How to get cheaper UK car insurance
How to reduce your vehicle insurance costs by a third.
Car insurance prices have risen by over 52% in the last 10 years.
Confused.com have predicted that the average UK car insurance premium could rise from its current average cost of £767 a year (2017) to over £1000 per year in 2018 due to changes in the personal injury discount rate and increases in insurance premium tax.
However, there are a range of options that will enable you to reduce the cost of your current vehicle insurance by over a third.
The 4 step method for reducing your vehicle insurance costs is described below. By following this simple method you should considerably reduce the cost of your vehicle insurance and offset the debilitating rise in vehicle insurance premiums.
Step 1. Reduce your risk to reduce your insurance.
Vehicle insurance providers base your insurance premiums on the probably or degree of risk that you will cost them money. If you are a good driver the risk of accidents, damages and costs are reduced. If you drive recklessly and with scant regard for the well being of other road users, your chances of accident and injury are increased and your insurance premiums will be higher than a more considerate or experienced driver.
There are many ways that you can reduce the risk of claiming on a vehicle insurance policy and if you reduce your risk of making a claim you can lower your insurance costs.
- Fitting an alarm or immobilizer to your vehicle, parking it on a drive or in a garage will reduce your insurance costs.
- Drive within the law. One speeding conviction will raise the cost of your insurance premium by 10%. More than one conviction and your insurance costs could increase by up to 23%, and insurers will check back over the last 5 years. More serious offenses can have devastating effects on your insurance. If you are caught driving whilst talking on your mobile phone your vehicle insurance costs can double.
- Make sure your photo card driving license is valid. If it is over 10 years old it has to be replaced or you risk a fine and higher insurance costs.
- Don’t assume that third party or third party fire and theft is cheaper than fully comprehensive cover, sometimes it is not. Third party cover should be considered if your vehicle is valued at £1000 or less, you are aged under 25, you live in a high risk area or you do not have any no-claims’ bonus. Always compare the cost of third party cover against the cost of fully comprehensive cover.
- Adding a second driver to your policy can reduce your insurance costs, but only if the driver has a good driving record or is in a lower risk category than yourself. Never put yourself down as the main driver of a vehicle someone else drives. Not only is this now illegal but it invalidates your car insurance.
- Don’t overestimate your annual mileage. The optimum mileage is probably around 5000 miles a year. Don’t drive on business trips and declare the mileage as a personal trip; it invalidates your insurance.
- Always tell your insurer the truth. Not declaring previous convictions, accidents, high mileage, modifications to your vehicle and other adverse circumstances can not only invalidate your insurance but make it difficult or expensive to get insurance at all. You need to inform your insurers of any change of address, occupation, unemployment and even marital status – they all affect your premiums.
- Paying a higher excess, (the amount of a claim you pay yourself), can lower your premiums. The downside is that you can end up paying a lot of money should you claim on your insurance.
- Consider protecting your no claims’ bonus. I have never claimed on vehicle insurance and I pay just £17.99 a month for third party, fire and theft insurance! It often pays to not claim for a minor accident because claiming can lose you 2 years no claim bonus. Even if you do not claim you should declare the accident or damage. If you have previously driven a company vehicle and you change to private insurance you will find it difficult to get your insurer to credit you any no claims’ bonus for the years you drove a company vehicle. However, if you telephone your potential vehicle insurers many will offer you an introductory bonus for switching from business to private insurance.
- Paying your premiums by installment can be prohibitively expensive. Some insurers charge an APR of up to 37.9% for paying by installment. If you can’t pay in full use a 0% credit card. I got a free overdraft!
- Your insurance can jump five fold if you are unemployed. If you are not seeking work and are not receiving benefits relating to seeking employment you can put ‘homemaker’ on your insurance application and your premiums will be reduced. Do not do this if you are seeking work as it is classified as fraud.
- NEVER automatically renew your insurance with your current provider. ALWAYS look for the cheapest and most relevant policy every time your vehicle insurance comes up for renewal. Many insurers add insult to injury by charging you a renewal fee to stay with them – no way!
- Adding a temporary driver to your policy can be costly. Put them down as a named driver when you take out your policy or add the driver temporarily to your policy. Either way it may be expensive. Temporary car insurance may be a better option. Try www.tempcover.com, www.confused.com or the RAC.
- If you travel outside the UK, but within the EU, your vehicle insurance will automatically be downgraded to third party, even if you are insured as fully comprehensive in the UK. To prevent this, contact your insurance company and tell them when you are out of the UK and where and on what dates you are traveling. You will have to pay a premium to increase your vehicle cover abroad, and don’t forget to do the same for your breakdown cover.
