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Car insurance can be expensive for anyone, but unfortunately, unemployed drivers often face higher premiums than those who are employed. Even so, it is still possible to find cheaper car insurance while out of work. You may just need to be more proactive in your search. This guide explains why costs can be higher and how to lower your car insurance price.
Insurance companies offer quotes to prospective customers based on several factors, including a person's age, location, and driving record, but also whether the person applying for the policy is in paid employment. For those who are unemployed, premiums are likely to be higher as the individual is calculated to be a higher risk and more likely to make a claim based on statistical data.
Aspects of the life of an unemployed driver that serve to increase the price of premiums offered include the fact that searching for a job often involves driving around a lot in potentially unfamiliar places.
The combination of increased mileage and potential increased risk of theft (due to unfamiliar and potentially risky locations being visited) translates into higher risk on the part of the insurer and so into higher costs of insurance policies.
There is also the worry that, given the lack of steady income for unemployed drivers, they are statistically less likely to be able to afford to maintain their vehicle as well as someone with a regular income.
Additionally, insurers claim that their figures show that unemployed drivers are statistically more likely to make a claim generally and further, that those in long term unemployment are more likely to consider making a fraudulent claim.
Your employment status plays a significant role in determining insurance prices. Car insurance for unemployed drivers tends to be more expensive because insurers often see unemployed drivers as high risk. If you are actively seeking work, insurers may factor in higher premiums due to increased driving, which may involve rush hour commutes or visits to less familiar areas.
Make sure to notify your car insurance provider about your new job title or change in employment. This can help lower your insurance costs and ensure you're not overpaying.
While as an unemployed driver, you will, in general, pay more than others for your car insurance, there are plenty of ways to keep your premiums as low as possible.
Firstly, your choice of car will have an impact on your policy cost. A smaller, less powerful car that is less attractive to thieves and vandals will cost less to insure than a flashy, high performance sports car.
Secondly, when you come to renew your policy, you should always shop around for new deals rather than simply auto-renewing with your current provider. This way you can avoid frustrating rate hikes and constantly take advantage of the best deals on the market.
Improving the security of your vehicle by using anti-theft devices and keeping it off road in a garage will also serve to cut money off the cost of your premium.
One of the best ways to consistently find a cheap car insurance policy is to build up a no claims discount, with many providers offering up to 75% off your premium if you drive for five years without making a claim.
Insurance providers assess risk to determine car insurance premiums, and certain factors contribute to why unemployed drivers are often seen as high risk by car insurance companies. Here are key reasons:
Increased Mileage: Unemployed drivers frequently travel to job interviews or search in unfamiliar areas, leading to higher mileage. More driving increases the likelihood of accidents and claims, raising car insurance premiums.
Higher Risk of Theft: Unemployed drivers may visit less familiar or higher-risk areas, which can increase the risk of theft or vandalism. This perceived higher risk translates to increased insurance costs.
Vehicle Maintenance Concerns: Without a steady income, maintaining a vehicle might become challenging. Car insurance providers worry that an unemployed driver may not keep up with regular maintenance, potentially leading to breakdowns or accidents.
Higher Claim Frequency: Statistics show that unemployed drivers might be more likely to make a claim, whether due to increased driving or financial pressures. This higher claim frequency can drive up insurance premiums.
Fraud Risk: Some insurance providers have data suggesting that those in long-term unemployment might be more tempted to commit insurance fraud. This potential risk influences car insurance policy costs.
While you may face higher premiums, you could adjust other factors such as the addition of a named driver or increasing your excess to reduce your premium.
Unfortunately, unemployed drivers are sometimes seen as a higher risk for committing fraud. Some insurers cite data showing that long-term unemployed drivers may be more inclined to commit fraudulent claims due to financial pressures. This perception can lead to higher premiums for those who are unemployed.
Always be honest about your employment status and vehicle usage to avoid the risk of being caught lying and facing higher legal costs or a denied claim.
Keeping your car insurance provider updated about your employment status is crucial to maintaining accurate coverage and potentially adjusting your car insurance premium. Here's when you should inform them:
Immediately After a Change: Notify your insurance provider as soon as your employment status changes. Whether you start a new job, lose your job, or change your job title, keeping your insurance provider informed ensures your policy reflects your current situation.
Before Renewing Your Policy: If your employment status changes before your policy renewal, inform your provider before you renew. This allows you to adjust your coverage and potentially find cheaper car insurance if your situation leads to a lower risk profile.
If You Move to a New Job: Changing your job title or switching to a new employer can affect your car insurance premium. Update your provider with your new job title and employer details to ensure your car insurance premium is accurately calculated.
If Your Driving Habits Change: A change in employment might alter your driving patterns. If your new job requires more driving or leads you to different locations, inform your insurance provider to adjust your policy as needed.
If You're Unemployed: If you become unemployed, notify your insurance provider immediately. This may affect your car insurance premium and coverage, and your provider can help you adjust your policy to reflect your current status.
Not keeping your insurer updated could affect your future coverage options and insurance prices, potentially leading to complications when you need to claim.
It’s important to review your car insurance regularly, especially if your employment status changes. For unemployed drivers, your car insurance provider may offer the opportunity to reduce your premiums or adjust your coverage, depending on your current circumstances.
Your insurer may offer the best policy based on the other factors that influence your insurance cost, such as vehicle type and driving frequency.
Yes. You can save money on your car insurance premiums without reducing coverage. Look for discounts, reduce your annual mileage, and compare car insurance quotes from various insurance providers to find a cheaper policy that fits your needs.
At the very least, you need to meet the legal minimum requirement of third-party car insurance. While your budget may be tight, comprehensive car insurance can provide additional protection against accidents, theft, or damage, depending on your vehicle and situation. If you can afford it, consider keeping full coverage to protect yourself in the event of unforeseen accidents or damage.
For stay at home parents, students, or those who are retired, it's important not to categorise yourself as unemployed when applying for car insurance. Doing so might lead to higher premiums than necessary. Unemployment status typically applies to individuals actively seeking work or receiving unemployment benefits. Instead, select the job title that best reflects your current situation, such as "retired" or "house person," from the options provided by the insurance company. This will help ensure that your premiums are more accurately assessed.
*51% of consumers could save £518.14 on their Car Insurance. The saving was calculated by comparing the cheapest price found with the average of the next four cheapest prices quoted by insurance providers on Seopa Ltd’s insurance comparison website. This is based on representative cost savings from June 2025 data. The savings you could achieve are dependent on your individual circumstances and how you selected your current insurance supplier.
