Money Wellness
Image of a man writing in a note book with a toy car on top and a car full of coins falling over at the side to show ways to save on your car insurance premium
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calendar icon22 Jan 2024

The brakes haven’t been applied to the cost of car insurance

The cost of insuring an average car rose by 58% in the final quarter of 2023, increasing by £338 on average when compared with the same period as the year before, according to Confused.com’s insurance price index.

Last year’s rise in car insurance premiums is the highest annual increase since the index was launched in 2006.

There are many factors that determine how much drivers pay for their car insurance, including the area they live, their age and the type of vehicle they drive. This means some drivers are worse off than others.

London saw the steepest rises, with the cost of car insurance now £1,503 on average, with prices rising by 61% in just 12 months. While in outer London, prices have increased by £567.

Outside of London, drivers in Manchester and Merseyside saw annual increases of around £417 (57%), making the average premium £1,154. And in the West Midlands, drivers are paying £1,139 on average, following a £442 (63%) increase.

As usual, younger drivers bore the brunt of the increases with those under 21 seeing costs increase to over £2,000 on average. And anyone under 18, will have to fork out £2,995. But it’s 17-year-olds who have faced the greatest rises, with premiums nearly doubling last year, meaning that first tine drivers will have to pay around £2,613 to get their car on the road – up 93% on the year before.

With millions of people feeling the pinch from the cost-of-living crisis, driving is become increasing unaffordable for many.

Why are prices increasing so much?

There are many reasons car insurance prices are increasing so rapidly. In part it can be put down to inflation – the increasing cost or raw materials, and repairs. Even paint has soared in price.

Insurers take these rising costs into account when deciding premium increases.

The pandemic can also be blamed, with insurers enjoying a profitable time when car usage was low and feeling the affects when claims started to rise the year afterwards.

And poor weather conditions have also come into play, leading to a larger volume of claims and ultimately pay outs.

Ways to keep the cost of your car insurance renewal down

A quick search in google will bring up lots of different suggestions about how you can reduce your car insurance renewal. But be careful as some are outdated, and others don’t make much difference or can even increase your quote.

Here’s some cheeky ideas that we love and might really you pay less when you come to renew:

Go fully comp

Some time back, insurers realised that millions of drivers kept their premiums low by opting for third party, fire and theft. But these motorists turned out to have more accidents than their counterparts who’d take out comprehensive cover.

Therefore, some insurers charge less for fully comprehensive cover than they do for third party, fire and theft.

It’s wise to compare quotes for ALL levels of cover as you might find yourself a surprise bargain.

Remove stuff you don’t need

It might also be worth reviewing add-ons to see if they’re increasing your quote. Things like courtesy cars, breakdown or car key cover can really inflate premiums.

Check your policy details to make sure you’re not overpaying for things you don’t need.

Get on the electoral register

Make sure you’ve registered to vote – even if you have no intention of doing so!

Insurers use the electoral register to check who you are and review your credit score. If they can’t find you or deem you as irresponsible, they might decide you’re a higher risk, which will increase your premium. And, in some cases, they might not insure you at all.

You can review your credit score for free. Check to make sure it’s correct and there’s not mistakes that need removing. If you do have a poor credit score take steps to improve it like making sure bills are paid on time, using direct debits, paying credit card balances strategically or keeping old accounts open.

Make yourself low risk

Have a look at courses like Pass Plus, which is between £150 and £200, or take an advanced driving course. These can demonstrate you’re a low-risk driver and should lead to cheaper premiums.

Don’t guestimate your mileage

You’ll be asked for an estimate of your annual mileage. Don’t guestimate this as you could be miles out and you could end up paying more.

Log your mileage each time you renew your car insurance so you have a regular check point each year you can refer back to. Lots of insurers also have annual mileage calculators on their websites which are useful.

However, don’t get caught out by setting your mileage too low as this could also increase your premium.

Premiums increase for anyone doing below 2,000 miles a year because they are viewed as higher risk because they aren’t getting enough experience on the road.

Around 5,000 miles a year appears to be the sweet spot for lower insurance prices.

Change the way you describe your job

Your job description can have a huge affect on the price you pay for your car insurance premium.

We’re not suggesting you lie about what you do as this will invalidate your cover – and is illegal. But you could consider how you describe it.

According to GoCompare you’ll pay £88 more if you describe yourself as a ‘chef’ than you would if you selected ‘kitchen staff’ on your application.

And if you have more than one job, it’s always worth comparing quotes for each one to see if it makes any difference.

Buy your insurance early

Moving the start date of your insurance by two weeks in advance of the renewal date can save you over £100.

If you do the quote to start the same day, the insurance companies know you’re desperate and will take advantage.

Increasing voluntary excess

It’s long been advised that if you increase the amount you’re willing to pay in the event of an accident, you’ll pay less for your premium.

However, doing this can have very little effect on your premium – sometimes only reducing it by about £4 – and could leave you with an unaffordable repair bill at a later date.

Parking a car in a garage

Insurance companies have got wise to drivers saying they park their car in a garage to reduce premiums when many don’t. Therefore, very few now offer discounts for this.

Conversely, some insurers offer greater reductions to drivers who park on the street. This is because of the rise in car key burglaries in recent years. And if your car is on the street, it’s difficult to work out which car belongs to which house and more unlikely to be stolen.

Avatar of Caroline Chell

Caroline Chell

Caroline has worked in financial communications for more than 10 years, writing content on subjects such as pensions, mortgages, loans and credit cards, as well as stockbroking and investment advice.

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