How to Find Cheap Car Insurance for the Unemployed

People who are unemployed often find that car insurance costs a lot more. Read our guide below to find out how you could save money today...

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Whilst car insurance is a considerable expense for any driver, those who are not in employment frequently find themselves facing higher premiums - possibly as much as 54% higher according to recent research by comparethemarket.com.

That said, if you are out of work, you can take steps to find cheaper car insurance if you are willing to make a few changes and shop around for an affordable quote.

Why is car insurance more expensive for the unemployed?

When calculating car insurance premiums, insurers look at a wide range of factors such as the driver's age, past convictions, the make and model of car (including engine size), where it will be parked, how often it will be used and so on.

Part of this process includes looking at the occupation of the driver, and if you are unemployed, it is likely that the price for car insurance will be higher.

It seems unfair of insurers to ask unemployed drivers to pay extra for cover, but research from the Association of British Insurers (ABI) indicates that unemployment poses an increased risk for the insurer based on statistics.

Head of car insurance at MoneySuperMarket, Dave Merrick, states:

“Car insurance is a lot more expensive if you don’t have a job, because insurers believe drivers are more likely to make a claim.”

The reasons why unemployment can often lead insurers to quote higher car insurance premiums include:

  • Insurers believe that drivers who don't have a job are likely to use their car more as they do not work during the day and will probably be driving a lot while looking for jobs and going to job interviews, etc. If your circumstances mean that it is possible you will be using your car more, then insurers will often deem you more likely to have an accident and therefore quote you a higher premium as a result.
  • Insurers also feel that those who are unemployed are more likely to be distracted while driving, and will therefore drive with less care. There is also the chance that, while driving to job interviews etc, the unemployed motorist will be driving on unfamiliar roads and junctions - so there is an increased chance of an accident.
  • Insurers also believe that unemployed drivers have less income to spend on keeping their vehicle in top condition.
  • As well as the above, insurers also say that higher premiums are simply the result of statistics. Unemployed drivers, particularly those who have been out of work for a long period of time, are statistically more likely to make a claim.

Whilst you may think some of these assumptions are questionable, your insurer will take them into account. Insurers will always look at statistical data to determine premium prices in order to balance the risk across their portfolio of clients.

If you find yourself in this position though, don't worry, there are things you can do to get a cheaper car insurance quote.

Read more: The Average Cost of Car Insurance | How it's Calculated

How to get cheap car insurance if you are unemployed

As with all types of car insurance, it's always possible to get a better - and cheaper - deal, if you know how.

1. Shop around for a better quote

Take your time and use price comparison sites to help you compare quotes online - don't automatically renew your policy with your current insurer, as discounts are often given to new customers and you'll probably face higher premiums just for being a loyal customer.

Get started now:

2. Consider black box insurance

Also known as telematics or 'pay as you go', black box car insurance rewards safe drivers who drive with care and obey the rules of the road.

It works by tracking your driving habits via a little black box device fitted inside the car, which provides a real-time stream of data to your insurer about how and when you are driving. They then calculate your premium price based on your driving habits, such as how fast you drive, how quickly you accelerate, whether or not you brake harshly and how you turn corners, among other things - and this can mean a big saving on premiums if you drive safely.

Black box car insurance is primarily used by new and young drivers to help keep insurance costs down, so could also help unemployed drivers get a good deal.

Find out more: Cheap black box car insurance

3. If possible, pay your premium in one go (annually)

If you're strapped for cash, you may be forced to spread the cost of your car insurance premium over the year. However, this usually incurs interest, so you'll end up paying more than just the cost of the insurance.

It can therefore work out slightly cheaper if you pay for your annual car insurance policy upfront in one go.

Additionally, by paying for car insurance monthly, you are essentially tied to a credit agreement with the insurer, so if you miss a payment, this is likely to have a negative impact on your credit score.

Read more: Does Your Credit Score Affect Car Insurance in the UK?

4. Don't auto-renew your policy

With car insurance you don't tend to get much reward for staying loyal to your current insurer. Most insurance companies reserve their best deals for new customers who are leaving a competitor, so if you just let your policy auto-renew without comparing new quotes from other insurers you could be missing out on significant savings.

If your policy is due for renewal soon, try to find a good deal online around 14 to 21 days (3 weeks) before your renewal date as this is the optimum time to make a saving – leaving it until the day before probably won't save you as much money!

Visit our car insurance page to start comparing quotes today and see how much you could save on cover.

5. Get a smaller car

Car insurance companies categorise cars into 50 different car insurance groups, which factor in features such as the cost of repairs, availability of spare parts, the likelihood of being a target for thieves and engine size.

