance quotes online could result in savings in the cost of travel insurance.  Be warned that the travel insurance offered by travel agents and sold with holidays is typically much more expensive than travel insurance purchased online offering a similar level of cover.

Pet Insurance

The UK is a nation of animal lovers.  Unfortunately unexpected vet bills can run into thousands of pounds and put a massive hole in the family finances.  As such, consumers should seriously consider taking out pet insurance for their cat or dog to protect both their finances and their pet in the event they need medical attention. 

Simple vet treatments such as an x-ray on a cat or dog can cost up to £200.  Most surgical procedures start from several hundred pounds upwards. 

Pet insurance costs can be relatively cheap.  Monthly premium costs are usually under £10 for most types of pet insurance, depending on the level of cover chosen.  You can shop around and compare pet insurance policies online to get the right cover at the cheapest price possible.

Life Insurance

Now life insurance could arguably be under the Essential Insurance list mentioned above, depending on the consumer’s particular circumstances.  If you are single with no financial dependents then you do not need life insurance.  However, if on the other hand you are married with a young family then having adequate life insurance in place to protect your family in the event of either yours or your spouse’s death is vitally important. 

Many consumers have life insurance just to cover their outstanding mortgage thinking this will be sufficient.  However, this level of cover is likely to be completely inadequate for a young family.  For young families it is important to think of life insurance as a means of replacing the lost salary of the family breadwinner if they died or paying toward the cost of child care previously provided by the homemaker if they died. 

Having inadequate life insurance could leave your financial dependents in serious financial difficulties in the event of your death.  If consumers are employed then their dependents may be entitled to life insurance if your died and also a dependent’s pension.  Consumers should check with their employer what benefits are available.

Save into an Emergency Fund

Finally, in addition to having the right and adequate amount insurance in place and at the cheapest price possible, consumers should give some thought to setting aside money each month to create an emergency fund for unexpected costs or emergencies so that there is no unexpected drain on their day-to-day finances.

Insurance to Avoid

Many commentators in the finance industry consider the value for money offered by other types of insurance such mobile phone insurance, wedding insurance and extended warranties to be questionable.  Consumers who have these type of insurances should perhaps consider relevance of the policies to their current circumstances and ask themselves whether it is worth having those policies.  Cancelling policies that do not provide value for money and instead paying the money into an emergency fund could be the wiser option.  This is because you will always have access to the emergency fund and you won’t have to deal with any insurance company if you need the money.

The consumer watchdog, the Office of Fair Trading (OFT), has released a report which reveals that almost 33% of UK consumers do not shop online because of fears that the system is not secure and that they may be the victims of online fraud.

Despite internet security improving massively over recent years, the OFT said that this continued fear among UK consumers is thwarting online shopping from reaching its full potential.

The OFT noted that 20% of internet users declined to do their shopping online because they still had concerns about the security of their personal details.  A further 15% of users didn’t want to shop online simply because they didn’t trust the online retailers.

Online shopping has increased massively over the past few years and there is no doubt that it is the future for many retailers and businesses across many sectors.  The Government is keen to increase the number of people doing their shopping online because of the importance it will play in the recovery of the UK economy.  Clearly, however, if a large proportion of UK consumers continue to hold fears about the security online shopping then it is clear that growth in the market will be slower and will take longer to reach its full potential.

Despite these findings, it is apparent that more and more UK consumers are beginning to trust and buy into the idea of online shopping.  A similar study carried out in 2006 revealed that just over 25% of internet users considered it safe to shop online – this compares to 55% of users in the most recent survey.  In addition, UK consumers do significantly much more online shopping than other European consumers.

It is clear that online shopping in the UK for all types of products and services, such as clothes, electronics and finance products such as credit cards and car insurance will increase.  Hopefully with ever-improving internet security, more and more UK consumers will begin to have confidence in and trust the internet.

Intune, a subsidiary of Help the Aged and Age Concern England, has discovered that nearly 25 % of consumers over 60 do not regularly review their personal  finances.  Instead, this group of consumers rely on financial advisers or other family members to provide them with advice and guidance on their money. 

