Cut the cost of your car insurance

We all know that car insurance can be a major expense. Yet the majority of us blindly accept the renewal notice we’re given each year, potentially missing out on savings of a few hundred pounds every time.

It may even pay you to check for a cheaper quote now, rather than waiting for your annual renewal. Most policies will refund part of your premium if you cancel early but check the wording of your current policy to see what you’ll get.

Here’s a simple three-stage plan that will help you get cheaper car insurance with the minimum of hassle:

1. Shop around for big savings

If you accept a renewal quote, you’ll always end up overpaying. It’s as simple as that. Insurers offer their best deals to new customers, so it’s always worth shopping around.

There is no standard price list for car insurance. An insurer will come up with a price based upon your answers to a detailed list of questions. So this means that although one insurer may offer you a good deal, they could offer someone else a far less competitive quote.

Internet comparison sites are the easiest way to get around this problem, as you only have to enter your details once to get prices from a large number of insurers. It’s far easier than going direct and you can make changes to your cover to see what impact this has on the price. While it’s true that no comparison site covers the whole market, Direct Line being the most notable omission, this is mainly due to their unwillingness to be included.

2. Get the right policy

Price is important but it’s equally important to make sure you’ve got the right sort of cover.

Most people go for fully comprehensive insurance cover and, in most cases, this will be the cheapest option. If your car isn’t worth much though, for example if it’s worth less than £1,000, third party, fire and theft may be more cost effective. This is because it’s unlikely to worth making expensive repairs to your own car in the event of an accident.

Also consider if you would like a courtesy car while your car is being repaired. If you need your car for work this is obviously a valuable extra. Another item to watch out for is that some insurers are no longer providing cover when you drive another person’s car. If this is something you want, check it’s included before deciding which insurer you’re going with.

If you’re likely to drive abroad, look to see if cover for this is included. In most cases, you’ll only have basic third party cover if you drive abroad so you may need to pay extra anyway if you want cover for fire, accidental damage and theft as well. 

If you’re buying a new car you may find that free car insurance is included as part of the deal. If you’re young, this can be worth investigating as getting cover elsewhere could be expensive. But check what the policy covers to make sure it matches what you need.

3. Fine tune your cover

When you’re entering your details in a car insurance comparison engine, there are a number of areas you can tweak to lower the cost even further. But be honest! Lying on an insurance application could invalidate your car insurance in the event of a claim. For example, if you use your car for business, even if it’s just commuting to the train station, make sure you declare this.

Increasing the excess you pay in the event of a claim is a one way of getting a cheaper deal. It’s worth experimenting with different levels of to see how it affects your premium. Be careful about setting your excess level too high though, as you’ll probably need to pay it someday! On average we claim on our car insurance every 5 or 6 years, with the average claim coming in at around £1,600.

Many insurers are offering discounts for insuring more than one car in the same household. Others offer discounts if you already have other types of insurance with them. It can also be worth adding an additional driver to your policy, especially if they are considered a good risk, as this can lower the premium further.

Think about the mileage you’re likely to do. A lower annual mileage is likely to reduce the cost of your policy. Where you park is also a factor. In a garage is best, but on a driveway will usually result in a cheaper quote than parking on the street.

Most insurers will ask what you do for a living. They use this to assess how likely you are to have an accident as some jobs have a history of attracting reckless drivers. Usually you’ll find that there a few different descriptions that fit what you do, so experiment to see which results in the lowest quote.

It’s almost always a bad idea to pay monthly for car insurance as the interest you’ll be charged could be as much as 30% a year. A 0% purchase credit card can help you ease the cost if you’d still like to spread your payments.

As you complete your application, you’re likely to be asked if you’d like to take out two optional extras. Firstly, there is protection for your no claims bonus. Opinion varies on whether this is worthwhile. If you do make a claim, typically two years will be knocked off your no claims discount. However, as you’ve had an accident, you’re likely to be deemed a higher risk anyway, so you’ll probably find your premium goes up next year even if you’ve got no claims protection.

Secondly, there is legal expense cover. This is often very expensive for the protection it provides. You could already have this cover anyway, through your home insurance or via your employer. You’ll probably be able to find a solicitor on a no win no fee basis anyway.

With these simple tips you should be well prepared to get a cheap car insurance quote. Happy motoring!