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The cost of car insurance can vary widely between different policies and insurers. If you don’t shop around, you can end up paying hundreds of pounds more than necessary for cover.
There are a number of things you can do to find cheaper car insurance. For starters, you should never just accept your current insurer’s renewal price or let your policy ‘auto-renew’. Instead, you should get quotes from different insurers in order to get the right policy at the right price. Price comparison websites make finding cheap car insurance easy to do.
When you ask for a car insurance quote, the insurer or price comparison site will ask you to declare your annual mileage.
In general, the less miles you drive, the cheaper your premium will be. This is because you will be on the road less, so less likely to have an accident and make an insurance claim.
Although the insurer will ask for an estimation of your annual mileage, it’s important for this figure to be as accurate as possible.
Every car needs a MOT each year and recording the odometer reading is a part of the MOT test. After the test is complete, the reading is shown on the MOT certificate and on the vehicle’s online MOT History. If you have your car serviced, the mileage will also be noted in the logbook.
The more secure your car is, the harder it will be to steal. There are various high-tech devices that can either make it more difficult for thieves to steal your car or make it easier to find if it is stolen.
Thatcham is an independent institution that rates car security and helps car insurance companies factor this into their price calculations. A ‘Thatcham-approved’ security device will lower the cost of your insurance. There are various classes of Thatcham security – an electronic alarm and immobiliser is class 1 and the best.
A Thatcham Category 1 alarm will have perimeter and ignition detection, and incorporate movement, broken glass and tilt sensors. It will also have a siren powered by its own battery supply.
An immobiliser is a device that only allows your car to start by using the correct key or fob – it can’t be hot-wired by thieves.
Lower Thatcham categories include things such as wheel locks and trackers.
Some insurers offer a discount on your premium if you have a dashcam, as these can help prove who it is at fault in an accident. A dashcam is a video camera mounted on the dashboard or windscreen of your car and used to continuously record the road and traffic through the windscreen. Some dashcams have rear cameras too.
Insurers also consider where your car is parked overnight when calculating insurance costs. A private driveway or car park is the most secure, while parking on the street puts your car at higher risk of it being stolen or damaged – resulting in a higher insurance premium.
The ‘excess’ on a car insurance policy is the amount the policyholder pays in the event of a claim – then the insurer pays the rest. For example, if you make a claim for £800 worth of damage and the excess on your policy is £200, the insurer will pay £600.
There are two elements to car insurance excess:
Compulsory excess + voluntary excess = total excess
For example, if your compulsory excess is £200 and you choose a voluntary excess of £100, your total excess is £300, and you’ll pay a total of £300 towards the cost of a claim before the insurance pays the rest. This means it may not be worth making a claim if you damage your car and it would cost less than £300 to repair.
The higher the total excess, the cheaper your car insurance. This is because you are less likely to make a claim and any claims you do make will be cheaper for the insurer to settle.
Before you increase your excess, work out whether you could afford to pay that amount in the event of an at-fault claim. The excess should be refunded if you’re found not to be at fault – your insurer will claim it back from the at-fault driver’s insurance.
When you get a car insurance quote, your premium will be quoted as an annual figure – but the insurer may also give you the cost to pay monthly.
You’ll notice that if you multiply the monthly cost by 12 it will come to a higher figure than the annual cost quoted. This is because when you opt to pay in instalments, the insurer effectively gives you a loan for the whole premium and you repay this monthly, with interest.
So it’s best to pay for car insurance upfront in one go. If you can’t afford to do this, a credit card with a 0 per cent offer on purchases will work out cheaper than accepting your insurer’s monthly payment option.
Car insurance policies vary regarding what they cover. Some policies will include extras, such as windscreen cover, a courtesy car, breakdown cover and personal effects as standard, while others will charge a fee for this cover.
When buying a policy, think about the optional cover that will be most useful for you and make sure you compare car insurance policies like-for-like.
Don’t double up on cover. For example, if you already have car breakdown cover as part of a packaged bank account then you won’t need it as part of your car insurance too.
If you have a second car in your household, or don’t use your car very much, you can save money by opting out of a courtesy car.
Insurers like drivers who don’t make claims, because they don’t cost them any money. To encourage people to drive safely and not make small claims, insurers offer drivers the chance to build a no claims bonus (NCB), also referred to as a ‘no claims discount’.
Each time you go 12 months without making a car insurance claim, you get another year added to your NCB.
This gives you a discount on your next car insurance policy and can be transferred between insurers. How much discount you will get depends on the insurer and how many years’ NCB you have.
Eventually you’ll reach the maximum number of NCB you can claim – this is usually about 15 years. At this point you’ll get the maximum discount possible.
