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21 Tips
to cut your car insurance premiums.

You may be surprised just what can influence the cost of your car insurance. However, within the factors that insurers take into account, with a little planning it’s possible to make big savings on your premiums. With this in mind, we’ve searched out 21 ways to save on your car insurance.

Each way to save is rated with either one, two or three green ticks. The more ticks, the higher likelihood it is to save you money.

1. Compare prices  

The difference between the cheapest and most expensive car insurance quote is always huge. If the cheapest quote was £400, the worst in the market could easily be £1,000. So always compare quotes and steer clear of the rip-off merchants!

Your car retailer might have given you a great deal on your car but he’ll inevitably try to claw back the money he knocked off the car by offering you expensive insurance cover. Those guys won’t make their insurance cheap, as it's so easy for them to cross sell insurance whilst you're buying the car.

And never, never automatically accept your existing insurer’s renewal quote without checking elsewhere first. Despite what you’d expect, they rarely reward your loyalty - or your lethargy! If you make life easy for them and automatically renew, they’ve no incentive to find ways to make it cheaper.

It's also important to be aware that insurers define and try to attract certain client profiles. For example, one insurer may be competitive for mature drivers in the country but not so competitive for young drivers in the city. And the insurance companies do regularly change their target market and their prices. This means that an insurer who gave you you a poor quote last time, may give you an excellant quote the following year.

This all underlines the absolute importance of getting comparison quotes and the easiest way to do that is to use the comparison service provided by Likewise. Simply click on Go Compare and we’ll connect you. After you’ve completed your details your screen will display up to 15 of the cheapest personalised car insurance quotes available from Likewise’s panel of over 30 top insurers. 

2. Direct debits

 

Almost every insurer will offer you the opportunity to pay your premium over monthly instalments by direct debit, rather than a single upfront annual payment. Though the credit is may sound attractive, you should be aware that you often pay through the nose for the privilege. Insurers often charge APRs of up to 20% for this credit facility, so if possible save up in advance and pay the annual premium in one payment. If this is a problem, search out a cheaper form of credit – for example a 0% introductory offer on a credit card and pay the annual premium through that.

3. Modifications

 

If you’re tempted to buy a modified car, or want to modify your existing car, then our advice is DON’T. Insurers hate modified cars. You'll find that around half them won't even bother quoting for a modified car and those that do will charge you through the nose.

This is because, over the years insurers have found that statistically, a modified vehicle is more likely to be involved in an accident and is more expensive to repair. And watch out for the insurer’s definition of a “modification”. Modifications don’t just include fitting more powerful engines or other performance-boosting changes; it also includes non standard exhausts and even Go Faster Stripes!

If your car has been modified we think that the personal touch is required. Call your preferred insurers to discuss your modifications, as many of them are more more flexible over the phone. Here's what to do:

1.    Enter your details on Likewise’s quotation form but select 'No' when asked if you have any modifications.

2.    Phone up the cheapest insurer and ask to speak to a member of its underwriting team. Tell him or her that you've got their quote without
modifications, but you want to know how much it would be with the modification you have or are thinking of.

3.    They should help you with a quote. Then take the quote details and their reference, and say you'll phone back.

4.    You may want to call up two or three of the other quotes on the short listed comparison.

5.    Now run another comparison with your modifications added.

6.    Check out which quote is the best and go with it.

4. Your No Claims Bonus

Every year you don't make a claim on your policy, you get a extra year's 'no claims bonus'. The maximum you can earn is usually five years.

In the insurance industry, 'no claims' means that your insurer has made no payout on the policy. Many motorists get confused about this point – they think that if they were involved in an incident which was clearly the other drivers fault, then their no claims bonus would remain intact. This is only true if your insurer was able to recover all the costs of repairing your car from the other party. If the accident results in your insurer having any unrecoverable cost, then it will still count as a claim on your policy. This will always affect your no claims bonus.

If you stop owning a car for a while, you can usually retain your no claims bonus entitlement for up to two years.

The no claims discount is transferable between insurers and when you reach the maximum five years of claim-free driving you should be in line for a most welcome 75% reduction in your premium.

If both you and your partner have been driving on the same policy, you can often transfer the bonus to your partner. Therefore, when the policy comes up for renewal, we suggest you get separate quotes for you as the bonus holder and then separate quotes for your partner as the bonus holder - and go for the cheapest.

If you've been driving a company car or if you've been a named driver on another person's car, you may still be entitled to a discount when you buy your own car. Make sure you tell the insurance company about this when you make your insurance application.

Finally, don’t be seduced by the size of the insurers’ no claims bonus; always compare the net cost after all discounts.

