Five simple ways to beat soaring car insurance premiums

The average annual car insurance bill is expected to hit a record high of £800 this month, according to comparison website comparethemarket. The cost has increased by around £200 over the past two years thanks to factors including the soaring cost to the industry of dealing with whiplash claims. And from today, the government is forcing insurers to make bigger payouts for serious personal injury compensation to ensure they’re not eroded by inflation – a measure that is expected to add £15 on to all insurance policies.

Yet despite the rapidly rising cost of car insurance, drivers are turning their backs on the easiest way to make significant savings by sticking with the same provider each year. This inaction results in them collectively wasting £2.7 billion each year, according to more analysis from comparethemarket.

While you should always ensure you buy the most appropriate car insurance policy for your needs rather than the cheapest – which could leave you short should you need to make a claim – it is entirely possible to make savings on the price you pay without compromising on quality. Here’s a list of simple tricks you should consider every time you renew your policy to keep the cost down.

1. Switch! Comparethemarket says only 40 per cent of motorists change their provider every year, despite the fact savings of hundreds of pounds can usually be made. Reasons for staying put include drivers mistakenly thinking that because they got a good deal last year they’ll be automatically renewed on to another competitive deal. Switching needn’t be a hassle. It can be easily done by entering a few details (such as your age, address and vehicle make and model) into a comparison site to get a sense of current prices. You could then either choose one of the policies listed, or use it as a bargaining chip with your current provider to see if it will match or improve on it. It’s worth remembering some insurers don’t appear on comparison sites so you could check directly with them to find out if they could save you money. These include Direct Line and Aviva.
2. Don’t leave it to the last minute. Switching car insurance three weeks before the renewal date yields the optimal saving, says comparethemarket.com. By doing so, drivers who used the website to switch provider saved on average £349 on an annual policy. When the company compiled its analysis earlier this year it found that the average cost of a policy was £407 three weeks before renewal was due, compared to £756 on the day of renewal. Despite this, it found 23 per cent of consumers wait until the day of renewal to shop around for a new policy.
3. Try telematics. Also known as ‘black box’ insurance, this involves a small recording device installed inside your car to measure driving behaviour – from journey length and the time of car use to smoothness of driving. Based on the data generated, insurers can then adjust premiums accordingly, with those drivers deemed safer rewarded with cheaper bills.
4. Go for a higher excess. Opting for a higher voluntary excess could lower your insurance premiums ‘but you will need to decide if paying a slightly lower premium is worth the risk of having to contribute more towards the cost of a claim if you have to make one,’ warn the experts at gocompare.com.
5. Once you’ve identified a suitable insurance policy, find out if you could earn cashback by purchasing it through a website such as Topcashback.co.uk or Quidco. For example, Topcashback is rewarding drivers taking out Co-op car insurance until Sunday 4 June with £50 cashback. To earn money back on your spending from these websites, you first need to create an account and then simply purchase the policy by clicking through to the deal from the website. Once you’ve paid for it, your cashback is then credited to your account. It’s up to you whether to put it towards further purchases made using the website or transfer it to your bank account.

Laura Whitcombe is knowledge and product editor at ThisisMoney.co.uk.