How to cut your car insurance premiums

Customers end up paying more for the convenience of price comparison sites, but there are still ways to reduce your car insurance premiums.

Kids driving toy cars © Getty Images

Price-comparison websites have undoubtedly made finding the best deal for car insurance easier. But they have also made our insurance "33% more expensive", says Sam Barker in The Daily Telegraph.

Up to a third of the price you pay covers "secret commissions charged by price-comparison websites, which can be as much as £160 per policy", says Barker. Websites charge insurers to display their policies in their search results. These days insurance companies have little choice but to pay up as most of us buy through comparison sites.

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The flat fees range from £40 to £160 and insurers pass that cost straight on to the customer. With the average comprehensive car insurance costing £485 a year, that means commission makes up 8% to 33% of a typical bill.

To make matters worse, most comparison sites ban insurers from selling deals directly for less. Each price-comparison site charges a different fee, so this is another reason why it is important to check more than one before you buy your policy. Look at Confused.com, Compare The Market, MoneySuperMarket and GoCompare.

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Don't let the fact that you are paying for the ease of using a comparison site put you off. Even with their fees, you'll pay less for your car insurance if you shop around every year rather than automatically renew with your current insurer. Your car insurance premium is likely to go up by £50 each year if you auto-renew, reckons MoneySuperMarket.

How to cut your car insurance premiums

When you are renewing your insurance don't rush. Carefully consider your answers on the form as each one can affect how much you end up paying. "If you only do a few thousand miles a year you could save money by setting a lower mileage cap on your policy," says Matt Allan in The Independent. "If you don't use your car to get to work, then deselect the commuting option."

Think carefully before you add named drivers. Putting young, inexperienced drivers on your policy will drive your premiums up, as will anyone with a motoring conviction.

"If they don't drive your car regularly then consider adding them temporarily when needed rather than paying to keep them on your policy all the time," says Allan. However, adding a more experienced, lower-risk named driver can bring premiums down.

Younger drivers can reduce premiums by opting for a policy that uses telematics. These place a black box in your car that tracks how and when you drive.

If you are a sensible driver your premiums should fall. Finally, pay for your car insurance in one lump sum. You'll save 10% or more against paying it monthly.

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