Beat rising car insurance costs

Millions of motorists pay more than they need to by auto-renewing their cover

Man hand on car gear to drive the car

Car insurance premiums are set to rise this year, yet rather than trying to reduce costs, millions of motorists pay more than they need to by auto-renewing their cover.

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Higher compensation payments, steeper repair costs and rising theft claims are all likely to push premiums up in 2020, according to comparison site Gocompare.com, with fraud and Brexit uncertainty adding to costs. Data from the Association of British Insurers (ABI) shows that that car insurance scams are the most common and most expensive, with 55,000 dishonest claims worth £629 million detected in 2018 alone.

The good news is that there are plenty of things motorist can do to keep costs down, starting with shopping around for insurance cover.

Don’t auto-renew

Despite the introduction of new rules which mean insurers must alert policyholders that they can shop around for cover, separate research by Money SuperMarket.com found that nearly 17m drivers automatically accept the renewal quote they’re offered, costing them a massive £674m a year.

Rather than rewarding drivers for their loyalty, insurers often penalize them for staying put, hiking prices by an average of £40 a year, according to research by comparison site MoneySuperMarket.com. One in five (20%) drivers who auto-renewed last year saw increases of between £51 and £125.

Dave Merrick, car insurance expert at MoneySuperMarket.com said: “Although some of us are shopping around for a better deal, the number of people allowing their policy to auto-renew has doubled in just a year, meaning that even more people are paying a loyalty tax by staying with their insurer.”

Pay annually

If you can afford a lump sum payment, paying for your car insurance annually rather than monthly can reduce the amount you pay.

Paying monthly means you’ll have interest added, bumping up the cost of cover. If paying for your policy annually would leave you stretched, one option may be to consider using a 0% credit card. However, you must be certain you can pay off what you owe during the introductory interest-free period.

Choose a higher voluntary excess

The excess is the portion of any insurance claim you must pay yourself. Raising the excess can reduce the cost of your premiums, but you must be certain the amount you choose is affordable, otherwise you might struggle to afford to make a claim.

Think about a telematics policy

If you pride yourself on being a careful driver, you might want to consider taking out telematics insurance, which bases your premiums on data gathered by a black box when you drive.

Consider security

If you’re able to reduce the risk of your car being stolen, this should be reflected by cheaper car insurance premiums. Installing an immobiliser and alarm can both help deter thieves, so let your insurer know if you have either other of these. If you can park your car in a secure garage, that can help lower the cost of cover too.

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