Car Insurance

DOs & DON'T to get cheap car insurance.

Reducing insurers' perception of your risk can cut the price you pay.

Car insurance rates, and other insurances, are set by actuaries, whose job is to calculate risk. Each insurer's price depends on two things: their underwriters' assessment of your particular risk focus, and then their own pricing model which dictates what customers they want to attract. See the following for ways to reduce your risk:

DO FIT SECURITY AND PARK OR DRIVE CAREFULLY

Any extra security will help. Fitting an alarm or immobiliser will reduce the bill substantially.

Plus, as theft and accidental damage add a wedge to insurance costs, if you leave your car in a garage or driveway it's a big theft deterrent and means accidental damage is less likely.

The more points on your licence, the higher the cost. While speeding points remain on your licence for four years, insurers usually check for convictions during the last five before they are removed from your record.

One speeding conviction may only affect the price of cover by around 5% - but any more will bump up the price, with two offences costing around 20% more.

Being caught driving with a mobile phone is more serious, and can double your quote. It can also give you three instant points on your licence, which stay on for four years. Approved hands-free kits are fine if used properly.

DON'T FORGET TO CHECK IF YOUR PHOTOCARD IS VALID

Photocard driving licences replaced paper ones in 1998, and under you must renew your photo every 10 years. Yet in July 2011, 1.7 million photocard licences were out of date, according to the DVLA. 

DO ACT NOW IF YOU'RE A MAN

All insurers must follow the European Court of Justice's gender equalisation ruling, which began in December 2012. It means all things being equal, men and women must pay the same.

In the past, women typically paid £315/year less than men, with those under 20 paying £2,000 less. But this is no longer the case.

So, if you're a man, you could save £1,000s. Get a quote now and compare it against your last renewal, even if your next renewal's months away. It's less, consider cancelling and starting a new policy.

As long as you've not claimed, you'll get a pro-rata refund, but check and factor in any exit fees (approx £25-£50), and remember you won't earn any no-claims during that insurance year.

Use the system in this guide to hopefully beat your current price, or at least find the cheapest you can.

DON'T ASSUME THIRD PARTY'S CHEAPEST

Before we begin, it's important to understand that there are three different types of car insurance: third party, third party fire and theft, and fully comprehensive (full definitions below).

Logically, third party insurance should be cheapest as it offers a lesser level of cover than fully comp - yet this isn't always the case. So get quotes for third party and fully comp just in case it's cheaper. Plus always make sure you check your policy so you know exactly what you are and aren't covered for in the event of a claim.

It's likely third-party buyers are on average a higher-risk group, perhaps as insurers may feel they care less about their cars, and so prices are pushed up. To illustrate this, in one low-risk driver quote we found £290 for fully-comprehensive, compared with £406 for third-party. This isn't a hard rule, but always check both.

THIRD PARTY

The minimum level of cover you need to legally be able to drive on the road is called third party. It used to be the cheapest type of insurance, but bizarrely, fully comprehensive policies can now sometimes be cheaper.

Third party covers you for any damage you cause to another person's vehicle, and gives protection for any passengers in your car.

Therefore, if you're in an accident and it's your fault, you'll have to pay for any repairs to your own car yourself, as your insurance won't cover it. It may be more expensive because it's assumed you care less about your car and are therefore more likely to have an accident.

It's generally the most suitable for those:

• With cars worth less than £1,000
• Aged under 25 (though also read Car Insurance for Young Drivers)
• Without a no-claims bonus
• Living in a high risk area

THIRD PARTY FIRE AND THEFT

Third party fire and theft has the same level of cover as third party insurance. However, self-evidently, it also provides assistance if your car is stolen or set on fire.

FULLY COMPREHENSIVE

This is the widest level of cover, but can sometimes be the cheapest. The big advantage is that if you have an accident and it was your fault...

You'll be able to claim the cost of repairing your car, and cover personal injury costs, as well as those of other drivers.

The cover also includes accidental damage and vandalism, for example if somebody causes damage to your car when it is parked in the street and drives off.

