Whether you drive for private hire or delivery, insurance is a cost of doing business. While it can seem a big amount of money to find, there are ways of paying to help you manage the cost.
When you buy or renew your private hire or delivery insurance, you choose how long you want your policy to last:
· 30-day cover means your insurance is flexible. At the end of 30 days, you can either renew or stop your cover.
· Annual cover can suit regular drivers, as your insurance is sorted for the whole year. By paying once for the year ahead, it’s often cheaper than it would be for 12 30-day policies.
Some drivers like the idea of annual insurance, but find the cost of paying in one go a bit off-putting. To help with this a lot of insurance companies, including INSHUR, offer something called ‘premium finance’. This is a way of paying for your annual insurance by spreading the cost over monthly payments.
Here we explain how premium finance works. We also look at some things to think about if you’re deciding if premium finance is right for you.
What is premium finance?
Premium finance is basically a loan. It allows you to take out an annual policy, but spread the cost over monthly payments.
If you choose premium finance, you’ll pay a deposit to your insurer to start the policy. Then a finance company will pay the rest of the cost for you, which you’ll then pay back each month. At INSHUR, you pay a deposit then 11 monthly payments.
How is premium finance different from 30-day cover?
With 30-day cover, the price can change when you renew. You might pay a certain amount one month, and then find the cost is more expensive next month. This is because you are buying a new policy every 30 days.
While 30-day cover is good if you want to work flexibly, you have to renew every month you want to work. So if you are working regularly over a year, you would have to renew 12 times a year.
What are the benefits of premium finance?
Premium finance can make it easier to budget, because you know what your payments will be every month.
Paying for your insurance this way also means your cover is sorted in one go. Once your monthly payment is set up, as long as the money is in your account, you’re good to go.
It’s worth pointing out that if you can afford to pay for your insurance in full for the year, this will be cheaper for you. Premium finance is more expensive than paying upfront for the year – this is because you are taking out a loan for the cost of an annual policy.
But while it costs more, it does mean you’ll know what you’re paying each month. Unless you’re changing your policy, you’ll have peace of mind that the price will stay the same.
Another benefit is you can change what day you make the payment. For example, if you start working for a different app and your payday changes, you can move the payment date to suit you.
There’s also the option to make other changes.
Let’s say you want to change your vehicle, which might add extra costs to your insurance. That extra cost can also be spread over monthly payments. For example, an extra £500 for a new car or van might work out at an extra £50 a month. This can help to manage extra costs and help you decide things like whether you can afford a new vehicle or not.
Things to think about
As premium finance works like a loan, make sure you can afford the monthly payments. If you miss payments, your policy might be cancelled and you won’t be insured.
Comparing the cost of insurance can be tricky, especially with all the jargon you see. There are two words that come up most often:
· Interest When a finance company provides a loan, like with premium finance, it takes a risk. Because of this, they charge a percentage on top of the money being loaned. This is the interest rate. Think of this rate as the cost of borrowing money.
· APR This stands for annual percentage rate, and is worked out based on how long a loan is for. It is the annual rate charged by a finance company to lend money to borrowers.
If you’re interested in the details, it’s worth looking at both the interest and the APR.
| To pay by premium finance with INSHUR, we ask for a 10% deposit. On a £1,000 premium, that would be £100 upfront. You can pay online or over the phone.You then make 11 monthly payments. If you’re looking to compare INSHUR with other companies, these are the numbers you need: Our interest rate is 13%. Our APR is 25.8%. |
As we’ve said, premium finance is more expensive than paying upfront for the year. So if you are comparing prices, first look at how much extra premium finance will cost you. Then look at what your monthly payments will be.
By using premium finance, you spread the cost of insurance over a year. This can make it more affordable than trying to pay for a year’s cover in one go.
At INSHUR, we want to make drivers’ lives easier. This includes offering payment options like premium finance. To see how we can help you, visit INSHUR to see how we can help you as a private hire driver or delivery driver. You can also find out more about premium finance here.
