How to cut your car insurance

Car insurance has never been so expensive. But Moneywise has some tips to shave hundreds off your bill.

Car insurance premiums are sky high. In fact, over the past two years, we've seen the biggest-ever rises in the cost of a policy. On average, cover will set you back more than £900 a year, according to the AA. 

But there are lots of ways you can make big savings.

The golden rule of cutting your car insurance bill is never just renew your existing policy. Insurers increase premiums each year as a matter of course, hoping their customers will put up and shut up.

Instead, shop around for a better deal online, using the comparison sites. Some promise to get you quotes from 100 companies in just a few minutes and save you hundreds of pounds.

Once you find a deal, either buy it through the website or go back to your existing insurer and use it as leverage to get an even better price.

There are other simple steps you can take to see your premiums fall.

If you can afford to, try to pay upfront. When you pay for your policy in instalments, the insurer is extending you credit and it will charge you for the privilege.

For example, a quote for fully comprehensive cover for a small hatchback costs £490 if you pay for the year upfront. But that rises to £530 if you pay monthly. So ditching the monthly repayments is a quick way to reduce your bill.

And be careful about what job title you put down. Call yourself a restaurateur when you're actually a café owner and you'll pay nearer £800, when you could have paid more like £700. The riskier your job title is perceived to be, the more you'll have to pay.

Adding another driver to your policy can also cut the cost of your premiums. And it doesn't have to be someone older or more experienced.

Take the example of 27-year old Chris. While teaching his 26-year-old girlfriend Laura to drive, he was amazed to find his Admiral policy cut by £100 even though she hadn't passed her test. All the insurer cared about was that they lived together. However, be careful who you add. Anyone deemed more risky than you, will increase your premiums.

There are other odd ways to save. For example, in some areas, parking on the street instead of a drive or in a garage can sometimes be cheaper. It all comes down to claims history. Insurers say that key thefts are more likely if the burglar knows which car belongs to which house. Ok, this tip might not save you hundreds but it can easily knock around £40 off your premiums.