How to cut your car insurance costs

Insurance can make up a huge proportion of your car costs - especially if you're young. These tips could help you slash your premium, though

John Evans
Apr 20, 2020

There are so many big decisions to make when choosing a car - from how much to spend to whether you should go for petrol or diesel - that some of the other considerations slip through the net. And it's only once you've already committed to a purchase that you might uncover just how much you need think about.

One of these decisions is car insurance. Pick the wrong model and you could be hundreds, if not thousands of pounds out of pocket. And since you might end up running the car for three or four years with a typical finance deal, this could cost you a huge amount every single year.

Since most drivers only look into insurance once they're about to pick up their new car, choosing which insurance policy to go with and paying up is often rushed, with many drivers left stressed and thinking that they may have been ripped off. This can seriously take the shine off the excitment of getting a new car. It doesn’t have to be this way, though.

First off, you can search for cars that sit in a low insurance group in the first place with BuyaCar, so you can be confident your next car won't cost any more than absolutely necessary to insure. Click here to search for used cars in the lowest insurance groups. But there are many other tricks to slash your premium, whether you're looking to change your car or already have one. Keep reading to see how you can reduce your car insurance bills.

23 ways to cut your car insurance costs

Picking the right car is a quick way to save money on your insurance. Once you have the car sorted, there are dozens of ways you can slash the cost of insurance, from getting a number of quotes to sorting out the policy ahead of time.

Follow these tips and it's perfectly possible to slash an initial quote of more than £2,000 down to less than £800. Just remember to be honest when getting car insurance quotes. Blatant lying could see your policy cancelled and you left with no cover at all. Keep reading for our top 23 tips for shrinking the cost of your car insurance policy:

Shop around for car insurance

This is the best route to cheaper insurance. Use several comparison websites to see which one gives you the lowest quote or best cover for the money and use that quote as a benchmark to beat. And don't forget about insurers that don't pay to appear on comparison sites. The logic goes that if they don't have to shell out money to appear in searches, they should be able to pass on savings if you go direct to them.

Make sure to get like-for-like quotes to see which is the best value policy, with the same excess, contract length, mileage amount etc. Typically, car insurance policies last for a year, though some sneaky insurers offer 10 months' cover. These policies may be cheaper, but you're getting cover for a 17% shorter period, so they will need to cost at least 17% less to work out as better value.

Be prepared to get the lowest car insurance premium

Since the best way to get a low insurance quote is not only to shop around for your policy, but to get quotes for different cars to see which is cheapest to insure, you'll want to save your details on your phone and in the site that gives you the best quotes.

This means you'll be able to get multiple quotes without spending hours typing out your details every time, quickly helping you to see which car and which insurance company gives you the best price. Yes, this might take a little time, but save your details and it shouldn't prove too taxing.

Buy a car in a low insurance group

Cars are rated by insurers according to the level of risk they represent. There are 50 insurance groups with the least risky cars falling into group 1 and the highest risk in group 50.

So, if you want the lowest insurance premium, focus on cars in a low insurance group. However, it's best not to get too hung up about differences of a couple of groups between cars as occasionally a car in a higher group might cost less to insure than another in a lower group. If in doubt, remember to shop around and you'll see which car is available with the best value insurance.

It's important to do specific research into individual models, too. It's not as simple as grouping cars according to value or engine size. There are other variables involved in insurance costs that aren't always immediately obvious such as Euro NCAP safety ratings and levels of driver assistance.

Buy car insurance ahead of time

Fail to sort out your car insurance until the last minute and you could be faced with rip-off premiums with no time to do anything about it. Sorting out your next policy ahead of time, however, not only gives you a chance to track down the best value policy, but buying cover a couple of weeks in advance could actually secure you a cheaper premium - even with the same insurer.

This is especially useful when renewing. Look to buy cover on the day you need it, however, and like buying an airline seat, the premium may be substantially higher.

Bide your time: choose a low-insurance car now

Fact: young drivers with little driving experience pay more for their insurance than older ones with more years behind the wheel. So be patient. Yes, you may not be able to get into the most exciting car on day one, but shop around and you can get a decent car with low insurance premiums now if you do you homework.

Plus, what you save on not paying huge insurance premiums now, you can put towards something more sporty or more upmarket in a couple of years.

Be feature-wise for lower car insurance premiums

Not all 1.0-litre Ford Fiestas cost the same to insure. Even two outwardly identical models can cost a different amount to insure due to the optional kit that has - or hasn't - been fitted. While some equipment - like alarms and automatic emergency braking (AEB) - can cut your premium, other features, such as aftermarket alloy wheels or a power-boosting 'remap' might dramatically hike up your insurance costs.

