Car insurance continues to increase ‒ here’s how you can cut your premiums

Average car insurance premiums have risen by 46% in the past year, with young drivers facing the biggest bill. We highlight twelve steps you can take to reduce your costs

Cars and coins with calculator on financial statement
(Image credit: everydayplus)

Car insurance costs have risen considerably over the past 12 months, with the average premium coming in at £892 in the year to February 2024 according to Compare the Market, marking a 46% rise. 

That said, car insurance costs continue to fall from the November 2023 peak, when the average premium peaked at £951. 

Previously, high inflation drove up the cost of car insurance premiums, as this pushed prices up in the motor repair industry, for example for spare car parts and mechanics. But with inflation slowing to 3.4% in February, it’s not the biggest contributor towards high insurance premiums anymore. 

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The comparison site puts the rise in car insurance costs partly down to a hike in the cost of claims made by drivers with their insurers.

And whilst a 46% increase is a substantial increase in insurance costs, young drivers aged under 25 years are worse off, with the typical insurance premium hiking to £2,057 which is a £648 increase compared to a year ago.  

Julie Daniels, motor insurance expert at Compare the Market said: “ For those concerned about the cost of driving, shopping around ahead of renewal is one of the best ways to save money on car insurance. We want to encourage motorists who tend more to stick with their existing insurer each year to compare prices to find the right deal for them.”

Here are 12 ways you can cut your motor insurance premium, potentially saving you hundreds of pounds over the course of a year.

1. Pick the right level of cover – and beware, the least comprehensive cover isn’t always cheapest

Insurance is essential to drive in the UK, but there are varying levels of coverage. Depending on your needs, you may be able to get a cheaper deal with a different form of cover, but it is essential to determine what kind of cover you need. Here’s a breakdown:

  • Comprehensive: Comprehensive car insurance is the highest level of cover available. A comprehensive policy covers you, your car, other people, and their property, meaning the policy has your back in any eventuality.
  • Third party, fire and theft: This form of policy will not protect you or your car in an accident that was your fault, unlike comprehensive cover. But as the name suggests, it will cover fire damage, theft or attempted theft. Passengers are protected under the policy, plus any people or property that may be affected by an accident that you are responsible for. 
  • Third party: This is the minimum level of cover required to drive in the UK. This form of cover does not allow you to claim for any damage to your own car or person, but does cover damage to other cars and property.

You should check the cost of each type of cover carefully – don’t simply assume that third-party cover will be the cheapest. As the latest data from Go.Compare reveals, third party premiums are actually the most expensive on the market at the moment, on average.

The cost of coverage depends on a huge range of factors, from what you drive, and how you drive it, to your age, occupation and where you live. With this in mind, those with third-party coverage may lodge more claims, or have older cars which are more likely to cause issues.

So, if you have a car you’re keen to look after, comprehensive cover may actually offer you better protection at a better price.

2. Consider black box insurance 

Commonly associated with new and younger drivers, black box policies, sometimes called telematics, will see your insurer mount a small device to your car. 

Often used in conjunction with an app, the black box monitors how you are driving, including your speed, how sharply you use the brakes and what time of day you tend to travel. 

The thinking behind it is it encourages drivers to be more careful and cautious, thereby reducing risks on the road. These policies tend to get cheaper over time – the more careful you are, the more your premiums will drop.

3. Protect your no claims bonus 

You can save around 60% of your car insurance costs by maximising your no claims discount. 

This is a deduction given to you by your insurer for every year where you don’t lodge a claim. 

But of course, accidents happen and it can take a long time to build up the bonus. That’s why many insurers offer to protect your no claims bonus for a fee in the form of a small additional premium.

4. Pay up front to avoid paying interest

If you are able to, paying your car insurance annually in one go is almost guaranteed to be cheaper than spreading the cost of it over 12 months. 

When you agree to pay in monthly instalments, you are in essence taking out a loan (with interest added) from the insurer. 

The amount you can save varies from provider to provider, but somewhere between a 10-20% saving can be expected.

5. Never auto-renew 

If you decide to auto-renew, it is very likely that you will end up missing out on a deal. While it may seem like you’re saving time and hassle by sticking with the same insurer, you forego the opportunity to shop around for better offers and prices. 

As long as your fixed-term deal is nearing its end, you are free to shop around and can switch to another provider. You could always see if your current provider will match an offer from elsewhere too. 

You can shop around for the cheapest quotes on comparison websites like Go.Compare, MoneySuperMarket, or Compare the Market.

6. Cut back on extras you’re not using…

Some policies include extras that you may not need but are paying for. For example, you may no longer need European cover or windscreen cover – two common extras that can bump up the price of your policy. 

When it comes to renewing your coverage, take a look at what you’re actually paying for and try to get rid of any extras you aren’t using.

7. …or get them cheaper elsewhere

Along the same lines, see if you can get your add-ons for cheaper elsewhere. For example, you can get a specific policy to cover any damage to your windscreen. This could be cheaper than getting it as part of a bundle with your motor insurance. 

The same is true for add-ons like legal assistance and courtesy car cover. It is well worth shopping around to see if there’s a cheaper deal out there.

8. Make your car more secure

Improving the security of your vehicle could encourage insurers to offer you a better rate. 

Steering locks and immobilisers are two of the most common ways of deterring thieves, and while both come at a cost, the expense of fitting security updates could be worth it should your insurer decide to reduce your premiums as a result.

Your location also affects how much you pay for your car insurance. This includes what city you live in and where you park your car. If you have a garage or driveway, your car insurance is likely to go down a little, as it is deemed as a safe space to park a car. 

Of course, you should always be truthful when telling your insurance where you live. If the information you provide isn’t accurate, you risk invalidating your cover.

9. Take an advanced driving course

Pass Plus is an optional course drivers can take and, with some providers, it will qualify you for a discount on your insurance. 

While it’s typically meant for young and inexperienced drivers, there’s no reason why you can’t take advantage of the potential savings on offer.

Some insurers will take the course into account when setting the cost of your coverage, but not all will. It’s worth getting in touch with your provider to see if the cost of taking the course will be worth the discount you receive.

10. Renew at the right time

The best day to renew your policy is 27 days before it is due, according to the latest data from Go.Compare. The reason is that the price tends to increase the closer you get to your renewal date. 

Another reason why it’s great to lock in a price early is that insurers can change their prices at any time, and for seemingly no reason. You may be searching a price comparison site one day, see a good offer and go back to claim it a few days later to find the price has been hiked.

To avoid this, be prepared to jump on a deal as soon as you see it – it could save you money down the road.

11. Drive less, if you can

When you apply for car insurance, you will be asked how many miles you drive on average in a year. 

This is because, statistically, the more often you are on the road, the more likely you are to be involved in an accident.

If you are able to reduce your annual mileage by using other forms of transport or by walking shorter distances, you will probably be able to bring your costs down.

12. Be careful when selecting your job title

The job title that you select when applying for your insurance has a big impact on the cost of the premium. For example, research from Vanarama, part of the Auto Trader group, shows that traders and mechanics are paying far more than chefs, accountants and financial analysts. 

It’s important that you record this information accurately, as any incorrect information could invalidate your insurance. However, if there are two very similar job descriptions and both match your role, it’s worth checking whether describing your position differently impacts the cost of your premium.

John Fitzsimons

John Fitzsimons has been writing about finance since 2007, and is a former editor of Mortgage Solutions and loveMONEY. Since going freelance in 2016 he has written for publications including The Sunday Times, The Mirror, The Sun, The Daily Mail and Forbes, and is committed to helping readers make more informed decisions about their money.

With contributions from