6 tips to drive down car insurance costs

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The Independent Online

If you're concerned about rising car insurance costs, here are six ways you can help reduce the price of your premiums without cutting back on cover.

According to the Motor Insurer's Bureau (MIB), an estimated 1.7m UK drivers dodged car insurance last year.

The study found that roughly one third of all uninsured drivers are in their 20s, while a worrying one in ten 18-24 year olds are unaware it is against the law to drive without insurance.

Amid concerns that the recession may tempt many more cash-strapped motorists to forgo car cover, the MIB has launched a new campaign warning people to stay insured.

If you are caught driving without insurance, you are likely to be hit with a hefty fine and receive six penalty points on your licence. What’s more, your vehicle could be seized and you’ll almost certainly face inflated car insurance premiums in the future.

If you're worried about accelerating car insurance costs, here are six top tips to help you put your foot firmly on the brakes.

1. Shop around

When it comes to purchasing your car insurance policy, it pays to shop around.

It's never a good idea to simply accept a renewal quote from your existing insurer without first checking the price of policies from other providers.

Using an online price comparison service is a quick and easy way to compare a range of quotes from different suppliers. This should inform you if you are getting good value for money from your current insurer.

2. Ensure your car is secure

The amount you are charged by your car insurance company is calculated based on risk assessment.

If you are able to reduce the likelihood you'll need to place a claim, you should find your premiums come down significantly in price.

Simple steps such as fitting your car with an approved alarm system or immobiliser, and keeping it in a locked garage, should help to reduce the risk your motor will be stolen or damaged.

3. Pay for your policy in one go

If you choose to pay for your car insurance policy in monthly instalments, be aware some companies will charge you interest for the privilege.

It's therefore a good idea to try and pay for your policy in one lump sum rather than spreading out your payments over a longer period of time.

If you can't afford to shell out the entire amount upfront, it may be worth covering the cost with a 0 per cent purchases credit card.

However, you must ensure you repay the total balance on your card before your 0 per cent deal expires or your provider will start to charge you interest.

4. Add an additional driver

Adding an experienced and trustworthy family member or friend on your policy could help reduce the price of your premiums.

This is because your insurance company will presume that for at least some of the time your car is on the road, it will be driven by the other person.

However, you must ensure you never name someone as the main driver of your car if they are not.

This is an illegal practice, known in the industry as "fronting". If you are found out, your insurer is within their rights to deem your policy invalid and refuse to pay out.

5. Pay a higher excess fee

Your voluntary excess is the amount you have to pay out if your car is damaged in an accident, before your insurance company will step in to cover your claim.

If you agree to increase this amount, many providers will reduce the price of your premiums.

However, to avoid a serious financial disaster later down the line, you must make sure the excess fee is set at an affordable level.

6. Don't make modifications to your motor

Finally, be aware that many insurance companies charge higher premiums for cars with modifications.

This is because insurers often view modified vehicles as more likely to be involved in an accident and more costly to repair if they are.

Even if the alterations you make are purely superficial and have no affect on the car’s speed or performance, you could still find yourself hit with a more expensive premium.

If you do choose to modify your vehicle, you must inform your insurance company.

Failing to tell insurer could be classed as fraud and may create problems if you need to make a claim in the future.

Victoria Bischoff is a personal finance writer at BeatThatQuote.com

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