How to Save on Car Insurance Premiums: Tips and Tricks

Introduction

Car insurance is a required policy by law, but along with that requirement comes a considerable expense in car insurance premiums. For many drivers, whether you’re a new driver, a commuter or a driver aiming to reduce household expenses, understanding how to save money on car insurance can make a significant difference in your budget.

This guide will provide tips and techniques to lower your car insurance premiums without compromising coverage, and take advantage of available discounts, create a better risk profile for pricing as a low risk driver, and educate you when to make choices among coverage options.

Understand Your Policy

The first step to manage your money and ways of saving it is to know what your policy entails and does not. A lot of drivers often pay for coverage that might not be entirely necessary or sometimes, drivers simply forget they can use something that is covered in their policy.

  • Check for coverage: You want to make sure you are not paying for coverage that you don’t need. For instance, if you are driving an older car, comprehensive coverage might not be the best option after all.
  • Check for exclusions: If you happen to know specifically what is not covered in your policy, this helps our avoidance of any surprises and the add-ons we might prefer to not have had to pay for.
  • Check for quotes regularly: Premiums change on a yearly basis, so comparing quotes could save you hundreds of pounds per year.

It could save you time and energy using quotes with a comparison tool like Compare the Market or GoCompare to have the best and most competitive rates.

Choose the Right Coverage Level

It’s important to get the right level of cover. Comprehensive insurance gives you the most protection but it may not be necessary if you have an older or low-value car.

  • Third-party insurance: The cheapest option that meets the legal minimum but does not cover your own car.
  • Third-party, fire and theft insurance: Provides cover for certain risks like theft or a fire to your car. This option provides protection at a cheaper rate than comprehensive.
  • Comprehensive insurance: The best option if you have a newer or higher value vehicle. Be conscientious in choice to find the right balance between risk and potential insurance premium cost.

By choosing the right level of coverage you can be sure you are not overpaying for protection you do not need.

Increase Your Voluntary Excess

A voluntary excess is the amount you choose to pay out of your own pocket when making a claim. If you increase this amount, it usually reduces your premium, often by several hundred pounds.

  • Higher excess: reduced premium, increased amount you pay out of your own pocket when you make a claim.
  • Lower excess: higher premium, and reduced amount you pay out of your own pocket when you make a claim.

For instance, if you increased the excess from £200 to £500, your insurer could reduce your annual premium by £150–£200, depending upon the provider. This is only a good strategy if you have the funds in savings for paying the additional excess on a claim in the event of an accident.

Maintain a Clean Driving Record

Insurers view your driving history as one of the most important aspects when calculating premiums.

  • No claims discount: Most insurers will reward drivers who have a no-claims history by reducing their premiums.
  • Avoid speeding tickets and accidents: Even minor offenses can dramatically increase your premiums.
  • Defensive driving courses: Some insurers will offer a discount to you for completing accredited skills-improvement courses.

A clean driving record indicates to insurers that you are low risk, which can save you a lot of money over the years – hundreds of pounds!

Consider Your Vehicle Choice

The vehicle you may be driving, by definition, directly affects your car insurance quote. Some considerations are:

  • The car’s value: Expensive or luxury vehicles cost more to insure.
  • The cost of repairs: Cars that have expensive replacement parts cost more to insure.
  • Engine size and performance: Cars that are more powerful are considered higher risk.
  • Safety features: Cars with anti-theft devices, airbags, or passenger safety systems may be eligible for insurance discounts.

Therefore, buying a vehicle that is moderately priced, safe, and easy to repair will make a difference in your insurance quote.

Limit Annual Mileage

Insurance companies are usually using annual mileage as a component in determining your premium. Generally, when you drive less, you will be less risky since your vehicle is on the road less.

  • Be accurate with your documentation: Be accurate with how much you report in your annual mileage. If you overestimate, you may be over premium due to paying for higher mileage.
  • Consider a pay-per-mile option: Some insurance companies have policies known as usage-based insurance plans, which charge premiums based on the amount you drive.

This is also great if you’re not driving very often, or your work situation has you working from home most of the time.

Install Security Devices

By improving the security of your vehicle, you decrease the chances of a theft and potentially earn discounts on premiums from your insurer. Here are recommended vehicle security improvements:

  • Alarms and immobilizers
  • GPS or tracking devices
  • Safe parking (garage, gated parking area)

Most insurers offer discounts of 5-15% percent off your premiums for any of these security upgrades, making them worth the cost.

Bundle Policies

If you have insurance needs in multiple categories, you should consider bundling your auto insurance policy with your home insurance, life insurance, or any other type of insurance. Many insurance companies allow you to qualify for a multi-policy discount to simplify the management of your insurances and to save you money on your auto insurance premiums.

For example, you may save 10-20% in premiums when you combine your home and car insurance in one policy instead of having separate policies.

Pay Annually Instead of Monthly

Making one annual premium payment is usually less expensive than paying in monthly installments because it often reduces the interest or administrative fees that companies may charge for monthly payments.

  • While paying monthly allows for flexibility, it may be a little more costly over time.
  • Annual payments are usually somewhat cheaper and start the customer with a full year of coverage right away.

Check for Additional Discounts

Insurers could offer a variety of discounts based on your profile:

  • Drivers who drive a low number of miles often
  • Students or professionals in a certain field
  • Advanced driving qualifications
  • Membership in certain organizations

Always ask your insurer or comparison tools to help determine you are getting all the available discounts.

Conclusion

Reducing car insurance premiums involves knowing your policy, making good choices regarding vehicles, and exhibiting safe behaviors on the road. Things such as selecting the most suitable coverage, increasing voluntary excess, keeping a clean driving record and installing security systems can help keep your costs low, while still providing a safety net.

Shopping for quotes on a regular basis, reviewing your policy and discounts, can clearly reduce your premiums without a reduction in coverage. Decisions that are made today will reduce your premiums through the savings on the life of the policy.

Further Reading

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