Vehicle Scrappage Scheme and Your Car Insurance

Now that Chancellor Alistair Darling has introduced a £2,000 vehicle scrappage incentive scheme for drivers to trade in their old cars for newer alternatives, what affect could taking up the offer have on your car insurance?

There are many economical benefits to driving a new car. Though the retail price is likely to be higher than a used vehicle, new cars will usually require less maintenance and be more fuel efficient meaning that you will pay less at the pump. However, owning a new car is not necessarily a good thing in the eyes of an insurer.

It could be argued that newer cars are safer than older cars because they are usually more reliable and therefore less likely to be involved in accidents, but some insurers taking an opposing viewpoint. Newer vehicles are seen by some providers as more of a threat because they tend to be driven more recklessly and at faster speeds. They are also a more likely target for vehicle theft and vandalism.

Therefore though you may be able to save money on a new car thanks to the introduction of the vehicle scrappage scheme, you could find that your monthly costs rise significantly due to increased car insurance premiums.

So if you’re driving a new car how can you keep your premiums manageable?

The first step is to think about the car you choose. Driving a vehicle with a high performance engine will see you penalised. Modifications too are frowned on by insurers because they can be more difficult to repair after an accident and replace in the event of a theft. So stick to a small and conventional vehicle where possible.

From there, take the general steps that all drivers should take to reduce their insurance costs. These include parking in a garage at night, enhancing a vehicle’s security, paying premiums annually and increasing the voluntary excess, albeit only to a level you can comfortably afford.