Tips on how to cut your car insurance costs!

As we all know insuring your car can be an expensive business. In the past shopping around for a cheaper quote was time consuming so many of us just accepted our renewal notice even though we knew we were probably paying over the odds.

Car insurance companies use different methods to decide what to charge each driver. So although one company might be cheapest for you, it could be more expensive for someone else. With the rise of comparison sites, it is now possible to get a sample of quotes from a large number of insurers in a matter of minutes, taking all the hassle out of finding a cheaper quote.

Car insurance is a very competitive product so there are often substantial gains to be made by shopping around. The average premium we pay is in the region of £300 to £400 a year and it’s reckoned that one in six of us claim on our car insurance each year with the average payout being around £2,000.

As well as shopping around, what else can help you save money on your car insurance?
Discounts and multiple policies

Some companies offer a decent discount if you insure more than one car with them. You can also get additional discounts if you have other types of insurance policy, e.g. home insurance, with the same insurer.

Third party or fully comp?

There are three levels of car insurance cover – third party, third party, fire & theft and fully comprehensive. Fully comprehensive is usually the most expensive so, if you drive an old banger, it may not be worth it as your car will probably be written off if any sizeable repairs are required. That said, rather bizarrely, with some insurers fully comprehensive is the cheapest of the three, so you might make a saving by switching from third party to fully comp.

You

Your age is one of the biggest determinants of your car insurance costs. Young drivers are the most expensive to insure with males under 20 hit hardest. Some insurers offer discounts if you take the Pass Plus training scheme. This involves continual assessment over six modules and costs £180 although some local councils offer a discount of up to 50%.

Premiums then fall quickly until you reach the age of 25 and then decrease marginally after that. Those in their 50s and 60s tend to pay the least for their cover. The cost of insurance then starts rising again once you’re in your 70s and 80s. It’s worth noting that many car dealers offer free insurance deals when you buy a car and these can be particularly valuable for younger drivers.

Female drivers usually pay less for car insurance, especially below the age of 25. This has led to a number of female-only car insurance firms. However, these don’t always offer the cheapest rates so it’s still worth shopping around as you could get cheaper cover elsewhere.

Make sure you describe yourself accurately. If you’re a homeowner or married then you’re likely to get a lower quote. Your job can also have a big impact. Quite often you’ll find that there are several different job descriptions you can choose which all describe what you do. If can be worth experimenting with these to see which provides the lowest quote.

Your car

The type of car you drive will affect your premiums dramatically. Any modifications made to the car, whether they improve its performance or not, can also push your premiums higher. You can bring down your car insurance costs by having an alarm or immobiliser.

Where you keep the car can make a difference too. A garage is best but off-road parking is usually cheaper too. Where you live will affect your premiums, although moving to get cheaper car insurance is somewhat of a radical step! Some parts of London are twice as expensive as the cheapest postcodes in the country.

Your mileage

If you’re a low mileage driver then this could result in you paying lower premiums. Check the mileage noted on your MOT certificate if you have an older car. You might be surprised at how few miles you actually do.

Recently a few insurers have started providing ‘pay as you go’ insurance using technology to track where and when you drive your car. Working out if this will be cheaper is not always easy but if you’re a young driver who doesn’t often drive at night it’s worth investigating.

Paying monthly

Paying monthly can help to spread the cost of large car insurance bills but the rate of interest charged can sometimes be as high as 30%. For younger drivers this could mean an additional £200 to £300 a year. A 0% credit card can often be a smarter option if you need to spread the cost.

Additional drivers

Adding additional drivers to your policy can bring down your costs, especially if you’re a younger driver. In the past many parents have named themselves as main drivers of their children’s car but insurance companies are cracking down on this. With some polices it is possible to start building up a no claims bonus as an additional driver so this can often be a good way for young, occasional drivers to cut their future car insurance costs.

Many policies use to let you use someone else’s car as long as you had their permission but this clause is increasingly being removed so, if you think this may affect you, make sure you check the policy wording.

Tweak your excess

Varying your excess can be a worthwhile exercise. A higher excess, if you can afford it, can bring down your costs considerably. Sometimes reducing your excess is worth checking too, as it may not necessarily increase your premiums.

Most companies have a separate excess for windscreen damage so check the policy wording for this. There may be a maximum number of claims per year as well.

Optional extras

There a number of optional extras you can get alongside your main policy. You might want the use of a courtesy car while your car is being repaired or you might want to be insured for driving your car in Europe.

Legal cover costs around £20 and in the event of an accident that is not your fault will help you claim back items not covered by your car insurance policy. These might include your excess, additional travel costs, damage to possessions you had in the car and so on. Opinions are divided on whether it’s worth paying for. You may already have legal cover through your employer or union.

No claims discount protection is another add on, which typically costs around £30. It might not prevent your car insurance rising next year as, although you’ll keep your percentage discount, the gross amount you’re charged might still increase because you’re perceived as being a higher risk.

There may also be a limit on the number of claims you can make within a certain time period e.g. twice in three years. But, on the whole, it’s considered to be worth the money, especially if you’d find a hike in your premium next year difficult to pay for.

Typically, without no claims discount protection, one claim will result in you losing two years worth of no claims bonus.