Expert tips on how to save money on your car insurance

Owning and running a car comes at a cost. Even after buying a vehicle, there are costs to meet - and one of the biggest expenses is car insurance.

Having car insurance is a necessity. It’s illegal to drive without it - penalties for driving without car insurance include a fine, penalty points and the possibility of being disqualified - so it’s not worth running the risk.

Depending on your circumstances, car insurance can be expensive. Add that cost to paying for fuel, maintenance, MOT’s, tax and other things, and it all mounts up to a hefty monthly amount. The good news is, that if you’re hoping to save on car insurance, there are ways to reduce what you pay.

Let’s take a look at some tips for how to save money on your car insurance.

Shop around and compare car insurance

If you’re disappointed by the price of your car insurance at renewal time then look for a better deal. It might take a few hours of your time, researching best car insurance rates, but it will be worth it if you end up with a deal that saves you money.

You may see some cheaper car insurance options and if there’s a policy at a better price than your renewal offer, you could just switch. However, if you’d prefer to stay with your existing insurer, you could try haggling the cost of your renewal premium with them if you have a cheaper quote to compare it to. Your insurer may be able to discount your premium, or give you another reason to stay with them. 

However, if you choose to switch anyway, you may want to check that the new policy is comparable in terms of level of cover. Paying less for a lower level of cover isn’t necessarily a good deal. A cheaper price doesn’t mean better or even equal cover.

Pay for your car insurance annually

This might not be an option to suit everyone but if your finances allow it, consider paying for your car insurance annually. Paying one lump sum for the full year of cover, instead of monthly direct debits, usually works out cheaper. Many insurers will add an interest charge for direct debit payments and build that into your monthly amount. The difference between paying in full and paying by direct debit could be as much as a monthly payment.

Add an older, named driver

Adding a named driver to your car insurance is another way of how to save money on your car insurance, but be careful: it doesn’t always result in a saving. If you’re an older driver who is adding a younger motorist to your insurance policy, – for example, a parent adding a newly-qualified son or daughter - the price may go up. But if it’s the other way around and you’re a younger driver adding a parent to the policy, it’s more likely to go down. 

The reason? Because a more experienced driver will be using the vehicle on some occasions, it reduces the level of risk in the opinion of some insurers. 

This is because insurers will assume a more experienced driver is using the vehicle some of the time, and therefore reduces the risk presented by the main driver. Whatever you do, though, make sure the policyholder is the main driver. Be aware of what is known as ‘fronting’, which is typically when a parent might open a car insurance policy with them as the main driver, but the vehicle is actually driven more frequently by their son or daughter. Fronting is a serious offence; in fact, it’s illegal.

Increase your voluntary excess

A typical car insurance policy can have two types of excess attached to it - compulsory and voluntary excess. The compulsory excess amount is set by the insurer and cannot be changed, but the voluntary excess amount can be set by the driver. These two excesses combined is the sum a driver pays in the event of having to make a claim. 

You can set your voluntary excess to zero if you choose, so you will only pay the compulsory excess in the event of a claim. However this would mean the insurer has to pay the full amount - minus the compulsory excess - in the event of a claim. As such, this could push up the price of your insurance premium to start with. 

Try adjusting your amount of voluntary excess the next time you get an online quote and see what happens to the overall price. If you have a voluntary excess of £50, increase it to £150. Remember though, that if you increase it to a higher price you must be able to pay that if you make a claim.

Remember, your policy will likely include a compulsory excess amount too. This is set by the insurer and is also the amount of money you’ll need to pay towards a claim. You need to take this into consideration too, when assessing car insurance prices.

Your total excess is an amount of money that you may realistically have to pay. If your voluntary excess is £250 and your mandatory excess is £200, could you afford to pay the total £450 in the event of a claim? You should budget for this, perhaps even saving a small amount of money every month as a contingency.

Consider black box insurance

Younger or newer drivers may find black box insurance a useful option to save money on car insurance. A small telematics box is fitted inside the driver’s car beneath the dashboard, and it monitors the performance of the motorist, recording and tracking speed, braking, cornering and other aspects. Results can be reviewed regularly by the driver, and careful and responsible driving can be rewarded with a discount on insurance premium.

Lower your mileage

When you take out a car insurance policy, the information you’ll be asked to provide will usually include the estimated mileage you expect the vehicle to cover during the year. A higher mileage could be a factor in a higher insurance premium; the more mileage you clock up, the higher risk you pose. 

So, if you can reduce your annual mileage you may be able to reduce your car insurance. You’d need to reduce it by a reasonable amount, and be truthful about a change in information. If your insurer discovers your mileage estimate was inaccurate, they may decide not to pay out in the event of a claim. To calculate your average annual mileage, work out your average weekly mileage and multiply that by 52. To be on the safe side, allow for any occasional longer journeys you may make outside of your usual routine, for example driving holidays, trips into town or to the beach.

To effectively reduce your mileage, try to use your car less. Walk or cycle instead of driving short distances, or perhaps car share with a colleague so that you drive to work every two weeks instead of every week.

Improve your car’s security

One of the factors that affects car insurance is the security of your vehicle. Vehicle crime not only poses a threat to your car, but it can have a negative impact on your insurance, too. 

For example, if your car is fitted with a security device, this should reduce the price you pay for your car insurance. Parking your car somewhere safe during the day and overnight is also important in helping to keep your vehicle safe.

You could also take steps to protect your car against theft or damage, for example, locking doors and closing windows when not in use, and keeping valuables out of sight. Although this doesn’t directly affect the premium you pay, if you are the victim of theft due to not locking your doors etc, any claim you make will likely push up your premium at renewal.

Car security is one of the categories taken into consideration when allocating vehicles to car insurance groups, alongside the price of the car when new, the cost of parts and the power and performance of the vehicle. For car security tips, read more here.

Choose your next car carefully

Arguably the two most important criteria when deciding the price of car insurance are the driver, and the vehicle being insured. If you’re thinking of changing your car, give some serious thought to the type of car you’re going to buy. Some makes and models are much cheaper to insure than others so a major way of how to save on car insurance is to buy and drive a vehicle that is relatively inexpensive and/or with a smaller, less powerful engine.

All cars are assigned to a car insurance group. There are 50 car insurance groups, with those in group 1 likely to provide the cheapest premiums and the most expensive ones in group 50.

So, if you’re asking ‘why is my car insurance so expensive?’ and need to save money on your policy, try some of the tips suggested here to see if you can secure a discount on price.


Get a quote for RAC Car Insurance here 

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