Our research has shown that renters can pay up to 11% more for car insurance compared to homeowners as insurers charge a premium for what they consider to be a higher risk.
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A little-known pricing quirk means renters may end up paying significantly more for coverage, but some insurers won’t charge them extra, meaning shopping around is essential.
Insurers charge more from tenants because they generate more claims on average.
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This happens for a variety of reasons, although how insurers set their prices is a closely guarded trade secret.
But renters tend to be younger than homeowners and therefore have limited driving experience, leading to more accidents.
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Driving away: Renters face higher insurance premiums than those with a mortgage, but it all depends on which insurance company you work with.
Many rent in cities, which comes with an increased risk of theft. Renters are also more likely to park on the road rather than in the driveway, increasing the chance of theft or accidental damage to the car.
Apart from these practical guidelines, homeowners also tend to have higher credit scores than renters.
This is because mortgage payments are taken into account in the credit assessment, while rent payments are mostly not taken into account, and this can also affect premiums.
To illustrate how renters pay more, we went to each of the four major comparison sites and introduced ourselves as a 35-year-old owner of a Honda Jazz.
We compared the allowances we were offered when we said we were a landlord with the allowances offered when we said we were tenants, leaving the rest of the details unchanged.
The overall lowest price for a homeowner with this car was £313.27 per annum for Ticker’s telematics insurance package deal through Confused.
This increases by 6.2%, to £332.80 per year, for a renter, although with telematics insurance how much you pay depends on how you drive.
In this case, the insurer uses the system in your vehicle to monitor your driving, either through a separate device or through the driver’s smartphone.
The cheapest price for a homeowner on GoCompare was £363.95 per year for comprehensive coverage with telematics policy from Hastings YouDrive insurance company.
| Insurer | Homeowner Quote | Tenant Quote | Difference |
|---|---|---|---|
| GoCompare | |||
| Hastings | £363.95 | £404.03 | eleven% |
| Essential Hastings | £454.71 | £497.64 | 9.4% |
| Flow | £458.57 | £485.34 | 5.8% |
| U Drive | £490.97 | £490.97 | 0% |
| Moneysupermarket | |||
| Admiral Essential | £498.64 | £527.40 | 5.7% |
| Admiral | £514.05 | £543.70 | 5.6% |
| Elephant | £519.19 | £549.17 | 5.7% |
| Diamond | £524.35 | £554.60 | 5.7% |
| CompareMarket | |||
| Flow | £367.64 | £377.03 | 2.5% |
| Essential Hastings | £394 | £406.28 | 3.11% |
| Hastings Direct | £417.67 | £437.22 | 3.11% |
| Ticker | £418.01 | £425.77 | 1.8% |
| Embarrassed | |||
| Pay per mile | £313.27 | £332.80 | 6.2% |
| Flow | £367.57 | £389.65 | 6% |
| Essential Hastings | £396.54 | £409.56 | 3.2% |
| Ticker | £410.22 | £417.80 | 1.8% |
This renter’s allowance rose by 11% to £404.03, the highest increase we have found.
Similarly, the lowest driver price from our CompareTheMarket example was £367.64 on the Flow – again, for a homeowner. This increases by 2.5% to £377.03 per annum for those with a landlord.
But one insurance company in our test did not charge the renter any additional fees for car insurance.
This was from broker U Drive Cover who charged £490.97 to both renters and homeowners via price comparison website GoCompare.
How can a renter save money on car insurance?
The best course of action is to take your time and go shopping.
Using different price comparison websites can result in very different prices and remember that major insurance companies such as Direct Line and Aviva are not listed on these websites.
There can also be large discrepancies between the same insurance firm on different price comparison sites.
For example, Flow charges our Honda Jazz driver who rented £485.34 from GoCompare, £377.03 from CompareTheMarket and £389.65 from Confused.
This price difference reflects the different questions asked on different price comparison websites, resulting in a different risk profile for the same driver and therefore a different premium.
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Each year these bills can increase, and the best way to save money is to shop around to make sure your loyalty doesn’t cost you money.
Prices are generally the same on most comparison sites, but can vary enough to make it worth checking out a couple.
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We offer:
HOME INSURANCE
Before you begin, you will need to know the cost of restoring your home for building insurance, as well as details of previous claims. For content, you need to know the total sum insured, as well as any high-value or special items.
MoneySupermarket
Compare cheap home insurance from 60 brands
Confused.com
Get a quote in less than 8 minutes
GoCompare
£250 free additional coverage, terms and conditions apply
Uswitch
See what you can save on your home insurance
Post Finance
£15 Amazon voucher with every policy purchased
Also check Straight line And Aviva which are not displayed on comparison sites.
CAR INSURANCE
The new FCA rules are designed to keep insurers from inflating renewal quotes, but it still makes sense to check better deals on comparison sites. We offer:
MoneySupermarket
Confused.com
GoCompare
Uswitch
Post Finance
Plus Straight line And Aviva which are not displayed on comparison sites.
TRAVEL INSURANCE
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