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It's almost the end of April, which is my cue to look around for cheaper motor insurance for my wife's car. I should point out two things before I go on: first, I've never owned a car (although I've driven company cars); second, I haven't driven since 1999, so my driving ability is probably no better than that of a learner! Nevertheless, in my many years in financial services, I worked with many motor-finance clients, plus I've been employed by one of the UK's biggest motor insurers, so I know how to drive a hard bargain [groan]. Here are five of the steps which I use to cut the cost of my wife's policy: 1. Try to avoid making claims It's well worth taking steps to lower your risk, so as to make sure that you don't have to claim. For example, you should: 2. Forget your renewal and start shopping around According to the latest British Insurance Premium Index from The AA, the average annual premium for a comprehensive motor insurance policy is £758, but the shop-around premium is £295 less at just £464. The saving is even more impressive for non-comprehensive cover: £411. Although almost half of motorists buy their cover without getting multiple quotes, only wimps renew without putting up a fight! Don't worry, because shopping around for cheaper cover isn't a hard slog and won't wear out your shoe leather. Indeed, various websites will do all the searching on your behalf, including Fool Partner The Idol, which price-checks thirty of the UK's leading insurers. 3. Shoulder some of the costs of a claim If you're involved in an accident which isn't your fault, you would reclaim your expenses from the other party's insurer, so you're not out of pocket. On the other hand, if you make an at-fault claim, you have to stump up your policy excess, which is usually £100+. One simple way to reduce your premium is to volunteer to pay an additional, voluntary excess, say, a further £150 to £500. Naturally, the larger the excess, the lower your premium. What's more, a larger excess may encourage you to drive more carefully, so you win both ways! 4. Don't pay your premium in instalments Although a few insurers will allow you to pay your annual premium in monthly or quarterly instalments at no extra cost, this is by no means the norm. Sadly, five out of six insurers (83%) will happily lend you the premium and then charge you a fortune in additional interest. Forget about 0% deals, because annual percentage rates on insurance instalment plans can be as high as 37% APR. Ouch! Rather than pay these ridiculously high rates, buy your motor insurance policy on a "0% on new purchases" credit card, which allows you to repay over, say, ten months without incurring interest. 5. Haggle before you pay My wife's car is insured by a well-known firm, which provided excellent service when her previous car was broken into a few years ago. Hence, I know that she's keen to renew her existing policy. Then again, her premium has gone up, even though she hasn't made a claim and her car is worth less than it was a year ago! Therefore, I've found a few lower quotes from reputable insurers and left Mrs D to haggle with her present insurer. Her premium is over £400, but I reckon that she could slice a tenth (10%) off this with a little negotiating, which means a saving of £40 from a single phone call. Eureka! For more tips on chopping your car insurance premium, read Cheaper Car Insurance In Ten Steps. Happy motoring! More: Get a quality quote in our Insurance centre | Dodge interest with a 0% credit card.