Vehicles that are in the higher number categories are considered to pose a higher risk to the insurance provider in terms of cost, and so they are more expensive to insure as a result.

Therefore you can make quick and easy savings by driving a car in a lower and cheaper car insurance group. To see what cars are in what groups use our tool: Car insurance groups list and read our guide: Car insurance groups explained.

6. Restrict your mileage

As your mileage is one of the main factors that insurers look at to determine the cost of premiums for unemployed drivers (and for those who are employed), it makes sense to limit how much you drive if you can.

Many drivers overestimate how many miles they drive every year, so they end up paying more for car insurance when there isn’t any need to. So if you can, try to work out an accurate mileage limit when applying for cover.

Generally, the less you drive, the lower the cost of insurance will be. The added bonus is that you'll pay less for fuel and make savings on the general wear and tear and upkeep costs of the car.

It is important, however, to make sure you tell the truth about your intended mileage when applying for a quote. If not, you could end up invalidating your policy.

7. Increase your voluntary excess

A higher policy excess will result in a lower premium, so it's definitely something you should think about at the application stage.

The important thing is to make sure you opt for an excess amount that you can afford to pay if it's ever needed in the event of a claim.

Read more: What to do if you can't afford to pay your excess

8. Simplify your cover

If you are unemployed and looking to lower the cost of insurance, lower the cost of insurance, you may be considering reducing your level of cover, perhaps from a fully comprehensive policy to a third-party only (TPO) policy, which is the minimum legal requirement for UK motorists.

However, fully comp cover usually works out much cheaper than TPO, because statistically,  more high-risk drivers tend to purchase this level of cover as it used to be known as the cheapest type, but since this has happened, more people have made claims, so insurers have since increased the price to account for this. As a result, insurers have rewarded drivers with cheaper fully comprehensive policies.

If you don’t need to add additional extras to your policy like legal expenses cover, breakdown cover, or a courtesy car then ask your insurer to remove them from the policy as this is likely to bring the cost down. If you do this, make sure that you won’t need it in the event of a claim - remember that you’ll have to pay for breakdown services and legal expenses yourself if you ever need them, so just make sure that the policy works best for you, and not just for your pocket.

Working from home?

If you don’t need to use your vehicle to commute to work or to travel as part of your job, either because of the Coronavirus pandemic or another reason, you may want to contact your insurance company to ask about taking ‘commuting’ and/or ‘business cover’ off your policy to reduce your premium – just check with them to make sure that you’re fully covered for your circumstances.

9. Think about car security

For obvious reasons, motor insurers prefer to cover vehicles that are well protected and secure, especially when parked at night. So if you can park it off-road in a driveway or garage then it can make a big difference to the cost of your premium.

You can also buy a range of car security devices to further protect your car - which do not necessarily have to cost the earth. Products like steering locks can help you save on your car insurance, so are well worth investing in.

It’s also worth noting that many insurers offer discounts to drivers who have a dashcam.

Read more: Car security - the best anti-theft locking devices

10. Don't make any modifications to your car

Car modifications - however small or insignificant you think they are - can have a big impact on the cost of insurance. Anything from spoilers to tinted windows or bigger exhausts will result in the insurer deeming your vehicle a higher risk - either due to potential theft or expensive damage if you are ever involved in an accident - and they will therefore hit you with a higher premium.

Read more: How do car modifications affect car insurance prices?

11. Try to protect your No-Claims Bonus (NCB)

It's not always possible, but driving carefully and making the decision not to claim if not absolutely necessary can allow you to accumulate a number of years of no-claims discount (NCD). If you make it to five years with no claims (consecutively), you could lower your premium by up to 24%, according to MoneySuperMarket.

12. Add a named driver to your policy

Putting someone on your car insurance as a named driver can help to reduce premiums provided that this person is a sensible driver, i.e. they haven’t been involved in any accidents and they have a good no claims bonus.

Generally, younger drivers add a parent to their policy to lower the cost, but if you add someone that doesn’t have a clean driving record, it will probably increase your premium.

If you decide to add a named driver, make sure that this person does not drive the vehicle more than the main driver (you), otherwise you will be committing a crime known as fronting, which can land you with fines or even a court prosecution.

Read more: The Implications of Being a Named Driver

Get cheap unemployed car insurance online today

By following the above tips, this will help you reduce the cost of your car insurance if you find yourself unemployed.

The best advice for saving money on cover is to take your time comparing deals and finding a good quote for your own personal situation, and don't be afraid to speak to your insurer to make sure you're getting the best deal.

Compare quotes now to see how much you could save by tapping the button below. And for further car insurance advice, be sure to read our related guides.