- If you are a careful driver, drive mainly at ‘off peak’ times and you do a low mileage then consider having a tracker device fitted to your vehicle. The device records when you drive and how you drive. The more you drive the more you pay. Check them out on the following websites: www.insurethebox.com, www.ikubeinsurance.com, www.drivelikeagirl.com and www.coverbox.co.uk. The first three sites are ideal for the younger, safe driver who seldom drives between 11pm and 5am.
- Try a ‘Pay how you drive’ policy. A GPS or tracking device is fixed to your vehicle. The device monitors your driving ability and skill. The better you’re driving the less you pay. Look them up on www.theaa.com and click on ‘Telematic car insurance for new drivers’. Aviva offers a free driving app that can save you up to 20% on your insurance premium.
- If you have a poor driving record or live in an area classified as high risk you could find it difficult to obtain cheep insurance or any insurance at all. Your best bet would be to contact a local insurance broker. Find one through the British Insurance Brokers’ Association website at www.biba.org.uk.
- Need temporary vehicle insurance? Try www.tempcover.com, www.insuredaily.co.uk, www.confused.com/car-insurance/temporary-mse and www.rac.co.uk/insurance/day-insurance.
- If you are a young driver adding a second, responsible and safe driver to your policy could lower your premiums, don’t modify your vehicle without informing your insurance company – it could invalidate your policy, compare multi car policy’s if you live with your parents and remember that a powerful and expensive car will cost you a fortune to insure. You could also try a specialist young driver’s insurance broker, such as Swinton’s Young Drivers. Endsleigh, Only Young Drivers, Thames City, Adrian Flux and A Plan brokers are worth contacting. Endsleigh and Provisional Marmalade offer specific learner driver policies. Additional driver training, after passing your test, can often lower premiums.
- If you drive a company vehicle, but you are responsible for paying the insurance, try a specialist broker, such as Endsleigh, Swinton, Footman James, Adrian Flux, Giles Insurance and Alan Boswell. www.lv.com offer company car insurance online. The rest you will have to telephone.
- Some insurers will lower your premiums if you have taken an Institute of Advanced Motorists driving course – see www.iam.org.uk.
- Applying as a new customer, to renew your insurance with your current provider, will often get you a cheaper premium than auto renewing.
Your car must be insured, even if it is not being driven – unless you apply for a SORN (Statutory Off-Road Notification).
Do not assume that you can drive other people’s vehicles if you or the other driver has fully comprehensive cover. Often you cannot. Check on the individual policy.
You should report a car accident to your insurers, even if you pay for the damage yourself.
Step 2. Compare insurance quotes using comparison websites.
Your next step is to log onto several comparison websites to obtain quotes for your car insurance. Note that not all comparison sites compare the same insurance provider’s and that some insurance providers don’t use comparison sites – you need to contact them directly for a quote.
You need to ensure that the comparison sites quotes and the insurance provider’s quotes match up. Do this by logging onto the insurance provider’s website and obtain a quote direct from the insurer. I once obtained an insurance quote of around £650 from a comparison site only to find the quote nearly doubled when I contacted the insurer directly.
The more comparison sites you use the greater your chances of obtaining the cheapest quote. Each comparison site search should take no more than 5 to 6 minutes.
Your chances of obtaining the cheapest quote are:
Using just www.gocompare.com – 74% chance of obtaining the cheapest quote.
Using Gocompare and Google – 87% chance of obtaining the cheapest quote.
Gocompare, Google plus www.moneysupermarket.com and your chance of obtaining the cheapest quote rises to 94%.
If you add www.confused.com you stand a 97% chance of obtaining the cheapest quote.
So the more insurance comparison sites you use the greater your chances of obtaining the cheapest possible quote.
Once you have obtained a quote from a comparison site you must check that quote using the insurance provider’s own website. Check that the quotes are similar, not just prices but add-ons like hire car provision, windscreen cover, legal cover, named drivers and protected no-claims’ bonus. Check everything.
Next, try amending details of the policy and see how this affects your quote. Adding an experienced named driver, adjusting the excess or opting for third party, fire and theft influences the price of your insurance. There is an excellent tool for comparing insurance details on www.find.co.uk/insurance/motor/compare-car.
Let me now take you through a worked example.