5. Motor incidents

 

Most insurance applications require you to provide your full accident history, regardless of whether a claim was made. Therefore, your insurance quote could still be affected if you've had any accidents where there was no damage or where all the costs were settled directly between yourself any the other party involved and the insurance companies didn't get involved.

But it doesn’t have to be way! Compare quotes with and without these accidents and then phone the insurers. Many will allow you to proceed without including these “no claim” incidents on the insurance application. But just in case there’s a query later on, remember to get a reference for your call in case of a future query.

6. Insurance ratings

   

The insurance industry uses standard car ratings, from 1to 20. However, nowadays some insurance companies have their own extended rating systems, which can go up to 40 or 50. This means that your car can be accurately banded with cars of similar characteristics and there can be a significant spread of groups within a particular model range. With all these rating systems, the higher the number the higher your premium will be.

Your car’s rating will mostly depend on the power its engine develops and the cars weight. But it will also take into account other aspects such as repair costs and the likelihood that it will be stolen.

So if the insurance premium is straining your pocket, go for a lower rated car!

7. Get a cheaper - or is it a more expensive(!) car

  

We know it’s obvious: if your car is worth more, it costs more to insure. However, if it's a banger - less than £1,000 - then insurers start to worry about its reliability and think you’ll take less care of it. They sometimes respond by charging you more.

8. But it's not all about the size of your engine

   

We all know that size counts. But, it's not just the power your engine developes, its weight counts too. If your car has a high power to weight ratio, then it's going to be fast and insurers don't like fast cars! And they particularly dislike young drivers with fast cars and price their quotes accordingly.

The moral? If the cost of insurance is going to be a big item within your household expenditure, go for a car with a lower power to weight ratio.

9. Comprehensive can be cheaper than third party, fire and thef!

  

Insurance premiums are based entirely on historical statistics. That enables insurance companies to get away with prejudicial pricing. After all, no other industry gets away with charging men more than women for the same product!

Statistics prove that drivers of older cheap cars have more accidents, particularly young drivers. This may be because they don't worry so much about crashing them. You have to be aware that the damage to other cars and, particularly, the injuries caused to third parties that cost the insurance companies so much money. Conversely, statistics show that drivers with comprehensive insurance are statistically less likely to be involved in an expensive accident. That's why quotes for third party, fire and theft, can end up costing more than comprehensive cover – and from the same insurer!

So if you have an old er cheap car, try getting a quote for comprehensive cover.

10. The voluntary excess

  

Almost all policies have a fixed compulsory excess plus an optional additional voluntary excess which you can set. Adding a voluntary excess means you are taking some of the risk by paying a higher proportion of any claim. So the higher the voluntary excess you agree, the lower your premium will be.

Try getting quotes for varying levels of voluntary excess. This will show you how it affects your premium. You can then decide how much excess you are prepared to shoulder. If you’re convinced that you won't make a claim for less than £400 then set your voluntary excess so that the combined compulsory and voluntary excess totals £400 and see a significant reduction in your quoted premium.

Increasing the voluntary excess will always reduce your premium, but often only by a few pounds. That’s why this only gets a two tick rating.

11. Where do you park?

 

If you have a garage, use it! Parking your car every night in a locked garage will result in a cheaper premium compared with on street parking.

However, if you don’t have the use of a garage but do use a private drive, do not complete your application as  merely “private parking” or “ cars port”. To most insurance companies parking on “a private drive” is safer than “private parking” and “car ports”.

12. Named drivers

 

Adding extra drivers to your policy can increase your insurance premium, but on occasions it can reduce it. Try getting quotes with and without extra drivers who live at your address and who have good driving records and have vehicles of their own.

13. Drive your car less - or more!

  

If you have a classic 1960’s MG “B” in the garage and only drive it on sunny days, then you probably cover only a few hundred miles a year. If so if the car’s annual mileage is low, tell your insurers and you’ll get a cheaper premiums. But if you drive from London to Edinburgh each weekend to see your mum, then expect the insurance company to take account of the high mileage and bump up your premium.

But nothing’s simple! If you are a very low mileage driver driving less than, say, 2,000 miles per year, some insurers become concerned that you may not be driving enough to maintain your driving skills. They then increase your premium accordingly. (This won’t apply to a classic-car policy.)

Many people consider 10,000 miles a year to be about average, but many do a lot less than that. So keep track of the number of miles you drive each year as you may find you're able to reduce the mileage you provide to your insurers and this may save you money.

14. Married

  

Believe it or not but insurers have found that if you're married you're more responsible! They've also found that if you're both named drivers you're even more responsible!

