How to find cheap car insurance for the unemployed

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

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Whilst car insurance is a considerable expense for any driver, those not in formal employment frequently find themselves charged higher premiums (possibly as much as 63% higher according to recent research).

That said, you can take steps to find cheaper car insurance if are willing to implement a few changes and shop around for a good quote.


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Why is car insurance for the unemployed more expensive?

When calculating car insurance premiums, insurers look at a wide range of factors such as the driver’s age, past convictions, the type of car, where it will be parked, how it will be used and so on. Part of this process includes 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, but research from the Association of British Insurers indicates that unemployment poses statistically increased risk for the insurer.

The reasons unemployment can often lead insurers to quote more for car insurance 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 looking for jobs, 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.
  • Insurers may also deem that those who are unemployed are likely to be more distracted while driving, and will therefore drive with less care. There is also the chance that, while driving to job interviews etc…, the unemployed driver will be negotiating unfamiliar roads and junctions – so there is an increased chance of an accident.
  • Insurers also believe that unemployed drivers have less disposable 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 more statistically more likely to make a claim.

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

As a result you can often find yourself on the wrong end of the algorithms and be dealt an expensive car insurance quote. If you find yourself in this position though, don’t despair…

How to get cheap car insurance if you are unemployed…

As with all forms of car insurance, it’s always possible to get a better – and cheaper – deal.

Shop around for a better quote

Take your time and use price comparison sites to help you – don’t automatically review your policy as discounts are often given to new customers.

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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 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 – which can mean a big saving 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 our more: Cheap black box car insurance

If possible, pay your premium in one go

If you’re strapped for cash, you may be forced to spread the cost of your 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 quite a bit cheaper if you pay for your 12 month car insurance in one go.

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 getting quotes from other insurers you could be missing out on significant savings.

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, likelihood of being a target for thieves and engine size.

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

Restrict your mileage

As the potential high mileage is one of the things insurers use to determine high premiums for unemployed drivers, it makes sense to limit how much you drive.

The simple equation is: the less you drive, the lower the cost of insurance. 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.

Increase your 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 that you can afford if it’s ever needed, otherwise you could face financial problems when it comes to paying your excess in the event of a claim. Read more: What to do if you can’t afford to pay your excess…

Simplify your cover

If you are unemployed and looking to reduce costs, a good option is to go for basic insurance cover. If you don’t need comprehensive cover, then just get third party cover. If you don’t need bolt-on’s like legal expenses cover or special features like courtesy cars then ask your insurer to remove them from the policy.

Although this could provide you with some big features, it’s important to make sure you know exactly what it is you’re asking the insurer to remove and are sure you won’t need it in the event of a claim.

Think about car security

For obvious reasons, motor insurers prefer to cover vehicles that are well protected and secure 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. Read more: Car security – the best anti-theft locking devices

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 of theft or expensive damage if you are involved in an accident – and will therefore hit you with a higher premium.

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

Try to protect your No-Claims Bonus

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. If you make it to five years with no claims, you could lower your premium by up to 70%

These are just a few ideas to help you reduce the cost of your car insurance if you find yourself unemployed.  The best advice is to take your time finding a good quote and don’t be afraid to speak to your insurer to make sure you’re getting the best deal.

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