If you make a claim on your car insurance, you’ll lose some or all of your NCB. However, your NCB should remain intact if you weren’t at fault and the claim is on the other driver’s insurance.
Most insurers will ‘protect’ your NCB for an extra fee. Depending on the insurer, this will mean that up to three small claims in a two or three-year period won’t cause you to lose your NCB. Paying for NCB protection is a gamble – you’ll have wasted your money if you don’t end up making a claim, but it could save you money if you do.
Adding a named driver to your car insurance policy could make it cheaper – depending on who the other driver is.
For young or inexperienced drivers, adding a parent with more driving experience to their policy will normally see them benefit from cheaper premiums. But adding younger, inexperienced drivers to your car insurance can increase costs because they are statistically more likely to be involved in an accident.
It is important to be honest about who the main driver of the car will be. Misrepresenting this – for example, claiming a parent is the main driver when it is actually their 18-year-old child – is known as ‘fronting’ and is classed as insurance fraud. If you are found guilty of any type of insurance fraud, your policy may be cancelled, and you’ll find it hard to obtain affordable insurance in the future.
If your car has been altered since it was manufactured, it will be considered ‘modified’ by insurers. Modifications usually fall into two categories: performance or cosmetic.
Performance car modifications include increasing horsepower, changing the wheels or suspension, re-engineering the car’s engine, intake and exhaust upgrades and fuel upgrades.
Cosmetic car modifications include tinted windows, go-faster stripes, installation of a sunroof, specialised paintwork and installing speaker systems.
Cars with modifications cost more to insure as it increases the likelihood of making a claim and the value of any claim. For example, some modifications will increase a vehicle’s value or make it more expensive to repair. Modifications that make your car go faster increase the chances of it being involved in a speed-related accident. Modifications – especially those that include expensive technology – can also put your car at greater risk of theft.
Advanced driving courses can help new drivers and young drivers hone their skills in certain situations such as driving at night or on the motorway.
Pass Plus is a government-backed practical training course that takes at least six hours to complete. It costs between £150 and £200, but you may be able to get a discount from your local council. There’s no test but you’ll be assessed throughout the course, and you’ll get a certificate at the end. IAM Roadsmart’s Advanced Driving Course costs £175 and you take a test at the end.
Although a small number of insurers offer a discount to drivers who have taken an advanced driving course, the majority don’t. However, they still might be worth doing as you will learn to be a better driver and therefore less likely to be involved in an accident. When it comes to renewing your insurance policy, the fewer claims you have made, the cheaper your premium will be.
Telematics car insurance can often mean cheaper car insurance – but only if you’re a good or low-mileage driver.
With telematics, your driving is monitored via a smartphone app or a ‘black box’ fitted to your car. Telematics uses GPS and internal sensors to monitor your driving including when and where you drive, how far and how fast, how sharply you brake, and your cornering skills. Policy premiums are then calculated according to how well you drive. Black box insurance is often a cheaper than average option for new or young drivers.
Telematics technology is also used by some insurers to offer ‘pay-as-you-go’ car insurance. In this case the black box only tracks the number of miles you drive each month, but doesn’t monitor your driving skills. You’re then billed for insurance per-mile, plus a set fee for covering your car while it’s parked.
If you already hold a car insurance policy, your insurer will send you a renewal quote about a month before your policy is due to end. But don’t just accept this – instead, use the letter as a prompt to start shopping around for a new policy.
According to a study by Go.Compare, the best day to buy new car insurance is 27 days before your renewal is due. Researchers found that drivers who leave it until the day their insurance is due for renewal could pay 50 per cent more than those who arranged it in advance.
When you buy a policy, don’t tick the ‘auto-renew’ box. Auto-renewing might sound convenient, but it means that 12 months later the insurer will set up a new policy for you and take the payment – which may be more than previously – from the card you used to pay last time. It’s more than likely you could find cheaper car insurance elsewhere.
It’s best to use a comparison website such as Moneysupermarket.com or Go.Compare.com to compare quotes for cheap car insurance. When you input your details into a comparison site, it will list the premiums and policies available from insurers across the market. Price comparison websites are free to use – they make their money from commission and advertising.
It’s easier to compare what’s on offer. As well as price, you should look at the level of cover, how much the excess is and if additional cover (i.e. breakdown cover or legal expenses) are covered as standard.
Bear in mind, though, that not all insurers or policies feature on comparison websites – Direct Line and NFU Mutual are not on them, nor are some of Saga’s premium policies. So it might be worth going directly to these insurers to get a quote.
Price comparison sites often offer freebies or incentives to use them; alternatively, cashback sites give you cashback on any purchase you make via their site, often meaning you can get £30 or £40 back on a car insurance policy.
