10 tips to cut your car insurance costs

It's never been easier to buy car insurance. But while shopping around for car cover is a simple process, half of the UK population is failing to seek out a number of quotes before signing on the dotted line. A further one in four renew their car cover instantly, missing a vital chance to save hundreds of pounds. Recent research by insurance broker Swinton revealed that if all drivers took cover with the most competitive insurers they could collectively save £3 billion! Here's how to avoid paying over the odds for your car insurance:

• Shop around. Don't just accept the first quote that comes your way. The price of car cover can vary widely as each company has its own criteria as to what should increase or decrease your premium. By seeking out several quotes you can get a better price list to compare. But if you are swapping car insurance, ensure you seek like for like, otherwise you may discover you do not have the same level of cover when you make a claim.
• Restrict the number of drivers on your policy. An additional driver usually means a higher premium. You can always add someone for a few days when they really need to drive the car.
• Protect your no-claims bonus. A crucial factor to reducing the cost of your car insurance premium is how many No Claims Bonus Years you have. A NCB of five years or more, for example, can entitle drivers to a 60%-70% discount on car insurance premiums. By being a good driver and avoiding potential claims, you can continually benefit by building up your number of claim free years. Every additional No Claims Bonus year you get will lower your car insurance premium.
• Increase your voluntary excess. Some insurance companies will include a compulsory excess amount on the policy but provide an opportunity to increase this if you wish. Agreeing to pay more towards the cost of any accident repairs will lower your premiums. But in the event of a claim, you will have to pay a higher amount yourself, up to the total amount of excess on your policy.
• Buy a lower group car. A smaller engine or a slightly different model can lower premiums significantly. Most insurers use the Association of British Insurers group rating to split vehicles into different groups when assessing risk. It's worth bearing in mind that the sportier the car, the higher the premiums.
• Consider Third Party Only insurance policy. If your car is on its last legs it may be worth considering Third Party Only insurance, which is the minimum level of cover available. In the event of an accident, any damage to a third party vehicle is covered but any damage to your vehicle is not. If your vehicle is of little value then you may not be too concerned.
• Fit an approved alarm. This can attract a small discount whilst having a tracker device installed may give you a larger reduction. Some insurers may insist on having a sophisticated tracking devices installed before they even consider insuring expensive cars.
• Agree to a mileage restriction. The fewer miles the car covers, the greater the saving. Try and work out how many miles you will genuinely do. But you must be honest about your annual mileage, as inaccuracy will jeopardise any claim.
• Take an advanced driving test. This can not only improve your driving skills but also help to lower your car insurance premium - some of the major insurers offer discounts of up to 35%.
• Pay for your car insurance in one lump. Do this and you can avoid hefty interest charges that would be added on if you opted to pay by monthly instalments. The interest charges can be quite steep so you could save a significant amount of money by paying the whole amount up front.

03 February 2006 © Moneyextra.com

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