Running A Car - How to cut your insurance premium

24 May 2012

A car's insurance banding heavily influences the size of premiums, which according to the AA now average around £900 a year.

However, insurers do take other factors into account. If your car is in a high insurance group, you can cut the cost of cover by tightening up your security measures to reduce the risk of it being stolen. Fitting an approved alarm and immobiliser, such as a Thatcham 1 or Thatcham 2, should reduce your premiums.

Tuning your car, or adding items such as spoilers or aftermarket alloy wheels, will have the opposite effect.

More than half of all vehicle thefts occur at night. Keeping your car in a locked garage will help to protect it from thieves and vandals, and reduce your premium. If you don't have access to a garage, parking it on a driveway is better than leaving it on the street. if you have this option, mentioning this to your insurer should have a positive impact on your insurance quote.

Voluntarily limiting your mileage will also have a positive impact on your premium. The fewer miles you cover, the lower the statistical likelihood of you being involved in an accident. Don't be tempted to lie about your mileage, though, because this could invalidate your policy.

Driving carefully in general will reduce the cost of your cover, because motoring transgressions that put penalty points on your licence will also put pounds on your premium.

If you have a minor accident, it can be cheaper overall to pay for the repairs yourself, because building up a no-claims discount could halve your premiums after five years. Agreeing to increase your excess – the amount you pay towards any claim, typically around £150 – is another useful money-saving tip that financially rewards careful drivers, because most insurers respond with a lower premium.

Completing an advanced driving course such as the Driving Standards Agency's Pass Plus (aimed at newly qualified drivers), or an Institute of Advanced Motorists course, could reduce your premium by up to 35%.

In 'pay-as-you-go' insurance, a tracking device or ‘black box' monitors your driving habits and allows you to pay only for the insurance you need. This suits low-mileage drivers, those who don't drive late at night. This is type of insurance is especially beneficial to young drivers who would otherwise be priced out of standard insurance.

It's a fact that customer loyalty has little or no value in modern life. That's certainly the case with motor insurance. Rather than simply accepting a renewal quote, be ruthless. Minimise your costs by shopping around for the best possible deal.

Around 7.3 million UK drivers simply stay with their current insurance provider when their policy comes up for renewal – even though 90% of drivers know they'll probably get a better deal elsewhere. No-claims discounts are usually transferable between insurers, so switching your cover to another provider is not something that would normally penalise you.

A good place to start your search is a comparison website. One such site, Moneysupermarket, suggests that average savings of around £375 are possible by using this kind of website.

Interest charges and admin fees mean that paying up front will be cheaper than opting for tempting monthly payment plans offered by most insurers.

Next: How to make a car insurance claim >>

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