So even if your spouse doesn't intend to use the car, get two quotes: one for you, and one for both of you.

15. Pass the Pass Plus course

  

The Pass Plus course is for young or new drivers. The aims of the course are:

o    gain valuable driving experience safely

o    build on your existing skills and knowledge
 
o    reduce the risk of you being involved a road crash

o    boost your driving confidence

Fees for the Pass Plus course vary depending on where you live and the instructor or driving school you choose. Please bear in mind that the course will take at least six hours, all of which need to be taken after passing your basic driving test. If more sessions are needed to successfully complete the course, this will add to the cost.

So you could end up paying pay around £150 for this extra training. However, research from the Association of British Insurers (ABI) shows that drivers who have completed the Pass Plus course have a 19% chance of being involved in an accident during their first year of driving, but drivers who haven't done taken the course have only a slightly higher chance, at 20%.

On this basis, it's possible that insurers will stop offering significant Pass Plus discounts.

However, at the moment some insurers continue to offer 20% discounts (down from 30% a few years ago) to first-year drivers who have taken the Pass Plus course.

Now there are two things to bear in mind. Firstly, the cost of the course will offset much of the savings you might make on your insurance. Secondly, some insurers may offer cheaper car insurance quotes even without Pass Plus course discount. So check out the comparison quotes carefully.

You can also compare insurance quotes with and without the Pass Plus course. You can then see if you're likely to make good savings.

Remember that if you get insurance quotes and then take a few months to complete the course, your insurance details may have changed; if you've moved address, decided to buy a different car or if you've had a birthday, you’ll need totally new quotes.

We understand that some local councils still award grants on a first-come, first-served basis for Pass Plus students. You should check this out. Ask your driving instructor about it.

Although some people still make big savings by having this driving qualification some insurers will not take it into account. Hence this tip gets just 2 ticks.

16. Get a sensible job

 

If your name is Lewis Hamilton and your application says your occupation is 'racing driver', you can expect to see a few noughts added to the end of your premium. If you’re a journalist or a TV presenter you’re also likely to be seen as a high risk. (They're seen as heavy drinkers for some reason!) Become a supply teacher and your insurance premium will fall.

17. Grow old fast!

It’s a fact that once you reach the ripe old age of 25 your car insurance will be cheaper. Insurers believe that by then you’ve lost your youthful exuberance that leads so many younger drivers into accidents. It’s a fact that their research shows there is a significant reduction in accidents among the over 25s.

In the morning you might look in the mirror and convince yourself that you can pass for 25 when you’re actually 18, but if you lie about your age on your insurance application and subsequently have an accident, you’re in real danger of finding yourself with no insurance cover at all and ending up on the insurance industry’s black list!

18. Where you live

The general rule if you live in a built up area in the centre of a large city your premium will be sky high. If you live in leafy suburbia, you’ll pay considerably less, and if your home is on the Isle of Mull it will probably cost you next to nothing!

You might be the safest driver in the universe, never have had an accident, never been caught speeding, or have never been the victim of car crime, but if you live in the 'wrong' post code area your premium will be loaded.

But be warned. Don't be tempted to use your parents' address in Mull to insure the Lamborghini that you actually keep at your pad in Mayfair. Your premium will be much cheaper but if you claim and the insurance company finds out what you’ve done, they’ll declare your insurance invalid. Fibbing about where the car is kept is one of the commonest tricks and your insurer is always the lookout.

19. Don’t chose red!

 

Some insurance companies have identified that red cars are more likely to be involved in an accident. Therefore, premiums for red cars can be higher. Maybe it’s something to do with testosterone fuelled drivers putting their right-foot down.

Metallic paint is also more expensive, due to their higher repair costs and black cars are more likely to be involved in night time accidents. Conversely, white cars can attract cheaper premiums as the opposite is found to be true. We understand that at least one insurer has discovered that green cars are more likely to be involved in accidents if you live in the countryside. Perhaps it’s because they're camouflaged! You can't see the cars for the trees.

So boring white is best for car insurance purposes!

20. Homeowners

 

If you’re a homeowner you’ll often be charged a lower premiums on your car insurance as the insurance industry has found that homeowners have fewer accidents. Ensure you update your car insurance details if you buy a property.

21. Stop smoking!

 

Non-smokers can also get quoted cheaper rates. Again it’s to do with accident rates. It’s a surprise therefore, that's as far as we’re aware, no insurers take into account whether you have a mobile. Maybe it’s because driving and using a mobile without hands free is already an offence.

Anyway, it’s just yet another reason to give up cigarettes! (Will my wife please note!)

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