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Will your car insurance premium go up if you lose your job?

Car insurance policies can be up to £200 more expensive if you're unemployed

Will your car insurance premium go up if you lose your job?

Unemployed people face having to pay up to £200 more for their car insurance than those who are employed, according to new analysis by Comparethemarket.com.

The study found that a policy for someone who is unemployed was 40% higher than a comparative policy for an employed person, or 54% higher than for a heavy goods vehicle (HGV) driver, which is the cheapest profession for car insurance.

With concerns over rising unemployment levels as a consequence of coronavirus, an increasing number of people could face having to pay more for their insurance.

Here, Which? looks at the key findings of the analysis, why your employment status affects your premium and your options in the event that you lose your job.


How your job can impact your car insurance premium

If you’re unemployed, the average amount you’d pay would be £571.28, or £413.88 if you’re a housewife/husband, Comparethemarket.com found.

It also showed that some key-worker professions carry some of the highest premiums. For example, the cost of a policy for a carer was £431.91 – 6% higher than the average.

Some of the most expensive professions for car insurance included taxi drivers and chefs, whose premiums can cost £485.13 and £459.79 respectively.

The top three cheapest premiums were for HGV, lorry and bus drivers, who would pay between £370 and £381 for a policy.

The table below shows average car insurance costs for various professions, calculated by Comparethemarket.com.

Why does your employment status affect your premium?

Insurance providers look at many factors when calculating the cost of covering you, such as your age and where you live.

Data has shown that people in some occupations pose a higher risk than others, and so your job title also plays a part in calculating your car insurance premium.

According to the Association of British Insurers (ABI), insurers view unemployment as an additional risk, and anyone not in a job is more likely to have an accident and make a claim.

It suggests that unemployed people may travel more because they’re doing more things in the day, and the more time you spend on the road the more likely you are to have an accident.

The ABI also says insurance providers may think that because unemployed people may have less cash, they’re less likely to maintain their car, which could also lead to accidents.

Should I tell my provider if I’ve lost my job?

It’s really important to tell your provider if you’ve lost your job or if you change profession, as failing to do so could mean your policy gets cancelled, the insurer refuses a claim or doesn’t pay the claim in full.

Your provider will need to reassess your risk profile and it could mean your premiums increase.

But, as the research shows, how you describe your job title has a big impact. You may have lost your job but could you fit into the housewife/husband category?

That said, don’t be tempted to lie or deliberately mislead your insurer – ie don’t say you’re a butcher when you’re a baker. This is considered fraud and you could be prosecuted.

Use our guide on how to lower the cost of your premium for help on finding savings.

COVID-19 help for insurance customers

Earlier this month, the ABI  provided updated guidance about car insurance during the COVID-19 outbreak.

It says that insurers will extend their support for customers affected by the pandemic until 31 October. This means that key workers, people helping their communities by transporting medicines and groceries, and those needing to drive to different locations for work due to COVID-19 won’t need to contact their insurer or extend their cover.

Further support measures requiring insurers to offer flexible payment plans or deferrals to people struggling to pay will also apply until 31 October.

How else could my motor insurance premium go up?

It’s not only your job that may affect your car or motor insurance premium.

Some customers may increasingly be charged more, the longer they stay with the same insurer. This is known as ‘price walking’ or the ‘loyalty penalty’.

On 22 September, the FCA set out a ban to this pricing practice, which it says is costing car and motor insurance consumers hundreds of millions of pounds each year.

However, the rules aren’t expected to come into force until late next year.

Last year, the FCA identified that in 2018, around six million policyholders were paying £1.2bn more than they needed to, thanks to the loyalty penalty and various other complex and opaque pricing practices.

How to choose a car insurer

If you feel your insurer is charging you too much, you may be able to switch.

To help you find the best insurer, we’ve combined expert analysis of 30 car insurance providers’ policies with feedback from thousands of customers to produce our car insurance reviews.

Use the link below to find out which providers have achieved coveted Which? Recommended Provider status.

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