Costs are rising, so apply the brakes

If you drive a car you are legally required to have insurance. But you can still have control over the cost.

Motor insurers paint a gloomy picture: "Premiums have risen to meet the increasing costs of personal injury claims and the increase in Insurance Premium Tax, which went up to 4 per cent in April," says Sandy Dunn, managing director of Touchline, the telephone insurer. He adds that further rises are on the way if Budget proposals making it easier for hospitals to charge insurers for treating road accident victims lead to increased costs.

All cars have insurance ratings based on engine size and price, so check this when buying a vehicle. The more expensive it is, or the bigger the engine, the more it costs to insure. Choosing a vehicle with a low rating will substantially reduce costs.

Under the Road Traffic Act, the minimum level of insurance you must have is third-party, which covers the costs if you damage other vehicles or property or if you injure someone. Most motor insurance policies also include fire and theft cover for your own car.

Fully comprehensive car insurance, by comparison, also allows you to claim for damage caused to your own car - by vandals, say- and for loss or damage to car contents. The costs can be prohibitive, especially for young drivers, so it is understandable that many car owners choose just third-party, fire and theft. But shopping around can considerably reduce premiums.

Most insurers offer ways to cut the cost of premiums. "No claims" bonuses have been around for years, allowing drivers with good records to pay much less. Nowadays, some insurers even allow you to make claims and still keep your bonuses if you pay a small extra charge.

Taking a voluntary excess, where you agree to pay the first part of any claim, can also substantially reduce premiums.

Security devices and car alarms will also help cut costs. Check first that your insurer recognises the validity of your system before it is installed. Insurers use a regularly updated list prepared by the government's research centre in Thatcham, Berkshire.

Parking your car off the road, preferably in a garage, helps reduce the insurance costs, as does a low annual mileage. This is especially true if you don't do any business miles in your car.

Loyalty schemes are also available. Some insurers offer discounts if you remain a policyholder for two years or longer. You may also be able to insure more than one car with the same company for reduced premiums.

Age is another determining factor. While the young, particularly men, face higher premiums, the over-50s can often negotiate reduced rates.