If you need your car insurance policy started quickly, be prepared to pay a much higher premium.
After putting it off as long as possible, I finally bit the bullet last month and bought a new car.
Our Seat Ibiza had done a good job for eight and a half years, but it became very clear that we needed something a little bigger.
Last year’s holiday in Gloucestershire had seen our growing children cramped to almost wacky levels in order to fit in our luggage as well, and we decided to opt for a Nissan Qashqai.
The purchase of the car itself went well.
We had done our research on the price a Qashqai of this age and mileage would typically fetch and were confident we had gotten a good deal.
We also strongly resisted the extremely expensive extended warranty that the various sellers were determined to try to convince us.
The sale went incredibly quickly – we saw the car for the first time on Tuesday, closed the deal on Thursday and drove it home the next day.
All in all, I was delighted – we had gotten a great deal and got it all sorted in a very short time.
Unfortunately, there was one area where acting so quickly cost us actively ‒ auto insurance.
Do your research
As any driver knows, the actual list price is just one cost to consider when purchasing a new engine. The other big expense is probably your auto insurance, an unavoidable expense.
Given this, it’s a good idea to do some background research on what the cover is likely to cost you long before you hit the showroom.
This is something we did too, using a few different price comparison sites to get a more complete idea of price.
In each quote, we set the policy start date at three weeks.
At that point, I was resigned to the long and painful process of buying a new car.
And the best price we found was just over £300, not that different from what we were already paying.
Last minute insurance
Of course, on Thursday of this week, things were rather different. Far from an extended sales experience, we had agreed on a price, paid the deposit and were ready to close the deal the next day.
So I went back to those quotes and made a little tweak – the date we needed the coverage to start.
After all, we didn’t need the policy to start in three weeks, we needed it the next day.
And an amazing thing happened. Premiums skyrocketed. Suddenly the best prices I could find were £450, a jump of about 50%.
Because of how quickly the deal was done, we were faced with an extra £150, a sum of money that’s not exactly a small change at the best of times, let alone for the moment.
Why do auto insurance costs change based on start date?
Of course, the obvious question here is why does the start date matter?
There are all kinds of different factors that insurers take into account when calculating the price of an insurance premium, the age and the mileage of the car at your address.
Obviously, your driving record will also have an impact – if you have points on your license you will be considered a higher risk than a driver with a clean record, for example.
And curiously, the date of your policy seems to have an impact on the risk that the insurer estimates that you could be as a customer.
It is believed that if you take out your policy a few weeks before the date you need it to start, you are probably an organized and sensible person.
On the other hand, if you sort out the insurance at the last minute, then you may be less careful. Some insurers have in the past suggested seeing higher claim rates for customers who buy their policy at the last minute.
Previous studies have suggested that around three weeks before the start date is kind of a sweet spot when it comes to getting the best possible price for your auto insurance.
Be warned, you may actually get a higher quote if you try to arrange cover sooner than this – fewer insurers are willing to run quotes for a longer period before the start date.
Although that massive premium hurt, the £450 quote was actually the best I’ve found – I would have paid even more with other insurers. It’s a helpful reminder of the importance of shopping around and comparing offers, even if ‒ as was the case this time around ‒ you end up with a very high quote.
Unfortunately there was nothing I could do about the fact that I needed coverage with such a close start date, but it motivated me to set a reminder in my calendar so that when we approach the time of the renewal, I could get my quotes around that three-week sweet spot.
By being prepared, I can ensure that I don’t get hit with another ‘last minute’ bounty penalty.