Car insurance is an unavoidable expense, and it can be a significant drain on your monthly budget. Since the start of 2021, car insurance costs have been slightly lower due to lockdown restrictions reducing the number of cars on the road.
But with most restrictions now lifted in the UK and as more people return to work, new data from MoneySuperMarket shows that car insurance premiums are going up. Even as rates start rising, the good news is that there are plenty of ways to save on your car insurance. Let’s explore five options that should be on your radar.
What’s happening to car insurance costs?
According to insurance comparison site MoneySuperMarket, the average price of comprehensive car insurance increased by 2.5% between July and September, from £402 to £412.
This is the first time that premiums have increased since the last quarter of 2020. MoneySuperMarket attributes the rise to people returning to work, meaning more cars on the road and more claims.
Despite the increase, average car insurance costs are still 10.4% lower than they were this time last year.
Drivers in London continue to pay the highest premiums at an average of £595. This is followed by the North West, where average premiums are £489. The West Midlands comes in third place with average car insurance costs of £477.
Drivers in the South West, meanwhile, pay the least at £298, which is £114 less than the national average.
How can you lower your car insurance premiums?
Now that it’s clear why car insurance costs are rising, let’s look at five things you can do about it.
1. Choose your car wisely
Some cars are simply cheaper to insure than others. In fact, every car in the UK belongs to one of 50 car insurance groups. The groups are based on things like performance, new car value and the price of parts.
The lower the group your car is in, the cheaper it will be to insure. So, if you’re in the market for a new car and don’t want your insurance premiums to cost an arm and a leg, do your research to see what group different vehicles fall into. After that, get insurance quotes on the cars you’re considering to help you make a decision.
2. Compare car insurance quotes from multiple providers
Don’t sign up with the first provider you come across or automatically renew your current policy.
You could miss out on potentially cheaper and overall better deals if you don’t take the time to compare car insurance quotes from different companies. It takes less time than you might think, but you could save up to £253 a year according to MoneySuperMarket.
3. Bundle your policies
If you have more than one car in your household, or if you have life insurance, home insurance or any other type of insurance, try to use the same company. Some companies will knock a significant percentage off your premium for having multiple policies with them. If they don’t offer this to you automatically, you are well within your rights to ask for it!
4. Add a higher voluntary excess
If you can afford it, raising your voluntary excess could save you a good bit on the cost of your car insurance premiums.
5. Pay annually
Your car insurance is likely to cost you more if you pay monthly because of interest charges. If you can afford it, the cheapest way to buy car insurance is to pay upfront. You can set aside a little money each month so that you can afford to pay at the start of each new insurance term.
Could you be rewarded for your everyday spending?
Rewards credit cards include schemes that reward you simply for using your credit card. When you spend money on a rewards card you could earn loyalty points, in-store vouchers airmiles, and more. MyWalletHero makes it easy for you to find a card that matches your spending habits so you can get the most value from your rewards.
Was this article helpful?
YesNo
About the author
Sean is a personal finance writer with a strong passion for helping others become more financially literate and make better financial decisions. He covers everything from credit cards to savings to investing.
Some offers on The Motley Fool UK site are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.
This post was originally published on Motley Fool
