Car insurance prices are falling: can you save at renewal?

Car insurance is getting cheaper, with typical policies costing £54 less than they did a year ago. Here’s how to cut the cost of insuring your motor.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Sale agent deal to car loan contract with customer.

Image source: Getty Images

Car insurance prices are falling, with average premiums for the most popular cars now £54 cheaper than a year ago. So how can you save on the cost of your car insurance? Let’s take a look.

[top_pitch]

How much are car insurance prices falling?

According to comparethemarket.com, between July and September, the cost of car insurance for the ten most popular cars fell by £54 year on year. 

The comparison website suggests that drivers of these cars typically spent £595 on their car insurance this year compared to £650 a year ago. This is a drop of roughly 8%.

The three most popular cars to insure are the Ford Fiesta Zetec, the Mini Cooper and the Fiat 500 Lounge. Drivers of these cars have been able to access cheaper premiums this year. That’s because typical renewals on these models now cost between £20 and £60 less than a year ago.

What are the cheapest cars to insure? 

According to comparethemarket.com, the cars with the cheapest car insurance include the Renault Captur, Nissan Qashqai, and Fiat Panda Pop.

In Q3 2021, the Renault Captur attracted a typical premium of just £276 compared with £404 a year ago. Meanwhile, Nissan Qashqai drivers paid an average car insurance premium of £305 in 2021. And Fiat Panda Pop owners typically paid £425.

As well as these models, other cheap cars to insure include the Dacia Sandero Stepway (typical annual premium of £334), Hyundai Tucson (£335), Ford Ecosport St-Line Ecoboost (£335), Kia Sportage (£335), and Ford C-Max Zetec (£339).

It’s worth knowing you could save a typical £268 (45%) on your car insurance each year if you opt for one of these cheaper models. 

Ursula Gibbs, director at comparethemarket.com, explains why this is: “Our research shows that choosing the right car model can make a substantial difference to your annual premium. Lots of factors can influence how much a car model costs to insure, such as engine size, repair costs and security features.

“Normally, the bigger the engine your car has, the higher the insurance premium. Alarms, immobilisers, or other built-in security features can bring down the cost of insurance by making a car more difficult to steal.”

[middle_pitch]

How can I save on my car insurance?

Aside from choosing the right model, you can save on your car insurance by shopping around for the best deal. The basic rule is that you should never automatically renew. That’s because the cheapest policies are often reserved for new customers.

Ursula Gibbs explains: “Car insurance is usually one of the most expensive running costs for drivers, so most will be relieved that premiums are cheaper than last year. However, many drivers might fail to take advantage of these savings if they simply auto-renew their insurance with their current provider.

“Given the financial pressures that the increased cost of fuel is placing on many households, it’s worth shopping around to take advantage of these sorts of savings.”

Despite this, scoring big savings by comparing prices may soon become a lot harder. That’s because from January 2022, insurers will be banned from charging existing customers more at renewal than new customers. As a result, the savings you can gain by switching providers will almost certainly shrink next year.

While the move by the FCA to clamp down on the customer ‘loyalty penalty’ has been applauded by some, the policy will almost certainly lead to higher prices across the board from 2022. That’s because car insurance providers will effectively be unable to subsidise cheaper new customer policies by overcharging existing policyholders.

This is great news if you don’t bother to switch every year, but bad news if you’re the type to regularly compare prices. With this in mind, if your car insurance is up for renewal, this may be one of your last opportunities to save big. To get yourself the best deal, see our list of car insurance comparison services.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

More on Personal Finance

Note paper with question mark on orange background
Personal Finance

Should you invest your ISA in a model portfolio?

Which model ISA portfolios offer both high performance and low fees? Hargreaves Lansdown, Interactive Investor and AJ Bell go under…

Read more »

Economic Uncertainty Ahead Sign With Stormy Background
Personal Finance

Is it time to exit emerging markets investments?

Investors may well be sitting on losses from emerging markets funds. Is it worth keeping the faith for a sustained…

Read more »

Personal Finance

Share trading? Three shares with turnaround potential

Share trading has been difficult in 2022, but which companies have turnaround potential? Jo Groves takes a closer look at…

Read more »

Man using credit card and smartphone for purchasing goods online.
Personal Finance

Revealed! Why Gen Z may be the savviest generation when it comes to credit cards

New research reveals that Gen Z may be the most astute when it comes to credit cards. But why? And…

Read more »

Environmental technology concept.
Personal Finance

The 10 best-performing sectors for ISA investors

The best-performing sectors over the past year invested in real assets such as infrastructure, but is this trend set to…

Read more »

Road sign warning of a risk ahead
Personal Finance

Recession risk ‘on the rise’: is it time for investors to worry?

A major global bank has suggested the risk of a recession in the UK is 'on the rise'. So, should…

Read more »

pensive bearded business man sitting on chair looking out of the window
Personal Finance

1 in 4 cutting back on investments amid cost of living crisis

New research shows one in four investors have cut back on their investing contributions to cope with the rising cost…

Read more »

Image of person checking their shares portfolio on mobile phone and computer
Personal Finance

The 10 most popular stocks among UK investors so far this year

As the new tax year kicks off, here's a look at some of the most popular stocks among UK investors…

Read more »