Plus you'll usually (though not always, so do check your policy details carefully) be able to drive other people's cars if you have their permission, although this is likely to only be third party. Sometimes you'll be covered for driving hire cars too.

Fully comp is a good idea if your car is worth more than £1,500, and gets more important the more valuable your car is. Many insurers will only offer fully comprehensive cover for cars over a certain value anyway.

There are a few ways of cutting the cost of fully comprehensive cover. For example, Tesco Bank offers a comprehensive policy but has a higher compulsory excess, which lowers the cost. However, this doesn't automatically make it cheapest; so make sure you use the comparison sites below to check.

DO TRY ADDING A SECOND RESPONSIBLE DRIVER

If you've considered adding a second driver to the insurance, even if they won't use the car often, this can smooth out the average risk and sometimes reduce the premium. Those with an additional record for driving well are likely to help make bigger savings, but anyone that's in a lower risk category than you can help.

It won't always work, but it's worth playing with quotes to check.

At no point should you add your name as the main driver on someone else's car, such as one of your children, instead of them. This is known in the industry as 'fronting' and is fraud. When you come to claim, this will often be checked out and your insurance will be invalidated. It can lead to prosecution, so don't do it.

DON'T OVER-ESTIMATE YOUR MILEAGE

The less you drive, the cheaper your insurance may be. Where possible, try to reduce your mileage. This may sound trite, but actually the real key is incorporating the extra insurance cost when you make long journeys, not just the cost of petrol compared to taking the bus or train. 

Anecdotaly, though many simply get a quote for 10,000 miles per year, Money Savers have reported that 5,000 is the cheapest quote - but we haven't tested this. If you drive your vehicle on business, always declare this rather than just include the business miles as personal, or the policy may be void.

DO TELL INSURERS ABOUT CHANGES AND SPECIAL CIRCUMSTANCES

If you haven't got normal circumstances, eg, you've made a claim in the past few years, have a modified car or expect to drive 100,000s of miles a year, tell the insurer. If you don't and then try to claim, even for an unrelated issue, your whole policy may be invalid.

Plus you should also tell your insurer about any change, even if it's just your address. This is crucial as it reduces potential problems in the event of a claim. Trying to get insurance after you've had a policy cancelled due to a fraudulent claim is very difficult. It's also very expensive and will follow you for the rest of your life.

A change in circumstances includes moving jobs, as insurers believe this can affect your risk. Scandalously, the unemployed often (though not always) pay higher rates for their car insurance, so do inform your provider if you're out of work - but also do the full checks below to see where you can get the cheapest cover.

You may also save on insurance if you're in a stable relationship - if you're living with a partner rather than listed as single.

DON'T MODIFY YOUR CAR

Sexy it might be, Money Saving it ain't. The more changes you make to your car, barring security ones, the more you'll be charged.

Always make sure you inform your insurer of any modifications to your car, whether you made them or not, or it may invalidate your policy. A modification is anything that isn't part of the standard vehicle specification, including factory-fitted optional extras such as alloy wheels.

Plus as a more general point, the combination of popularity, engine size and value all have an impact on car insurance costs. It's worth considering this when you buy. Insuring a super-powerful beast of an SUV for a 17-year-old would cost enough to make Bill Gates weep.

DO WORK OUT HOW MUCH YOU'D REALLY CLAIM FOR

It's worth considering going for a policy with a higher excess (the amount of any claim you need to pay yourself). Many people will find claiming for less than £500 of damage both increases the future cost of insurance and can invalidate no-claims bonuses, meaning it's not always worth making a claim.

So why pay extra for a lower excess? A few policies will substantially reduce premiums for a £1,000 excess, so try this when getting quotes. The downside of this is if you have a bigger claim you'll have to shell out more, so do take this into account.

DON'T FRONT - IT'S ILLEGAL

At no point should you add your name as the main driver on someone else's car, such as one of your children.

This is known in the industry as 'fronting', and is fraud.

If you claim, this will often be checked out and your insurance will be invalidated and can lead to prosecution, so don't do it.

If they are the main driver, then they should be listed as that.