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The KwikGuide to: Car Insurance
introductionAbout car insurancetypes of cover
extra features
jargon buster
common mistakes

Insurance buying guidewhere to buy
how to choose
cutting the cost

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choosing car insurance guide

cutting the cost of car insurance

1. The golden rule: shop around. Don't just sign on the dotted line to renew with your existing insurer every year, or let your insurer get away with automatically renewing your cover. It's likely you'll be paying more than you need to.

Why is shopping around so important? The price of insurance from the many different providers depends on a wide variety of factors about you, your driving record and your car. Insurers place different emphasis on different factors. Plus, due to the competition between insurers, each company's 'formula' also varies year-to-year.

KwikTip: always get a car insurance quote from Direct Line too,
as they don't take part in the price comparison websites.

This means that, for the same car & driver circumstances, different insurers will quote widely differing prices. And that the best for you one year might not be cheapest the next.

Many people can save up to £150 by shopping around properly. See how much costs could vary for your own circumstances using our car insurance links page with links to dozens of major insurers and comparison websites.

2. Avoid paying monthly. The admin fee or interest rate for paying your premium by monthly direct debit may cost you far more than if you paid in one go on a competitive credit card.

Many insurers charge more than a typical credit card interest rate for paying in installments - some at least 24%. So always ask the APR for paying monthly and consider using a credit card if you don't have the cash available. Ideally a card with an introductory interest-free period.

Paying up front will also prevent your insurer automatically renewing your policy, possibly at an uncompetitive rate. This will ensure you'll shop around again for the best deal available at that time. Insurers can give you very short notice in which to instruct them not to renew your policy and, if you wish to cancel shortly after they have renewed it, they may first ask you for proof that you have bought cover elsewhere. Meanwhile the brief window within which you may cancel without incurring punitive extra charges ticks away.

3. Consider cutting your cover - do you really need Comprehensive cover when Third Party, Fire & Theft may do? You could end up footing the bill for any repairs to your own car if you have an accident. But might that work out cheaper than a heavy premium for 'fully comp' cover?

Also, if you don't intend to use the car for commuting to and from work, say so. Limit your cover to social use only.

Finally, consider your real annual mileage. If you do fewer than the average 10,000 miles a year, say so. Insurers realise that less time on the road is likely to mean fewer claims, so will reward lower mileages appropriately. Just don't exceed the limit you have set, without informing your insurer.

4. Fit approved security devices. Even small items like an approved steering wheel lock can help cut your premium. Approved alarms and immobilisers cost more, but could save you up to 30% on your insurance every year. Just don't forget to actually use any security devices you have declared. If your car is stolen without them having been activated, you may not be covered.

5. If you're married, add your partner to your policy. It might seem strange that adding an extra person could cut the cost of cover, but perhaps insurers equate marriage with responsibility. Whatever the reason, surveys suggest doing this could be worth a 20% saving on your premium.

6. Garage your car overnight. Clear out all that junk from your garage and put your car in it. It's a guaranteed saving, particularly in higher risk areas.

7. Buy online. Most insurers give a 5-15% discount and other benefits for buying your cover online.

8. Don't modify your car's standard specification. Any mods from alloy wheels to spoilers and body kit makes insurance companies fret and prices rise.

9. Don't judge the premium by the excess. It's a mistake to assume that a policy with a high compulsory excess is likely to be one of the cheapest. Search out the combined cheapest and lowest excess policy for the cover you need, then consider offering to pay a higher excess to bring the premium down further.

10. Young drivers. Take Pass Plus - anyone under the age of 25 who has passed their test within the past 12 months can take this extra test. It costs £100 but could cut deadly starting-out insurance by a third.

Also consider adding an experienced driver to your policy - that can have the effect of cutting the premium. But don't get a parent to 'front' a policy for your own car, with you as a named driver. Insurers are catching on to this and, if you have to claim, will look at who the 'main user' of the car is. You also can't get any valuable no claims discount until you have a policy in your own name.

The best type of car for the most reasonable insurance bills is something small and inexpensive with a diesel engine. With such a car, and less chance of a big financial loss if it's stolen or damaged beyond repair, you can also risk cheaper Third Party only cover.

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