Cheap car insurance: how to find the best deals and save on bills as premiums rise

Insurance body the ABI warns that rising cost of car repairs and replacements are pushing up premiums for motorists

The average cost of car insurance crept up by £5 in the second quarter of the year, according to insurers.

The Association of British Insurers (ABI) revealed that the price paid for the average policy is now £419 - up by 1.3% compared with the first three months of the year. However, the average price is still £11 lower than in the same period in 2021.

As motorists face sky-high fuel prices and other pressures on their finances, the ABI says that the rise has been caused by mounting costs faced by insurers - from the soaring price of secondhand cars to the increasingly complexity of modern cars.

The data also shows that the cost of new policies has risen more sharply than the cost of renewals, after the Financial Conduct Authortity introduced new rules to stop rewening customers being overcharged.

The cost of spare parts and repair work is climbing

Average premiums for new policies stood at £500 and average premiums for renewed policies increased were put at £371.

Unlike other estimates which are based on quotes, the ABI figures track the price of policies actually taken out by motorists to create an accurate picture of costs around the country.

Callum Tanner, the ABI’s manager, general insurance, said: “Insurers appreciate that these are difficult times for many households dealing with the rising cost of living.

“While, like many other sectors, motor insurers are facing higher cost pressures of their own, which are becoming increasingly challenging to absorb, they will continue to do all they can to keep motor insurance as competitively priced as possible.”

The ABI said that more than 18 months of rising costs in the used car market have contributed to increasing costs for insurers. Repairers have also faced the same semiconductor shortage that is affecting the whole car industry and the cost of raw materials, such as paint, has also risen. The increasingly high-tech nature of cars and the time and components involved in repairing them is also pushing up the cost of insurance claims.

How to cut your car insurance costs

With policy costs rising amid the ongoing cost of living crisis, a few simple steps can help save you money on your car insurance.

  • Shop around: Although new policy costs are rising faster than renewals, everyone’s circumstances are diiferent, so it always pays to compare quotes before committing to a policy.
  • Pay up front: In most cases, you can chose to pay your premium in a single lump sum or spread the cost over a year. Generally, there’s an extra cost for paying in installments, so pay the whole bill in advance if you can.
  • Check your mileage and usage limits: How far you drive each year affects how much you pay and, especially post-Covid, many of us aren’t driving as far as before, so check lower the mileage estimate if you can. Similarly, if you don’t use your car to get to work, deslect the commuting option under use, it could help cut costs.
  • Cut the extras: Insurers will always try to persuade you to include extra cover for things like lost keys, courtesy cars and breakdown cover. These all add to your premium, so consider whether you need them or whether you can get services such as breakdown cover cheaper elsewhere.
  • Increase your excess: A higher voluntary excess will often help cut the premium cost. Just be sure you can afford the extra cost should you need to claim.
  • Add a named driver: Somtimes, especially for young drivers, adding another more experienced motorist to your policy can actually reduce the cost, so it’s worth considering. On the other hand, young, inexperienced drivers or those with motoring convictions will push up costs, so don’t add them if you can avoid it.
  • Change your job. Some jobs attract higher costs than others and although you can’t lie about your employment you can be smart with the title or description you use to get a better quote
  • Consider telematics: Telematics or black box insurance schemes use a tracking device in the car to monitor your driving behaviour. It all sounds a bit Big Brother but, especially for young drivers, can bring lower premiums.