How to save money on your car insurance premium

06/05/10

Good news, after months of steady increases, the cost of insurance has taken a breather in the first quarter of this year. The cost of insuring your car from January-March actually fell by 3.2 per cent, but experts at the AA don’t expect this to last, and believe that costs will resume their upward climb later in the year.

The latest rises came after years in which premium costs only showed tiny increases. So, why has this happened? There are a number of causes, one of them is the increase in personal injury claims – drivers are increasingly turning to ‘no win no fee’ compensation lawyers. Bad weather has also affected premiums – particularly with the ‘big freeze’ causing more accidents on Britain’s roads this year.

There are smaller factors which can also affect insurance policies, for example, the rising cost of windscreens - as more adaptations become available on the market, insurance companies have to raise their premiums to cover the cost of replacing more bespoke styles.

So what can you do to keep rises to a minimum? Although there are certain insurance-related factors motorists have no control over such as age, sex and postal code, there are still things you can do to help. Below are some top tips from motors.co.uk:

Choose wisely
Your choice of car will affect your car insurance cost. For example, if you’ve recently passed your test, and are under 25 years old, choosing a car with a smaller engine is preferable - and if you can pick a car with lower fuel consumption and road tax to boot, you’ll be looking at a much cheaper premium. Body modifications can also increase premiums so avoid making unnecessary ones if you don’t need to.

Shop around
It’s really important to shop around before you purchase – visit comparison websites that allow you to compare and contrast a variety of insurance deals to find the best one to suit your specific requirements. Figures from the Association of British Insurers (ABI) have shown that you can save 35 per cent on your premium by comparing just five car insurance providers, so it’s well worth taking the time out to do this.
 
Update your insurer
It’s vitally important to always update your insurer with any changes to your circumstances - if you’ve moved house recently, changed jobs, or increased your mileage requirements - all of these factors can affect your insurance policy and could save you money. Keeping your details up to date will also reduce potential problems when it comes to making a claim.

Drive carefully
Having points on your licence increases your insurance premium, and although the points stay on your licence for 4 years, insurers are able to check for any convictions during the past five years. A speeding conviction can affect a premium by around 5 per cent, any more convictions could amount to 20 per cent more, so it well worth sticking to the road rules.
 
Choose higher excess
Choosing a policy with a higher excess will help reduce costs. Some motorists consider paying anything lower than £500 is simply not worth it when you consider that it will increase your future insurance costs and invalidate or decrease your no-claims bonuses. That’s why some companies offer an excess of up to £1000, reducing your annual policy even further.
 
Be secure
Installing an alarm or an immobiliser can reduce your premium significantly, especially if the alarm is approved by Thatcham – the Motor Insurance Research Repair Centre. Keeping a car in a garage or off the road will also significantly cut costs.

Buy online
You can usually benefit from a cheaper policy if you purchase online – some insurers might offer you an incentive such as a 10 per cent discount or a month’s free cover. Purchasing the full insurance amount upfront as opposed to paying monthly instalments will also help.
 
Pass-Plus
Younger drivers can benefit from cheaper insurance premiums if they opt to take the Government-sponsored Pass-Plus training scheme aimed at helping new motorists become more confident on the road. You have to take the course within 12 months of passing your test, and once you have obtained the certificate, some insurers may then lower the price of your premium.