A further 15% of the over 60s fail to review whether the cover being provided by their existing insurance policies remains appropriate, and 10% fail to review the rates of interest being received on their savings and whether this could be improved.

It is wise for all consumers, not just the over 60s, to carefully review their existing financial arrangements to make sure they are getting the most out of their money.  By regularly reviewing and comparing existing financial arrangements it could be possible to find similar or better cover at a similar or lower cost.  However, it is important for consumers to remember that cheapest isn’t always best.  Some insurance policies might be cheaper than others, but they may not offer the same level of cover or protection. Consumers have different needs and different circumstances, and what might be right for one consumer might not for another. 

Intune noted that older consumers have become more cautious with their savings, possibly due to the high profile collapse of several financial institutions in the UK.  This has lead to many older consumers spreading their savings, and thus risk, across several different banks and building societies.

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Motor and car breakdown giant the AA has warned that UK motor insurance costs have started to increase due to insurers’ costs increasing over the past year.

According to the AA’s insurance premium index, the average quoted premium for an annual comprehensive car insurance policy rose by 1.3 %, to approximately £750, over the first three months of this year.

Although an increase of 1.3% does not appear to be significant, it is material in that it goes against the trend seen in the previous five years when the cost of motor insurance fell.  This reversal in trend could therefore herald the start of a new trend where motor insurance costs increase over the next few years – this will enable insurers hit by increasing costs to recover losses suffered.

The AA noted that the motor insurance industry is facing increasing costs in terms of falling investment income and underwriting losses.  As such, it is inevitable that the cost of motor insurance will increase.  The motor insurers noted a rise in personal injury costs and higher levels of fraud during the current economic downturn as other material contributing factors which have lead to a sharp rise in their costs.  UKfinancemarket.co.uk recently reported that the current economic downturn in the UK had lead to more consumers making fraudulent insurance claims, which in turn was increasing costs of the motor insurance industry.

In view of these findings by the AA it again highlights the importance of comparing car insurance quotes to make sure consumers get the best priced car insurance for their particular circumstances and the appropriate level of cover they want.

If you would like to obtain a car insurance quote to see if you could save money on your cover then please review our car insurance section on the menu to the side.

Following the announcement of the Chancellor’s Budget last week, millions of consumers face substantial tax rises.  It has been estimated that the changes to be implemented will see ordinary families paying an additional £10 billion to the Government until 2012 – at a time when the UK economy is in its deepest downturn in living memory.

For those hard-pressed consumers, here are some brief highlights of the Budget and some tips to make the most of the changes announced.

 Families

- In 2010 the Child Tax Credit will increase by 38p per week.

- The Government will also start to contribute £100 each year into the Child Trust Funds of disabled children and £200 for severely disabled children. 

It is imperative that consumers check with HMRC that they are receiving all the benefits they are entitled to receive, via Tax Credits and Child Benefit, which currently pays £20 weekly for the first child and £13.20 for the second child.  The Child Tax Credit is £2,235.  For more information visit the HMRC website and search for Child Tax Credits.

 Pensioners

- Pensions will be increased by 2.5% irrespective of the fall in the Retail Prices Index.

- From November 2009, pensioners will also be able to benefit from their savings of up to £10,000 and still qualify for the Pension Credit, Housing and Council Benefit, rather than the maximum limit of £6,000 at present.

- The winter fuel allowance will for those over age 60 will be £250 and £400 for those over age 80.

- From November 2011 grandparents and other family members looking after grandchildren or other minors under the age of 12, for at least 20 hours a week, will be eligible to earn credits to the state pension.

 As mentioned above, it is imperative that consumers check with the Department for Work and Pensions to see if they qualify for extra support under the Pension Credit or Benefit system.  The DWP helpline is 0800 991234.

 Homeowners

- The Stamp Duty Tax concession has been extended which means homes purchased for under £175,000 are exempt from Stamp Duty Tax until the end of 2009.

- The Government has also committed to making mortgages more easily available to consumers in order to get the housing market moving again.

