COMMENT
Save Money On Your Car Insurance!

By Alison Hunt (TMFAlly)
February 16, 2005

So, it's car insurance renewal time and that letter from your insurer has dropped through your letterbox. It may even handily say 'Here's your renewal quote for next year, and the good thing is you don't need to do a thing, we will take £x from your bank account automatically - aren't we helpful?'

Well no, actually,  they're not - in most cases by shopping around you can better the deal that your insurer offers, and save yourself loads of money!

If you'd like to lessen your car insurance renewal premium and save some cash, follow these tips:

1. Shop Around for Quotes

The most time consuming job, but the one that will potentially save you the most money! Pick up the phone book and start calling; if you call two each day for a week, it won't take long, and you'll have 14 quotes to choose from!

Try asking your friends which companies they use to start you off. By all means use the internet too, but I've found phoning often provides the insurer with more information and can lessen the quote even more.

2. Add Your Partner

Ask the insurer to let you know the cost of your premium both with, and without your partner as an additional driver. Quite often, you'll find this reduces your premium as you're seen as less of a risk. Also, naming drivers is generally much cheaper than taking out an 'any driver' policy.

3. Fit an alarm or immobiliser

If you don't already have them fitted, consider fitting an alarm or an immobiliser to your car, they could reduce your premium significantly.

4. Increase your excess

This is the amount of money you will have to pay should you need to claim. If you choose a higher voluntary excess you'll take on some of the risk, and therefore reduce the cost of your premium.

5. Build up a No-Claims Bonus

Insurance companies reward drivers who don't claim on their policies with a discount for each year, called the 'no-claims bonus'. The longer you drive for without making a claim, the more no-claims bonus years you will accumulate. Typically, they can build up to a very nice 65% discount if you manage six years without claiming.

Try and build up a no-claims bonus, and when you've got five years, consider 'protecting' it – it'll cost a bit more but can save you from losing your discount should you need to claim.

However, you need to be careful. Recent research by insurance company MORE TH>N has found that protected no-claims bonuses are not all the same. Many companies limit the number of claims allowed (to one a year and two every three years for example) and some even reserve the right to increase premiums after a claim. The only way to get round this is to read the small print carefully.

6. Use Your Garage

Make sure you use your garage – and no, not for storing all the junk that clutters up your house – keep your car in it! Locking your car in a garage at night can save you even more money.

7. Don't Pay Your Premium Monthly

Have you ever phoned for a quote and been really pleased with the £250 total premium offered. You've asked how much it will cost to pay monthly and been told it will be £26.

That sounds fine you think…..then the cogs start whirring and 'hang on, £26 x 12 months is £312!'

'That's £62 more than my quote!'

Yes, you've guessed it - by paying monthly; you are effectively taking out a loan at 24.9% APR!

Make sure you check if it will cost you to pay your premium monthly instead of yearly. If you don't want to be ripped off but don't have the cash upfront, consider taking out a 0% credit card, and save the 'payments' yourself each month into a high interest savings account.

So if you're renewing your car insurance, follow these tips and reduce your premium (but make sure you check the policy details to ensure you have all the cover you need).

And if you phone your insurer to tell him your best quote, you may just find he'll match it!

You can find out more in our Insurance centre and take out a 0% credit card in our Credit Card centre.