Steve is a 24-year old single male. He drives a 10-year old Vauxhall Vectra CDT 5 door hatchbacks 1910cc diesel, valued at £4500. Steve passed his driving test 4 years ago. He did not own his own vehicle for the first 18 months after passing his test; he was a named driver on his father’s insurance. Since he only used his father’s vehicle occasionally in the evenings and week-end and was not the main driver this was perfectly legal. He therefore has 2 years no-claims’ bonus, (being a named driver on someone else’s insurance does not qualify you for a no-claims’ discount). He has one speeding conviction and has had one minor traffic collision.
Steve logs onto the ‘money supermarket’ website.
He clicks onto ‘motoring’ at the top of the page.
He then clicks on ‘car insurance’.
Then onto ‘Get a new quote’.
He is then asked to enter the registration number of his vehicle.
He clicks the ‘yes’ button and enters his car registration. If he did not know his car registration he would have clicked the ‘no’ button.
Details of his vehicle now appear on the screen. He checks the details and confirms them as correct by clicking on the ‘confirm’ button.
If any of the vehicle detail were incorrect he would have clicked on the ‘I want to change these details’ prompt.
Asked if the car has been modified he clicks ‘no’.
He enters the month and year he started driving the vehicle.
He clicks that he is ‘the registered keeper and owner of the vehicle’.
When asked ‘What do you use the car for’, he indicates ‘Social and communicating to a single place of work/study’.
When asked ‘How many miles does the car cover in a year’, he estimates 5000 miles.
He then states that the vehicle is parked overnight on a driveway.
Steve has a little difficulty answering the next question, ‘Where is the car normally kept during the day’. Steve is studying at university and his car is in the university car park or on the street. He opts for ‘Office/Factory car park’.
For ‘The total number of cars in your household’ he enters 2 – his own and his father’s.
He then clicks onto the ‘next step’ icon.
Next he is prompted to answer questions about himself; his name, gender, marital status, date of birth, number of children, what he does for a living – he enters ‘student’. Since he works part time to supplement his student grant he clicks ‘Yes’ when asked if he as an additional job. He describes the job – ‘waiter’.
He then enters how long he has lived in the UK.
Then he enters his address, indicates that he is not the homeowner and gives his phone number.
When asked if he has any motor insurance claims’ or incidents in the last 5 years he ticks ‘yes’ and gives the details.
Asked for details of any motoring offenses he clicks ‘Yes’ and gives the relevant details.
There were no non motor related offenses. He notes his speeding conviction, amount of fine and number of penalty points incurred (3).
He indicates when he wants his insurance to start, the type of driving license he holds and how long he has held it, how many years no claims’ bonus he holds, details of any medical conditions, if he has been declined car insurance, if he drives any other vehicle and how he would prefer to pay for his car insurance.
Asked if he would like to add an additional driver he declines.
He then enters the email address to be used for receiving his quotes.
After entering his password Steve can now access his insurance quotes.
Prior to obtaining a quote from a comparison site, make sure that you have the relevant information. In particular; your vehicle registration, driving license details, details of any motoring convictions, fines or charges and details of any accidents, collisions or damage to your motor vehicle.
Steve checks his email and notes that the cheapest quote is £925.15, (£1013.93 if paid monthly), from Drive Like a Girl. He also notes that the most expensive cover costs £3830.76, from AA Plus Legal. Steve decides that in addition to comprehensive cover he also requires legal cover, courtesy car and windscreen cover. Since Drive Like a Girl does not offer legal cover he searches the list for the cheapest insurance that meets his needs. The cheapest quote that meets his needs is Tesco Bank Box. This insurer offers windscreen and legal cover plus a courtesy vehicle and therefore meets Steve’s basic needs. The cost is £1040.10, (£1139.92 if paid monthly).
Steve now compares and contrasts this insurance with his current providers (Admiral), renewal quote.
Annual cost Monthly cost Monthly payment Excess
£2094.56 £2932.35 £244.39 x 1 + £344.36 x 11 £400
£1040.10 £1139.92 £208.02 x 1 + £93.19 x 100 £550
Steve checks that the information on the comparison website and the Tesco Bank Box website are the same. The information matches.
Steve decides to check two more comparison websites; Go Compare and Confused.com.
If Steve opts for Third Party, Fire and Theft cover his cheapest quote is £622.93, (£712.88 if paid in installments). However, this insurance does not provide windscreen cover or include courtesy car provision. Comparable cover to Tesco Bank Box is quoted at £869.55, (£980.39 if paid by installments).