 Savers

- From October 2009 the maximum savings limit for Individual savings Accounts (ISAs) will be increased for the over-50s to £10,200 for equity ISAs, and £5,100 for cash ISAs.  Those savers under age 50 will have to wait until April 2010 to take advantage of the higher investment limit.

 Therefore, those consumers who are aged over 50 and are looking to save or invest should keep an eye out for top-paying cash ISA accounts and boost their deposits.

 Higher earners

- Those consumers earning over £150,000 will be hit by a new rate of income tax of 50%, and see the amount they can invest annually and qualify for higher rate tax relief in pension arrangements pegged at £20,000.

- Anyone earning over £100,000 will lose the benefit of a personal allowance.

 However, it has been noted that increased income tax can be circumvented by swapping income for additional benefits or for capital gains, which are taxed at a lower rate of 18%.

 Motorists

- From September 2009 fuel duty will increase by 2p per litre, increasing on 1 April 2010, and every year to 2013, by 1p per litre above indexation.

- A new scrappage scheme will enable motorists to exchange their old car for a new car.  The Government will pay £1,000 toward the cost of the new car, as will the car manufacturer who will also pay another £1,000.  However, there are tight restrictions: the car to be scrapped must still have a valid MOT certificate, the owner must have owned it for at least a year and it must have been registered before 31 December 1999. 

 There are concerns that manufacturers may cut existing discounts to take the new scrappage scheme into account so consumers should bear this in mind.  It is clear that buying a smaller and more fuel efficient car will save consumers money on their motoring costs in the long run.  Comparing car insurance quotes online before making a deicison about which insurer to go with can potentially save motorists money too.

The UK is currently in the middle of a painful recession; the housing market is depressed and unemployment is  rising.  There is no doubt that many millions of people in the UK are struggling with their finances than compared to only 18 months ago.  Many motorists who are struggling financially may be tempted into believing that a way of saving money to see them and their families through the current financial crisis is to cancel their motor insurance policy.

However, as tempting as it may be to cancel costly motor insurance, motorists should be aware that to do so could create significant problems for them in the future should the worst happen such as an accident, theft or vandalism.   Notwithstanding this is the very important fact that it is illegal to drive in the UK without a motor insurance policy.  All motorists on the UK’s roads MUST have motor insurance.  In view of this, motorists should try can think about ways they can reduce the cost of their motoring.  Such ways might be reducing the amount of miles covered each month and seeking alternative ways of travelling, washing the car by hand rather than taking the car to an expensive car wash, emptying the car of junk so that fuel is not needlessly being wasted on transporting that junk on every journey, making sure tyre pressures are correct, etc. 

UKfinancemarket.co.uk recently produced a news article with practical tips for motorists to use to try and lower the cost of their car insurance. 

If motorists are really struggling with their finances rather than cancelling their car insurance policy altogether, they should consider obtaining alternative and cheaper car insurance quotes to see if they can cut the monthly cost of their insurance down.  It is important to note that cheaper insurance probably won’t offer the same level of cover as motorists might enjoy now under their existing car insurance policy, but at least it will provide a basic level of protection in the event the worst happened.  The level of cover offered by different car insurance policies can vary significantly.  Like anything, cheapest isn’t always best so it is vital that motorists read and understand exactly what is covered, and what isn’t covered, when obtaining alternative and cheaper motor insurance quotes.  By obtaining inadequate insurance cover for their particular circumstances, motorists could leave themselves and their families open to financial hardship in the event they had to make a claim – so it is important for motorists to get the right insurance cover for their circumstances.   There is no doubt that insurance should be viewed as a necessity, not a luxury. 

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The current economic downturn in the UK has lead, perhaps not unsurprisingly, to a rising number of fraudulent insurance claims during the past year.

According to the Association of British Insurers (ABI) approximately 107,000 insurance claims during the past year, worth a total of £730, were found to be fraudulent.  In once such case, a motorist pushed his own car over a cliff and attempted to claim on his motor insurance policy in order to raise funds to pay off his debts.

