10 secret ways to slash the cost of your car cover

Last updated: Nov 18th, 2013
Feature by Nick Gibbs
Motorists have been hit hard in the pocket over the last 12 months in a lot of ways, but two particular costs stand out: stubbornly high petrol prices and car insurance premiums.
 
According to the AA, while insurance premiums are falling, they remain a huge cost for motorists – the average annual motor insurance premium stood at £747 in July 2013. For 17-22 year olds this increases to a whopping £1,743.

Even shopping around might not cut your bill - but don't despair, there are other options. In a business that relies so much on computers to calculate risk, there will inevitably be quirks you can exploit.

We reveal here 10 ways to cut insurance: you've probably never considered them, but they could save you a bundle.

ONE: Put someone else on the insurance - no matter what age

One of the easiest ways to reduce your insurance is to stick someone else on the policy, but it doesn't necessarily have to be someone older or more experienced.

Graeme Lambert, a 29-year-old journalist from Dunstable, was astonished to discover that by adding his 26-year-old girlfriend to the insurance for his Vauxhall VX220 sports car, his quote from Admiral went down £200. "I was amazed," he says. "Not only is she younger, but she's held her licence for fewer years than I have."

The reason is that his girlfriend's licence is endorsement-free, unlike Graeme's, and insurers rate her profession (teaching) a safer bet than journalism. The moral is: ditch your preconceptions and check to see what difference it could make.

Compare car insurance quotes from more than 130 insurers

TWO: Buy or convert a camper van

An insurance hike of over £1,000 pushed 32-year-old Nick Rees from South Shields, Tyneside into buying his dream vehicle. "The insurance quotes for my Citroen Saxo went up from £350 to £1,500, with a £3,000 excess after two thefts," he says.

"I tried all the small cars I could think of and my cheapest quote was £1,200. I worked out it was cheaper to insure a camper van."

Nick had always lusted after a rare off-road people-carrier called a Mitsubishi Delica. He found that if he turned it into a camper van, it would cost him £500 for fully comprehensive insurance via a conversion policy with Adrian Flux. Another £100 bought the equipment to convert it. Now he's looking forward to the summer.

THREE: Buy a classic: they are not as old as you think

Anyone who's owned a classic car will quickly list the benefits, and somewhere up top is cheap insurance. Specialist brokers are generous because they know the cars are cherished, and driven carefully and infrequently.

But it's little known that insurers' definitions of what constitutes a classic vary wildly and can include some modern cars.

For example, on specialist broker Footman James's 'acceptable list', any Jaguar is considered a classic after five years; a BMW after 10 years; and certain Land Rovers after 15. For bread-and-butter brands it's usually 20 years, but anything sporty will always qualify.

Maximum annual mileage is around 5,000 and the cars generally need to be garaged, but the savings are big - a 1985 Porsche 944 garaged in south London was quoted at £224 with Footman James, compared with £809 with the cheapest standard insurer (Admiral).

FOUR: Park on the street

Of all the insurance loopholes, this is perhaps the strangest: it could be cheaper to park on the street than in a driveway or garage. Martin Scampion, from Rustington, West Sussex, says: "I noticed the policy said the car was parked on the road, so I rang to say it was parked on the drive. It upped the premium by £37."

It all comes down to claims history: if one area has more claims involving garaged cars, street-parked motors will be cheaper. Insurers say one reason is that key thefts are more likely if the burglar knows which car belongs to which house.

FIVE: Ignore the comparison sites

Not all insurance companies list on comparison websites, but they still need something to lure you in - and that means discounts.

New Aviva customers, for example, get 12 weeks' free insurance if they have at least four years' no-claims bonus. Meanwhile, First Direct will knock 10% off your renewal quote if it's greater than £200. But always make sure you check the provider's quote against the competition.

SIX: Don't call about a prang

For minor accidents it's often cheaper to fork out for the work yourself. The moment you identify yourself as risky, even if it wasn't your fault, both the premiums and the excess shoot up.

Just telling the insurer, even if you don't claim, will alert it to the accident.

Alfa Numeric, writing on motoring forum Pistonheads, recalls: "My car was hit by a van that sped off. I rang my insurer to see what my excess was, but then paid for the repair myself. Come renewal time, my policy had gone up by over £100."

If you don't want to involve your insurer, you don't have to inform it, either at the time or when you renew your policy. "There's no legal obligation," says Malcolm Tarling, a spokesperson for the Association of British Insurers.

SEVEN: Don't be shy: haggle

Buying a car is one of the few situations still left in the UK in which haggling is acceptable - and so is insuring it. Even in the age of the comparison website, the insurer will still bump up the cost of its second year's cover - partly to offset the discount it gave you for joining and partly to take advantage of customer inertia.

So if you like the insurer but not the price, don't hesitate to quote the cheapest online offer.

Sales people on the phone will usually have a standard discount they can give without authorisation and another one they have to clear with their supervisor, so if you're not happy with the price, stay on the phone until you are, and always be prepared to cut and run: it strengthens your hand.

EIGHT: Ditch monthly payments

This is a luxury to avoid - in fact, some insurers don't give a monthly option, which means you could lose out on the cheapest deals.

The extra cost of splitting payments into 12 can add hundreds to your bill, plus your insurer then farms the business out to a finance company, which will take a healthy cut in the form of increased APR on the interest rates.

Insisting on monthly payments when insuring the old Porsche (from the earlier example) would remove the cheapest quote of £729 from Admiral, pushing Endsleigh to the top of the list at £1,069. Add interest to the monthly payments and the total would then be £1,210, a hike of £481.

NINE: Be precise about your job

It makes a difference. Call yourself a restauranteur when you're actually a café owner and you'll pay £800 instead of £707. Likewise, a nurse would pay £800, a medical officer £745, and a student nurse £887.

Insurance companies keep a detailed record of past accident history for all professions and if the quote is high, it's a case of being penalised for the carelessness of your colleagues.

You can check what your exact job title should be by using the 'job picker' tool on moneysavingexpert.com. This lists all the various titles for specific jobs and the difference in average quotes. 

TEN: Choose fully comp over third party, fire and theft

Another mystery of the insurance industry is why fully comprehensive insurance (which covers damage to your car) is often cheaper than third-party insurance (which just pays out to the person you hit).

One reason is that fewer underwriters offer it, as it's popular with younger drivers who are a bigger risk.

But another reason is that insurers don't like surprises. In the event of a crash, drivers with third-party cover don't bother informing their insurer. There's no point - they just hand over the details to the other party and let their insurers sort it out.

But costs can quickly mount, ranging from personal injury claims to temporary car replacement, and the first the third-party insurer hears of them is when it's presented with the huge bill.