How to find cheaper car insurance as premiums accelerate

Car insurance premiums are on the rise but there are ways to cut the costs.

Data from the Association of British Insurers (ABI) shows motorists paid an average of 25% more annually for their car cover in 2023.

More recent figures from researcher Consumer Intelligence shows the average quoted price of car insurance rose by 56.4% in the year to February 2024, to between £500 and £749 on average.

Younger drivers in particular are facing “extortionate insurance premiums” of more than £2,000, said the Daily Telegraph.

It means drivers are desperately searching for ways to cut the costs of car cover.

Why is car insurance so expensive?

Many drivers will rightly feel that car insurance costs are “spiralling out of control”, said Auto Express. There are an “array of new challenges” facing car insurers, the motoring website added, including”rampant recent inflation”, while the rise of electric cars is causing “skills gaps and delays at repair shops”.

The ABI highlighted that insurers have reported increases of 16% for materials, and 15% for labour, while some garages faced a 300% rise in their energy costs last year. 

This means insurance payouts are rising, up 18% to £9.9 billion last year, passed on to consumers through premiums.

Drivers can “take some comfort” from the fact that the latest increase is lower than the 67.2% recorded in the year to the end of November and the 61% in the year to August 2023, added Consumer Intelligence. But it is “still the third highest annual increase” since the brand started tracking the figures 12 years ago.

How to cut car insurance costs

It is “vital to do everything possible to get the cheapest quote”, said MoneySavingExpert, and this is particularly the case during a cost-of-living crisis.

Here are some tips and tricks to reduce your car cover costs.

Shop around

Prices may be high and “there are few competitive prices out there”, said Which?, but you should use comparison websites to shop around for the best deals “before you commit to renewing or buying” a policy.

You can browse car insurance deals on comparison websites such as CompareTheMarket, Confused.com, MoneySuperMarket and uSwitch.

Choose the right level of cover

There are three main types of car insurance.

The minimum is third party, which protects you if you damage another vehicle. There is third-party fire and theft, which also provides cover for fire damage or if the car is stolen. 

The “highest level of cover”, said MoneyWeek, is comprehensive, which covers you, your car, and others and therefore “has your back in any eventuality”.

Don’t assume that third party will be cheapest though, added the financial website, as there are a “huge range of factors” that determine the cost of cover, including your vehicle, your age, occupation, and where you live.

Choose a cheaper car to insure

Cars are ranked into different insurance groups to determine the cost of cover, so it is worth checking the list before you buy. 

Smaller, economic models in lower insurance groups are “cheaper to insure”, said CompareTheMarket, in contrast to “those with more powerful engines in the higher groups”.

 

Change how and what you pay

Insurance premiums are also determined by how much you are willing to pay to process a claim, known as the excess.

Your annual premium costs “may come down”, said The AA, if you can afford to increase your voluntary excess by another £100 or £200.

Similarly, paying monthly “might feel cheaper than paying your premium in one go”, said MoneySuperMarket, but insurers often add interest so “it will probably cost you more in the long run”. You could therefore save money by paying annually in one go.

Add a named driver

Using a parent’s “good insurance record” could help lower costs, particularly for younger drivers, said the Daily Telegraph, but be aware that “adding someone who has recently made an insurance claim could increase your quote”.

Don’t lie about the main driver though, warned the Daily Express. Known as “fronting”, this is illegal and “can land drivers with six points on their licence and an unlimited fine, or a possible driving ban”.

Alter your job details

Insurers see certain jobs as more high risk so if there is “more than one accurate description of your role”, said uSwitch, a different category could save you money. 

You must not lie though, added the comparison website, as “this can invalidate your insurance”. So while you can change your job title, “if you are a circus clown, don’t say you are a top civil servant”.

Change your driving habits

Insurers will ask how much you plan to drive and if you have a low annual mileage then technically the “less time you are on the road, the less likely you are to have an accident”, said ThisIsMoney. But lying about mileage can also invalidate your insurance, warned the financial website.

Another option, particularly for younger and less experienced drivers is black box or telematics insurance, which records your driving habits.

This means your car cover is “based on your actual driving habits rather than statistics”, said BeWiserInsurance.

But there may be restrictions on when you drive, said 4youngdrivers, plus bad habits such as “regularly driving over the speed limit, hard braking or rapid acceleration, poor cornering or road positioning” could push up your premiums.

The art of negotiation

If all else fails, “you might be able to get the price down by haggling”, said Which?.

Make sure you are ready for negotiation though, and are armed with “any cheaper quotes for the same level of coverage” to help secure a discount.