The increase in fraudulent claims is 30% higher than the previous year.  The ABI noted that fraudulent claims increase during a recession since policyholders who might be facing financial difficulties, perhaps caused by rising unemployment, seek any means possible to raise funds to meet their financial liabilities, such as bills and mortgage repayments.

The ABI noted that fraudulent claims were most common on home insurance policies, with 55,000 false or exaggerated claims detected last year.  Fraudulent motor insurance claims were the highest by value, at £360m.

It has been calculated that fraud adds an extra £40 a year to the average insurance policy premium.  The insurance industry therefore has a clear incentive to make it harder for cheats to claim which will, in turn, reduce the total value of claims paid out and lower insurance costs for honest customers.  In response to the ABI’s report, Norwich Union said the majority of insurance claims were still genuine and when assessing claims it looks for unusual remarks, whether a customer had made a series of claims, and whether a policy had just been taken out.

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Over the past several years car owners have become increasingly savvy as they have embraced the Internet to source cheaper car insurance. It would seem that the days of sitting with a Yellow Pages on your lap and ringing round several insurers for the cheapest insurance quote are well and truly over.  Online car insurance is now a billion pound industry which has led to the creation of several dedicated, and very successful, online insurers and insurance comparison websites.  In an attempt to compete with the dedicated online insurers, many traditional high street insurers now offer discounts for car insurance purchased online.

While comparing car insurance quotes online can undoubtedly save on the cost of car insurance, there are a number of other ways in which the savvy motorist can lower the cost of their car insurance even further. At UKfinancemarket.co.uk we have compiled a brief list of what you can do to lower your car insurance quote further:

 1. First and foremost, don’t just go for the cheapest quote you see when you compare car insurance quotes on-line. What‘s more important is that the car insurance policy you choose is right for your particular circumstances. You should always compare quotes on a like for like basis and check the excess levels and small print.

2. Building up your ‘no claims bonus’ over several years of careful driving will enable you to have access to a larger number of insurers and reduced insurance costs. Consider protecting your ‘no claims’ bonus already built up to date so that it‘s not lost in the event of a claim. 

3. If you agree to pay the insurer a higher excess (which means you agree to pay the first part of any claim, for example the first £100 or £150) you can cut the cost of the cover. If you are a confident motorist and consider that you are unlikely to make a claim then agreeing to pay a reasonable amount of excess is a good method of reducing the cost of your cover.

4. If you are thinking of buying a new car, consider cars with a smaller engine. Cars with smaller engine sizes typically have a lower insurance grouping which means lower insurance costs too. Notwithstanding this, a smaller engine will also mean lower fuel costs and road tax.

5. You should avoid cars that have been modified in any way, such as body kits, alloy wheels and engine performance enhancements, since car insurers are likely to charge a higher insurance premium due to those modifications.

6. It goes without saying that you should consider the security of your car to be very important. A professionally installed Thatcham approved alarm can save up to 10% on the cost of your insurance cover. If possible, park your car in a secure garage or off the road and you could save up to a further 5%. Finally, make sure you don’t leave valuables on display – lock valuables away in the boot or glove compartment.

7.If you do not cover much mileage then you could be entitled to a ‘low mileage discount’. The theory behind this discount is that since you are covering lower than average mileage, the chances of you having an accident, and thus making a claim, are reduced. However, you should never deliberately mislead the car insurer about your estimated mileage since this could cause problems if you have to claim.

8. Finally, ensure you have the appropriate level of cover for your circumstances. The cost of cover can vary considerably depending on whether you have third party only cover, third party fire & theft cover, or comprehensive cover. Depending on your circumstances and the value of your car, you should obtain quotes for all three types of cover and see how they compare. If your car is of low value you could save by choosing third party cover only. It is important to remember that third party cover will only cover you against accidental damage to a third party vehicle, injury to third parties and liability to passengers in the policyholder’s car. Whereas, fully comprehensive car insurance covers against accidental damage to a third party vehicle and to the policyholder’s car, injury to third parties and liability to passengers in the policyholder’s car.

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