Car insurance costs are still heading north – up 12% in the past year, according to the latest MSE Bills Tracker. Fight back by playing the key tricks, including never auto-renewing. Instead check NOW to see if you can lock in cheaply.

This guide explains the basics of car insurance, what to watch out for and reveals how you can slash the cost of cover in six easy steps.

Car insurance: The basics

At its most simple, car insurance covers you if your car is stolen or involved in a road accident. It also protects other road users if you cause damage to their vehicle or property.

The cost of insurance – your premium – is based on how much of a risk insurers perceive you to be. For example, if you are a youngster ready to hit the highway after just passing your test, or you have had more than a prang or two, you will pay more.

However, if you can prove you are not a risk by keeping accident-free and storing your car safely, you will pay much less.

10 ways to cut car insurance costs

Did you know the average driver faces an annual insurance premium of £680 with drivers younger than 25 paying over £1,400 for cover? Here are our top 10 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, which is what an insurer will hold about a particular age group or address, for example, on which they base their premiums).

This can outweigh the fact you get more cover, and make your policy 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.

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

Should I get third party or comprehensive cover?

A responsible 2nd or 3rd driver can cut costs

It may seem counter logical, but covering an extra driver can reduce rather than increase your cost – in some cases by £100s or £1,000s. Here are seven quick tips on how to do it most effectively…

  • Car insurance is all about risk. That’s why it can work. If you’re a high-risk driver and you add someone who is a much lower risk as a 2nd (and/or 3rd) driver, they can bring down the average risk and you may get a cheaper policy.
  • This isn’t just for young drivers. While it works well for young drivers (see our Young Drivers’ Car Insurance guide) as they are automatically seen as a high risk and know many people, like their parents, who may be lower risk, it can work for anyone. But of course, it’s especially powerful for those with costlier insurance.
  • The better the driving history and lower the risk, the more impact it should have. Those with a good driving record are likely to help make the most savings, but anyone who’s a lower risk can help. By law insurers can’t discriminate over gender, but age, driving experience and history can make a difference.
  • This is about trial and error, not logic. Your mum may increase the cost, your brother may cut it, or vice versa. It’s just a question of trying different quotes and seeing what happens.
  • Different insurers respond in different ways. One may cut your costs adding your uncle, another may increase it. A quick way to check is by varying quotes on comparison sites – it’s easy to do, see our top comparison sites list below.
  • The second driver should be someone who would reasonably drive your car. So don’t add Lewis Hamilton, unless you happen to be his brother (and even then racing drivers are likely a very high risk so I wouldn’t bother) – but your mum, son, best mate or gran should be OK – as long as they would drive the car.
  • Never add someone as main driver if they’re not. This is known in the industry as ‘fronting’ and is fraud. If you do it and are caught, you can face a criminal conviction and your insurance will likely be invalid.

Here are some successes to get you started…

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

Tweak your job description – some save £100s

Another quick win is tweaking your job description (legitimately of course). An illustrator is often cheaper than an artist, an editor than a journalist, a PA than a secretary.

Beware paying monthly

A monthly payment plan for your insurance is essentially a high-interest loan. For example, if your premium is £1,000 and want to pay monthly, you could pay £95/month, which is £1,140/year (£140 more) at a huge APR of 25%.

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
Age UK
0%
Esure 27.7%
Admiral 18.2% Hastings Direct 39.9%
Aviva 21.9% John Lewis 23.9%
Churchill 29.4% M&S 9.9%
Co-op 18.5% Privilege 24.3%
Debenhams 23.46% Swiftcover 39.58%
Endsleigh
39.90%
Zurich 33%
Correct at December 2017

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 more each year, knowing inertia stops policyholders switching. And even though new rules mean insurers must now tell you the premium you paid last year in correspondence to you, don’t rely on this to take action.

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 it can match, or even beat, the best quote you found. If it can, you’re quids in.

Last year I paid £258 car insurance. The renewal quote was £608. I paid £199 using your comparison site process. Thanks.Sue via email

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

Finally convinced the other half to challenge car insurance renewal quote. Reduced from £520 to £219!@laedeejaedee

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