For the lowest premiums, focus on cars that have an alarm and immobiliser fitted - preferably one that is approved by Thatcham, the insurance industry's research centre - and certain safety kit, such as AEB, which can reduce the chance of you having a crash as it automatically slams the brakes on if it senses you're about to hit something. Similarly, you'll want to avoid models with special features that might cost more to repair or make the car more appealing to thieves.

Certain features such as having an automatic gearbox, can also cut or increase insurance premiums, depending on the car. So, if you're open to having a manual or automatic gearbox, for instance, why not get insurance quotes for both to see if one is dramatically cheaper to insure, or if a diesel version costs less to cover than a petrol, for instance? If in doubt, getting like-for-like quotes should help you work out which way to go.

Opt for black box car insurance to cut your premiums

Black box car insurance monitors your driving - how fast you drive, when you travel and how many miles you cover, and insurers use this data to gauge whether you're a high-risk driver or not. The more smoothly you drive, the safer the insurer will think you are, and in time they should lower your insurance premium to reflect this. This makes an especially big difference for young or inexperienced drivers, who may not have much - if any - no claims bonus to prove they're safe behind the wheel.

Blast around at full speed everywhere, swerve around corners and brake violently up to every junction, however, and you're likely to face a higher insurance bill next time around. The worst case scenario is that your insurer considers you dangerous and cancels your policy, so make sure you understand how black box insurance works before signing up.

Cheap car insurance: choose a multi-car policy

Multi-car insurance policies offer lower premiums when you get insurance for additional cars. So if you insure your car with the same provider as your partner or your parents, you could end up paying less than if you bought a standalone policy.

In most cases it doesn't matter when the renewal date is and you can often expect to save around 10% compared with a standard policy. Do bear in mind, however, that other insurers may still offer notably cheaper cover, so it's still worth shopping around.

Park safely: check prices for parking on street, driveway or garage

Where you keep your car at night and weekends can affect the cost of your insurance. A locked garage at your property might sound like the safest place - which you'd think would mean the lowest premiums - however, it can be cheaper to park on the driveway. Strange but true.

So if you have the choice of where you park, try getting quotes for keeping your car in the garage or the driveway to see which proves cheaper. The insurer will also want to know where you keep the car during the day. If you have the choice between driving to work and leaving it somewhere safe or keeping it at home, it's worth getting quotes for both to see if there's a difference, too.

Multiple cars at home – partner or relatives' cars

You may think the presence of other cars at your property would increase your premium but it can actually have the opposite effect, as having more cars around could potentially mean you use yours less.

Driving another car can also help reduce your premium, too, so if you own or are insured on another vehicle, this could have a positive impact on your insurance cost.

Car insurance: know your cover

Comprehensive cover is exactly that - protecting your car whether you damage it or if another driver does - and it's the best type to choose. You may think that a more thorough policy would cost much more than basic third party, fire and theft cover - which doesn't cover your car if you crash it - but that's often not true. Fully comprehensive insurance can prove cheaper than third party fire and theft cover.

Do also think about how you use your car. If you don’t commute to work, you may be able to save money by choosing social, domestic and pleasure (SDP) cover rather than (SDP+C), which includes commuting to work. Meanwhile, if you’re only ever based at one workplace, be careful not to select additional business cover, as this is likely to bump up the price.

Reduce your mileage to cut your car insurance premium

You need to declare your approximate annual mileage when you apply for car insurance. As you'd expect, the greater distance you plan to drive, the higher your premium is likely to be, as there's a greater chance of you being involved in a crash.

Therefore, you can save money by choosing a low mileage band but you need to be truthful because in the event of a claim, the car's mileage could be checked on the car’s service and MOT records. If you've covered vastly more than the mileage you've claimed, the insurer may refuse to cover you.

Move home: safer streets mean cheaper car insurance

This might be a bit extreme, but where you live dramatically affects the cost of your car insurance. Even nearby streets may prove notably cheaper, so if you don't want to compromise on the car you drive, living in the lowest risk area will reduce your premium.

You can check different areas' crime records online at police.uk and ukcrimestats.com. Pay particular attention to things such as vehicle crime and vandalism, as these are particularly likely to affect your car insurance. It’s worth looking into this before moving house in the future to ensure you don't end up in a particularly high risk area to avoid steep premiums.

Be job smart: similar jobs may come with very different insurance premiums

Believe it or not, your job affects the risk you pose to your car insurer, so they charge you according to the likelihood of you making a claim and the likely size of that claim. This means that it's worth thinking about the different ways to accurately describe your job and seeing whether using one of these reduces your premium.

