Car insurance masterclass - Saving on car insurance costs

Soaring premiums mean that the average motorist now pays around £900 a year for car insurance, according to research from the AA.

Young drivers pay even more, with some annual premiums coming in at more than £2000.

There are ways to keep your insurance costs down, though.

Choose your car with care
Insurers divide cars into 50 groups according to various factors including their engine size and the likely cost of repairs. The higher the insurance group, the higher the premium. If you are thinking about buying a new car, it pays to check the make and model’s rating before taking the plunge. Find out car insurance groups at www.thatcham.org.

Keep it simple and secure
You may want to stand out from the crowd, but modifications such as spoilers or fancy alloys can push your premiums skywards.

Fitting your car with an approved alarm and immobilizer, on the other hand, can help to keep costs down.

Limit your mileage
If you only tend to drive your car on local roads at the weekend, you are statistically less likely to be involved in an accident than someone who takes a busy motorway every day. So why not see if your low mileage could result in a lower premium?

The MoneySupermarket website features a useful calculator to help you work out how many miles you drive each year.

However, don’t be tempted to lie about your mileage to keep costs down as this could invalidate your policy and result in any claims being refused.

Choose pay-as-you-go insurance
Motorists who drive relatively little, or who are willing to avoid driving at night, for example, could benefit from choosing pay-as-you-go insurance over a standard policy.

These policies involve your insurer fitting a tracking device or ‘black box’ to your car to monitor your driving habits. Then you pay only for the insurance you need.

Cover of this kind can be particularly useful for young drivers who cannot afford standard insurance.

Obey the rules of the road
If you are caught speeding, running a red light or driving dangerously then you could get points on your licence, which will foruce up your insurance premium.

Driving with care can therefore cut the cost of your cover – not to mention your fuel bill.

Drivers who commit serious traffic offences may find it hard to find insurance at any price.

Increase your excess
Most policies carry a standard compulsory excess of about £150, which is the amount you must pay towards any claim.

If you agree to pay a larger excess, however, most insurers will reward you with a lower premium.

Just make sure that you can afford the higher amount should you have to make a claim.

Avoid making small claims
The no-claims discount offered by insurers can knock more than 50% off your premium if your stay claim-free for five consecutive years.

If you have a minor accident, it can work out cheaper to pay for the repairs yourself and keep your no-claims discount going as a result.

Pay upfront
Many insurers offer the option of spreading the cost of your policy over the 12-month term.

However, while monthly instalments may be convenient, they are also usually more expensive due to the interest charges and admin fees applied on top of the original premium.

Take an advanced driving course
The Driving Standards Agency’s Pass Plus course is aimed at newly qualified drivers and covers various aspects of motoring, including motorway driving.

If you complete the course, you could earn a premium reduction of up to 35%. The Institute of Advanced Motorists also runs driving courses that insurers may take into account when pricing your policy.

Search online for the best deal
It’s tempting to stick with your existing insurer when your policy comes up for renewal, but most companies do not reward loyalty.

So, shop around for quotes on MoneySupermarket to see if you can find a better offer. The average car insurance customer saves more than £360 by using the site.

This article has been researched and written by whatcar.com's car insurance partner, MoneySupermarket