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.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

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, Compare The Market, MoneySuperMarket and GoCompare.

Advertisement - Article continues below

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.



Car Insurance

Is your car really insured?

It’s surprisingly easy to invalidate a car insurance claim inadvertently. Here are some key pitfalls.
17 Mar 2020

Why you should keep a close eye on your National Insurance contributions

The state pension now requires a 35-year record of National Insurance payments to get the maximum payment. Check your record is correct, because any m…
20 Dec 2019
Personal finance

How to protect your home from burglars

As the days get shorter, burglars get busier. But there are simple steps you can take to guard your property.
12 Nov 2019

Healthcare reform: will America get its own NHS?

Not even socialist Bernie Sanders goes quite that far, but a radical shake-up of America’s healthcare system looks to be on the cards.
26 Oct 2019

Most Popular


Three things matter for the UK housing market now – and “location” isn’t one of them

The UK housing market is frozen. And when it does eventually thaw out, the traditional factors that drive prices will no longer apply. The day of reck…
1 Apr 2020

What does the coronavirus crisis mean for UK house prices?

With the whole country in lockdown, the UK property market is closed for business. John Stepek looks at what that means for UK house prices, housebuil…
27 Mar 2020
Small business

Furlough: what does it mean and how does it affect me?

Many companies have “furloughed” employees after they have shut down because of the coronavirus. But what does furlough mean and how does the scheme w…
30 Mar 2020

Buy stocks for the long term, but buy very carefully

After the wild ride of the last couple of weeks, equities are no longer expensive. But if you do decide to buy, be very, very careful indeed, says Mer…
30 Mar 2020