Did you know the average driver faces an annual insurance premium of £540, with drivers under the age of 25 paying more than £1,000 for their cover? Here are our top ten car insurance cost-cutting tips that can save you £100s.
Don't assume third party is the cheapest
You would expect third party cover to be the cheapest because it is the lesser cover, just covering the person you bump into and their car. Yet don’t expect car insurance to be logical.
With some insurers the mere fact you have selected comprehensive, which includes your car too as well as fire and theft, means you'll be assessed as a lower risk (based on actuarial history) and that can outweigh the fact you get more cover, to make it cheaper.
There are no hard rules here, it’s a matter of trial and error, yet if you’re just looking for the very cheapest cover, never only check third party.
There are no hard rules here, it’s a matter of trial and error, yet if you’re just looking for the very cheapest cover, never only check third party.
My auto renew quote was £210 for 3rd party only. I went to a comparison site and got comprehensive breakdown cover & free car hire with the same company for £40 less.Forumite DobbieSloan
Add a responsible second driver
It makes sense to think adding more motorists to a policy would make it cost more. Yet especially for younger drivers, it can actually lower your costs (see our Young Drivers Guide for more tips).
This is because the risks may be averaged. So adding a responsible older driver, who could legitimately use the car, can cut costs. Those with a good driving record are likely to help make bigger savings, but anyone who's a lower risk can help.
This is because the risks may be averaged. So adding a responsible older driver, who could legitimately use the car, can cut costs. Those with a good driving record are likely to help make bigger savings, but anyone who's a lower risk can help.
As a young new driver my insurer wanted £5,000 but after adding mum and dad it dropped to £1,900.@Faevouritexox
Took your advice and added my mum to my car insurance and saved £500 #mumstheword.@mazzyb5
Beware - At no point should you add your name as the main driver on someone else's car, such as one of your children, instead of them. This is known in the industry as 'fronting' and is fraud. When you come to claim, this will be checked out and your insurance will be invalidated. It can lead to prosecution, so don't do it.
Tweak your job description
Another quick win is tweaking your job description. To help, we've built a fun Car Insurance Job Picker tool to show the riskiest jobs and see if small changes to your job description could save you cash. Remember, never lie as this will be considered fraudulent. If it worked for you, share your success stories with our forum users.
Thank you @MartinSLewis after rewording my job occupation on car insurance I have managed to save £400.@JenStaCreations
I did this too thanks to @MartinSLewis from creative director to marketing manager = saved £300+ Crazy world isn't it?@fabsternation
Beware paying monthly
A monthly payment plan for your insurance is essentially a high-interest loan. For example, if your premium is £1,000 but you are paying an APR of 25%, your insurance will actually cost £1,140 once you factor in the interest. So either pay in full, or if you can't afford it, use a credit card with a lower APR rate (or better still, a 0% credit card for spending, ensuring your repayments are big enough to clear it within a year).
If paying by credit card, check if the insurer or provider charges a fee for doing so - though the fee is usually less than the interest charged on monthly instalments.
| FIND THE APRS OF THE BIG INSURERS | ||||
|---|---|---|---|---|
| Insurer | APR if you pay monthly | Insurer | APR if you pay monthly | |
| AgeUK |
0%
| Hastings Direct | 29.9% | |
| Allianz | 35.54% | John Lewis | 23.5% | |
| Aviva | 31.9% | M&S | 9.9% | |
| Axa | 29.19% | Privilege | 28.8% | |
| Churchill | 23.6% | Prudential | 23.8% | |
| Co-operative | 18.5% | RAC | 29.9% | |
| Endsleigh |
39.7%
| Sainsbury's | 23.8% | |
| Correct at Mar 2015 | ||||
Never auto-renew. Loyalty is expensive
Nothing better illustrates car insurers preying on loyal customers than Sarah Cooper's tweet. "My car insurance renewal is £1,200. New policy with same company is £690. How do they justify this?" They don't. They just do it.
Insurers charge increasing amounts each year, knowing inertia will stop policyholders switching. If your renewal is coming up, jot it in your diary to remember it. Compare comparison sites and then call your insurer to see if they can match, or even beat, the best quote you found. If they can, you're quids in.
Insurers charge increasing amounts each year, knowing inertia will stop policyholders switching. If your renewal is coming up, jot it in your diary to remember it. Compare comparison sites and then call your insurer to see if they can match, or even beat, the best quote you found. If they can, you're quids in.
I hadn't had any accidents or incidents yet my renewal went up almost £200. I left and went elsewhere for £70 less plus £60 cashback.Forumite Zipman23
My auto-renew price for two vehicles including a 21-year-old named driver son on smaller vehicle was £1,024. I followed the advice given in the guide to get a better deal with Direct Line for £590.Forumite Rawhide
Don't pimp your ride. Lock it down
For those over the age of 50, 'pimping your ride' involves decking it out with fancy alloys, windows and spoilers. The more changes you make to your car, barring security ones, the more you'll be charged. Always tell your insurer about any modifications and whether you made them or not, or it may invalidate your policy.
Even more savings are there for the taking if you can protect your vehicle by securing it. Fitting an alarm or immobiliser (especially one approved by Thatcham) will reduce the bill substantially.
Even more savings are there for the taking if you can protect your vehicle by securing it. Fitting an alarm or immobiliser (especially one approved by Thatcham) will reduce the bill substantially.
Only buy add-ons if you know their value
Often when you buy your cover an insurer will try to sell you additional products such as windscreen cover or breakdown. Avoid buying add-ons if you are not clear what they do or what their terms are. If you are interested, check out the cost of the cover individually first.
Many insurers make a large mark-up by selling add-ons at higher rates than you can get elsewhere. Also, some of these covers may already be included in your policy so read all the terms carefully.
Set the right excess without breaking the bank
It's worth considering going for a policy with a higher excess. A higher excess will result in lower premiums but make sure you can afford the premium in the event you need to claim. Many people will find claiming for less than £500 of damage both increases the future cost of insurance and can invalidate no-claims bonuses, meaning it's not always worth making a claim.
So why pay extra for a lower excess? A few insurers will substantially reduce premiums for a £1,000 excess, so try this when getting quotes. The downside of this is if you have a bigger claim you'll have to shell out more, so take this into account.
So why pay extra for a lower excess? A few insurers will substantially reduce premiums for a £1,000 excess, so try this when getting quotes. The downside of this is if you have a bigger claim you'll have to shell out more, so take this into account.
Lock in quotes early
Car insurance prices have dropped 40% over the past two years, according to the AA, but bumpy roads could lie ahead as, due to more whiplash claims, they're predicted to rise by 10% this year.
A cancellation fee may eat away any savings but some insurers such as Aviva, LV and Nationwide will hold the price of a quote for up to 60 days. This means that if you obtain a quote two months before your renewal is due, you've locked in the price to beat any possible future premium increases.
Remember, the prices are fixed subject to you not changing any of your details. Set up a Tart Alert to remind you when it's going to expire.
Remember next year
Providing you drive well and don't have any accidents, your insurance premium should get cheaper after the first year. However, don't automatically stick with the same provider.
Apply for cover from your existing insurer as a new customer and it's likely you'll be given a cheaper price.
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