How to cut your car insurance bill

There are many ways to ensure you don't pay over the odds, says Toby Walne
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The Independent Online

Motor insurance premiums have soared in price by 25 per cent over the past six months, according to price check website Insuresupermarket.com. With the average yearly premium for comprehensive cover standing at £590, the need to find savings by shopping around is greater than ever.

Motor insurance premiums have soared in price by 25 per cent over the past six months, according to price check website Insuresupermarket.com. With the average yearly premium for comprehensive cover standing at £590, the need to find savings by shopping around is greater than ever.

Before hunting down that best deal, be prepared. First, work out a realistic value for your vehicle. Insurers will only pay the market value if the car is stolen or written off, so by providing an over-optimistic price for the vehicle, you might have to pay higher premiums than necessary.

Next, calculate how many miles you will drive. The higher the mileage, the more expensive the premiums. Be realistic about who will drive; by restricting cover to named drivers only, you can cut insurance costs dramatically, rather than needlessly opting for an "any driver" policy. And consider where the vehicle will be parked. Finding an off-road garage where you can park your pride and joy, rather than parking on the roadside, should lower premiums straight away.

Susan Carruthers, 50, has enjoyed accident-free motoring for 30 years. The freelance personal assistant, who lives in Cheltenham, Gloucestershire, pays Direct Line £238 a year for comprehensive motor insurance for her J-reg Honda Civic.

"Good fortune means that I have built up a no-claims bonus. I shop around but savings are only marginal, so I have stuck with Direct Line for the past few years. However, should I lose my no-claims and see my premiums rocket, the insurer will immediately lose my loyalty and I will go elsewhere."

Richard Mason, director of Insuresupermarket.com, says although the process may look daunting, it is important to keep in mind the fact that this exercise will save you money. "Just by comparing a handful of insurers, you save at least £25. Do not call just one specialist broker but try out a few and call insurers direct to see if they can beat an offer. Also consider shopping online as this can often bring you discounts."

Check the Yellow Pages and surf the internet to compare deals, but be aware that headline offers may hide the real costs, and it is also necessary to compare like with like on so-called "extras".

James Harrison, managing director of the online insurance broker Insurancewide.com, warns: "An initial low quote may not be reflected in premiums. Look closely at the excess limit, medical and legal expenses cover, personal accident, personal belongings, no-claims protection and breakdown insurance."

Other small-print covers to look out for include whether a courtesy car is laid on if yours is off the road, insurance for car stereos, whether you are covered for loss of keys, and if any repair work is guaranteed.

If you have a higher excess payment limit, you may find cheaper premiums. An excess of £200 should be perfectly acceptable to many motorists, but £500 is probably too steep.

For most drivers, a fully comprehensive insurance policy offers the best peace of mind, as it covers you against any damage caused both to your own and to any other vehicle involved in an accident. But if you are driving a cheap old banger, it may not be worth insuring for the repair of your own vehicle, so a third party, fire and theft option might be the best value choice.

If an accident is your fault, it might be worth dipping into your own pocket to foot the bill, rather than risk losing a no-claims bonus. A five-year no-claims bonus typically shaves 65 per cent off premiums. Nervous motorists might like to save this built up saving by ring-fencing it for an extra charge, typically £70 a year.

Specialist insurance deals are available for women, elderly drivers, and motorists with particularly good - or bad - track records. However, don't just be taken in by slick niche advertising, but shop around non-specialist motor insurers as well. On average, women pay £70 less a year on car insurance premiums - men are responsible for 97 per cent of dangerous driving offences and 83 per cent of speeding convictions.

It pays to drive carefully, not just to avoid accidents. Breaking speed limits may cause premiums to rise by £65 and £25 a year for men and women respectively for a first offence. Drink-drivers not only face losing their licence and a prison sentence but an automatic yearly premium hike of at least £100.Petrol-heads with a love of fast cars will find themselves paying the highest insurance. Unless you have money to burn it is unwise to consider a sports car if you are under 30.

Lower premiums tend to be offered for small-engine cars such as Fiat Pandas, Citroën 2CVs, Vauxhall Corsas and Seat Marbellas, which are all Group One cars. However, sit behind the wheel of a Ferrari, Porsche 911, Aston Martin, BMW M series or Audi TT Roadster and you are put into Group 20, the most expensive insurance rating for a vehicle.

Fitting a tracking device or immobiliser can help whatever motor you drive. Satellite tracking systems cost at least £300, but insurers will offer discounts of up to 15 per cent for approved systems. If you are aged under 21, then expect a stiff first-year motor premium of more than £1,000. But if you can keep hold of your "no claims", the price can tumble by almost £250 the following year.

Newly qualified drivers can also take the government-backed Pass Plus course, which offers a chance to develop more advanced motoring skills and can result in lower premiums.

Also, consider where you live. A motorist living in London's congestion zone can pay more than £800 for a typical policy, while the average premium outside London is £455.

One in 20 drivers is reckoned to be on the road without insurance. Paying for their accidents, including injuries to others, is calculated to cost honest drivers £40 a year in higher premiums.

Finally, James Harrison points out: "Do not lie on your motor insurance documents. This is fraud and can get you into serious trouble, as well as invalidating your policy."

'If I lose my no-claims, I'll go elsewhere'

Susan Carruthers, 50, has enjoyed accident-free motoring 30 years. The freelance personal assistant, who lives in Cheltenham, Gloucestershire, currently pays Direct Line £238 a year for fully comprehensive motor insurance for her 'J' reg. Honda Civic.

She says: "Good fortune means that I have built up a no-claims bonus. I shop around but savings are only marginal so I have stuck with Direct Line for the past few years. However, should I lose my no-claims and see my premiums rocket the insurer will immediately lose my loyalty and I will go elsewhere."

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