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Car insurance costs up – and set to rise again

We’re paying more for car insurance than a year ago, and the total cost is due to increase further with an insurance tax rise in November. But there are things you can do to help combat the rise, including some you may not have thought of…

The average annual fully comprehensive policy for your car is now £359, up by 2.9% from a year ago in the latest statistics released by the Association of British Insurers (ABI).

Another 3.5% will be added in the autumn when the Insurance Premium Tax increases from 6% to 9.5%. The tax rise was announced in the government’s summer Budget in July, and applies to most other insurance policies such as home and contents too.

Shopping around different insurers is the best way to beat the growing cost of car cover. However, a new study this week by research company Consumer Intelligence shows only 39% of drivers switched insurers in the last year.

If something's stopping you from hunting for a better deal, maybe our four car insurance buying tips will help.

1. Don’t auto-renew

It’s rare for the best prices to be offered to existing customers. If you had a discount when you first joined your insurance company, it was probably just for the first year, which means your second (and third, and fourth….) will be higher.

If you’ve followed the steps below and still think you’ve got the best deal with your current insurer, great. However it pays to look around. You can always ask your insurer to beat the best quote you find elsewhere.

2. Always use more than one comparison site

The best way to compare is to use a comparison site – but they don’t all cover the entire market. It’s best to use one or two to get the best idea. There are also a couple of providers which aren’t on the comparison sites, so check them too.

The first and cheapest prices aren’t always the best policies to take, so make sure you read through the results.

3. Add a second driver

Surprisingly, you might pay less if you add a second, low risk driver – even if they’re not big users of the car. However watch out for “fronting” where you state the second driver is the main driver. This is illegal!

4.  Pay annually, not monthly

Unlike with many bills, paying by Direct Debit can actually cost you more as you’re often charged interest on monthly payments.

 

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  • Michael Bierman / 23 August 2015

    All the tips described above are known to me and I put them into practice every year, not just for car insurance but household insurance etc. Worthwhile savings can be made every year