The Quest For Cheap Car Insurance

By Donna Werbner | 2 May 2008

| 16 Comments

Car insurance. Let's face it: it's not the most exciting of topics. In fact, choosing a car insurance policy is probably up there with filling in your tax return and watching paint dry.

But what with food prices going up and the economy slowing down, many of us are feeling the pinch. And any way we can cut our outgoings is welcome.

So what's the cheapest car insurance policy out there -- and how can you get it?

Risks And Rewards

When buying a car insurance policy, you may assume that the facts the insurer is most interested in relate to the car and your driving skills. For example, the type of car, how old it is, whether you've got any motoring convictions, how many years of no claims bonuses you've achieved -- that sort of thing.

But try to get a quote from any car insurer and you'll see they're also interested in you and your lifestyle. For example, they'll want to know your age, gender, marital status and postcode.

And this isn't random demographic information gathered because they want to know who their customers are. They're using this information to calculate your premiums, based on statistics which show the likelihood that a person in your situation will need to claim on the policy.

And the greater the risk is that you'll claim on the policy, the higher your premiums will be.

For this reason, it is very difficult to point to a single insurer and say: they're offering the best deal at the moment. The cheapest deal for you will always depend on your individual circumstances and situation, as well as the car you drive and your driving record.

But which specific factors affect the cost of your premium? For example, does being married make a policy more or less expensive? If you park your car in a garage, will you pay less? Can female drivers really get cheaper insurance?

The Cheapest Car Insurance Policy I Could Find

Using The Motley Fool Car Insurance Comparison Service, here's the best quote I could find for myself - a 26-year-old woman living in North London:

This is the default quote I will use to when comparing all other quotes.

I was asked for my marital status when filling in the form for the quote. So what would happen if it changed and my long-suffering boyfriend decided to make an honest woman out of me?

As this table shows, if I were married, my premiums would decrease by £40 a year. Why is this?

According to Diamond, the reason married drivers pay lower premium is because its data shows that married drivers tend to claim less than single drivers.

Now, there's no doubt that, here at The Fool, we're always keen to find out about new and innovative ways you can save money.

But we wouldn't recommend getting married just to save £40 a year. In fact, that would probably be a very bad idea indeed. 

Men Vs. Women

What if I were a man? Would I pay more or less?

Despite all the statistics demonstrating that, overall, women are safer drivers and despite all the female-driver-only insurers out there which claim to offer fantastic deals to female drivers, the answer, surprisingly, is that I would pay nearly £10 less a year if I were a man.

This just goes to show that, if you are a woman, you should never assume that a female-only insurer will offer you the cheapest policy.

An insurer that offers policies to both men and women may well provide policies which are better value for money - so you should compare the whole of the market before you decide which insurer to go with.

Location, Location, Location

What would happen to my premiums if I upped sticks from London and moved back to the quiet Cheshire suburb where I grew up?

The biggest saving achieved so far - more than £90!

How about if I had a garage and parked my car inside it, instead of on the street outside my home?

Clearly, this is all about safety. A car is statistically more likely to get stolen at my address in North London than at my parents' address in Cheshire - but even a car in North London is less likely to get stolen if it is securely parked in a garage.

Sadly, however, not all insurers seem to be aware of this obvious fact. Diamond, for example, offered me a higher quote for a car that is usually parked in a garage than it offered me for a car that is usually parked on the street.

That's why if you do have the option to park in a garage as well as on a street, I'd recommend you double-check the price both ways.

Younger But No Wiser

What I wouldn't give to be 17 again.

Except, of course, when it comes to all the spots. And the expensive car insurance premiums:

As this table shows, if I suddenly, miraculously, became 9 years younger, with a 4-month old licence, my premiums would increase nearly three-fold!

In this situation, a ‘pay-as-you-drive' car insurance might be cheaper.

What about if I'd got my licence 9 years ago, when I was that spotty 17-year-old, and had managed to build up nine years of no claims discounts?

Here, my quote has almost halved.

In this way, it's clear that the more experience you have as a driver, the lower your car insurance premiums will be.

Well, I never said it was rocket science, did I?

Be Honest

Bearing all this mind, please don't be tempted to lie about your age, marital status, gender or any other personal details on your car insurance quote form.

This could potentially invalidate the insurance policy -- which would be very un-Foolish, indeed.

>Compare car insurance quotes using The Motley Fool Car Insurance Comparison Service