12 ways to cut the cost of car insurance

The cost of motor insurance has remained static over the last year, according to research by the AA, despite fears that premiums would rise because of rising claims.

Comprehensive car insurance premiums rose by just 0.49% to an average of £762.11. But even if this year's bill is not much more than last year's, no one wants to pay more than they have to, so here are some ideas to keep insurance costs down:

Drive carefully!

If you don't make any claims and build up your no-claims bonus, your premiums will be cheaper.

Increase your excess

If you opt to pay a bigger contribution towards the cost of a claim, you will pay a lower premium.

Get older

Older drivers are generally charged less for motor insurance than younger drivers, particularly young men, who pay the most.

Take another test

Many insurers give discounts to drivers who have passed the Advanced Driving Test.

Choose your fellow drivers carefully

If you opt for just one other named driver on your policy expect to pay a lot less than if you insure the car for anyone to drive. If you must have a teenager on your policy, put them on temporarily during the university holidays rather than permanently if your insurer will let you do this.

Drive a less powerful car

The more powerful your car, the more likely it is to be involved in an accident or at least cause expensive damage if involved in an accident. A hatchback runabout will cost you far less to insure than an executive or high performance vehicle.

Don't modify your car

You will pay more if you have fancy additions such as spoilers and alloy wheels. Standard and boring means cheaper.

Pay attention to security

Install an alarm or immobiliser, and keep the car off the road when you are not using it. Use a garage if you can. If you can't, keep it off the street in your driveway. Keeping it out of the way of bumps and scrapes and vandalism will mean fewer claims and a lower premium.

Move house

Taking and driving away, theft from vehicles and vandalism of cars is more prevalent in certain towns and cities. Your insurer will take your home postcode into account when assessing what premium you will have to pay. Nottingham is the car crime capital of Britain, followed by Manchester and Sheffield. In a survey of car crime which ranked the 57 cities in the UK with populations of more than 100,000, Nottingham recorded a shocking 40 car crimes per 1,000 citizens compared to just nine crimes per 1,000 in Ashford, Kent.

Keep your mileage down

The less you drive, the less you will pay. Low mileage could cut your premium by 15%. Insurers will charge you more if you use the car for business or to commute to work. Norwich Union has been testing the use of "black boxes" inside its customers' cars, which record the time, distance and location of a vehicle's journeys so that it can charge them for insurance accordingly.

Pay your premiums annually instead of monthly

Paying your premiums monthly can add as much as 30% to the cost of your insurance. Opt for an annual bill instead.

Shop around!

A third of people who are offered free insurance with a new car renew their policy with their existing insurer. But there are more than 100 companies offering motor insurance, so don't simply renew your policy from year to year, but compare prices to see if you can get a better deal. Then go and ask your current insurer to match any better offer you find. However do be sure you are comparing like with like and don't go just for the cheapest offer - make sure you have all the cover you need.

24 July 2006 © Moneyextra.com

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