Steve decides to stick with the Tesco Bank Box comprehensive cover quote. If he makes a one off payment he will save a massive £1054.46 a year, compared to his Admiral insurance. If he pays monthly his annual saving will be £1792.43 and his monthly payments will reduce from £244.36 to £93.19, and with Tesco Bank Box he only makes 10 monthly payments against Admiral’s 11 monthly payments. A monthly saving of £151.17. He also pays a smaller deposit; £208.02 compared to £244.39. There is a small downside in that the excess is £150 more with the Tesco insurance and there are a couple of ‘add ones’ that were included in his Admiral insurance – personal accident and European cover – that are excluded from the Tesco insurance. However, Steve never used his Euro cover and he thinks that personal accident cover is a luxury he can do without.
Steve is so surprised by the saving he has achieved that he telephones Tesco Bank Box directly to check the quote. Although he mentions that Drive Like a Girl cover is marginally cheaper than the Tesco quote he decides not to pursue the matter, he believes that his savings are so substantial that he cannot believe his luck. The friendly and competent staff at the Tesco Bank Box calls center checks his detail and confirm the quote is correct. They offer several ‘add ones’ but Steve politely declines. However, they do point out to Steve that should he pay for his insurance with one annual payment he will save £1892.29 a year compared to his current Admiral insurance renewal quote, (£1040.10 compared to £2932.39). The additional cost of paying by installment is £837.79 for the Admiral insurance and £99.82 for Tesco Bank Box!
Steve decides that he can comfortably afford to pay an additional £99 a year to spread his cost. Had he simply renewed with Admiral he may well have opted to make one annual payment rather than pay an additional £837 a year.
Since Steve’s Student Grant is going into his bank account in a week’s time he asks if Tesco can hold his quote for a few days. They tell him they can do better than that; they can hold the quote for 30 days. If Steve’s credit score was good he could have applied for a 0% credit card to pay for his motor insurance.
Of the 86 quotes received from Moneysupermarket.com the most expensive was £3830.76, with no option to pay by installments. The cheapest was £925.15 with an option to pay by installment and several ‘add ones’ included. Steve’s quote of £1040.10 was the third lowest quote, but it meets all of his requirements. Although the least expensive and the most expensive insurance are not identical they still offer comprehensive cover, windscreen cover and offer a courtesy car. Often you end up paying for expensive ‘add ones’ you will never use.
There is a very simple truth; very often the ONLY DIFFERENCE between insurance products, mortgages, loans, credit cards, services, goods and even the food that you eat is the price you pay for it – nothing else. There is often very little if any difference between the expensive product and the cheaper product, except the price. If Steve had simply automatically renewed his insurance he would have paid nearly £2000 a year more and he would never have known!
Step 3. Check out any special deals or offers.
Some insurance provider’s offer special deals to induce you to sign up. Swinton’s are currently offering £40 cash back, (you need to enter a specific code) – phone them for details. The AA is offering free breakdown cover for a year. Be Wiser offer free RAC cover. Aviva offer discounts for applying online, plus multi car discounts. John Lewis Insurance offers a 10% discount and if you have Nat West home insurance cover you get a discount on your motor insurance. Sainsbury’s Bank are offering double Nectar points on shopping and fuel purchases plus a discount if you sign up for their comprehensive insurance cover online. Confused.com is offering 1000 Nectar points.
These deals do come and go, so check with individual insurance provider and brokers to see what deals are still being offered. Take these special offers into account but never sign up with a particular insurance provider just on the strength of a special offer or deal. The bottom line is the cost of the insurance cover.
It is always worth contacting your existing insurance provider to see if they can match or even better your lowest quote. Never auto renew your policy. Insurers must give you 28 days notification before renewing your policy. Once the policy is renewed there are often hefty penalties or charges for canceling the policy. I let my current insurer know as soon as I receive a renewal quote that I will not be renewing my policy, unless they can match my lowest quote!
If your lowest quote does not match your needs you can always use it to haggle for a better deal with your preferred insurance provider or broker. Never automatically accept a quote without trying to get an even better deal.
Step 4. Take the lowest quote that meets your needs.
If you sign up with www.consumerintel.com and become a ‘mystery shopper’, they will pay you up to £50 to carry out vehicle insurance comparisons, and you don’t have to take out the insurance!
Steve saved a massive amount of money on his car insurance partly because he avoided very costly loan charges. Always take into account the cost of borrowing money when opting to pay your insurance in installments.
You can save a great deal of money on your car insurance if you use multiple comparison sites and shop around. Never automatically renew anything without seeking a cheaper quote.
I hope that you have found this post helpful and informative. Please feel free to post any suggestions or comments below.
James S Boughey
This post is based on a chapter of my book ‘The Recession Buster Challenge’, available from www.Lulu.com priced at £13.36 + p&p.
This post may contain affiliate links.