If you work on the desk serving customers in a bank, for instance, you could legitimately describe your job as 'bank clerk' or 'cashier', yet you could potentially be charged twice as much for car insurance if you use the first title rather than the second. Therefore, get like-for-like quotes using different job titles to see if one proves cheaper than any of the others.

You can’t lie or misrepresent your role because that would be classed as fraud but you are free to choose any title that accurately reflects your job role.

Don't stick to one insurer: be insurer-wise

You’d think every insurer wants your business but in fact, most actively target certain groups by offering favourable premiums and vice versa. It’s another reason to shop around.

If your parents have always used a certain insurer because that company has given them low premiums as they've got older, that company may not offer good value premiums for you. Getting quotes from different companies will quickly help you to find the best value option for your circumstances.

Share the risk: add a responsible named driver

You may not think that adding an additional driver to your insurance would have a positive effect on your premium. However, having an older, named person with a good driving record on your policy could help to reduce your premium.

You’re still the main driver, as the policy is in your name, but because they’re on the policy and potentially sharing some of the driving - and thus potentially reducing some of the risk - they could reduce your premium.

Avoid adding high-risk named drivers to your car insurance

Just as having an older, named driver with a good record on your policy can help reduce your premium, having a driver who has made a number of car insurance claims or is simply younger and has less driving experience, could increase it.

Once you've found a good quote, try adding a named driver to see what impact they have on your premium. If they lower the premium keep them on, but if they hike up the price and don't need to drive the car, remove them.

Set a larger voluntary excess for lower car insurance

This is the sum you have to pay when making an insurance claim, before the insurer pays out. The higher the voluntary excess you set, the lower your premium should be - in theory. Expect a £500 excess to reduce the premium compared with a £250 one, but go wild with a £1,000 excess and the opposite may happen. Like-for-like quotes with different excesses will show you the way to go.

It should be pretty simple to gauge what impact the excess has on the premium as you should be able to adjust the excess in an online quote and watch as the premium is recalculated. However, don’t overdo it because the point of insurance is for the insurer to pay out and not you. If you agree to a £1,000 excess, for instance, you'd have to shell out the first £1,000 of any claim.

Consider car insurance add-ons - and which ones you don't need

Cutting out extras such as a hire car when yours is being repaired, legal cover so you can claim for uninsured losses, protected no-claims bonus cover and breakdown cover will save you money. However, the first two could be very handy while the third is debatable.

Before you sign up for any extras, make sure you're not already paying for this elsewhere - for instance, some bank accounts include extras such as breakdown cover, while some car manufacturers bundle it in for the first three years, with most new cars including cover for the first year. If you don't have cover, meanwhile, it's worth shopping around to see if you can get it cheaper elsewhere than simply adding it to your insurance premium.

Keep your speed down - avoid penalty points for cheaper insurance

Your driving history has a direct bearing on your insurance premiums. If you have a record of trashing your cars and making £10,000+ insurance claims, you can expect your premium to rocket. Similarly, even if you've never made a claim, if you pick up points on your licence for speeding every year, you can expect a hike in the cost of your insurance.

So, it's worth taking it easy when behind the wheel to ensure it doesn't cost you more and more to insure your car. Insurers now consider penalties going back as long as five years, rather than three or four, as before. This means that a speeding fine now could cost you every year for the next five years. So dropping your speed a little could end up saving you thousands.

Threaten to leave your car insurer

If you are not happy with your existing insurer’s quote, tell them you’re thinking of taking your business elsewhere. It’s amazing what a bit of determined haggling can achieve.

The price a company quotes is not fixed, so even if you are happy with the premium, phoning up and saying you've found a cheaper quote elsewhere could potentially see them slash hundreds from the price.

Pay annually for the cheapest car insurance

If you can afford to, you’ll save money paying for your premium in one lump sum rather than monthly - as that will see you charged interest. Unlike the amount of interest you might pay for car finance or a loan - which on a used car is typically around 7% to 15% for those with a reasonable credit score - you could easily be charged 40% APR with insurance.

High interest charges could dramatically increase the cost of your premium, with a large proportion of the cost being interest. If you do need to pay monthly, don't compare annual premium costs; look at specific monthly figures, instead, as insurers charge vastly different interest rates. This means that a company that looks expensive for annual insurance could prove the cheapest when paying monthly.

Finally, it’s not all about saving money

Of course, it’s important to watch the pennies when choosing car insurance, but make sure you know what you're getting for your money. It's worth having a quick look at customer reviews before deciding upon an insurer to make sure that if you do need to make a claim, the company can be trusted to help you.

One insurer may prove a little cheaper than another, but if its service level is much worse, it could be a wise move to pay a little more for greater peace of mind, should you need to make a claim.

 

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