How to find cheaper car insurance

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By Mark Mitchell
Know Your Money Editor

It can prove difficult to know where to start when trying to find the best car insurance deal with a number of comparison sites available and some companies - such as insurance-review/">Direct Line - confident enough in their service to go it alone.

In recent times motorists have seen their insurance rise, along with ever-soaring petrol prices, which may make it more important to shop around than ever.

Prices are rising

A cheaper deal during the ongoing economic turbulence may prove important, as research has indicated the cost of car insurance rose by 14 per cent in the period between April and June this year.

Confused.com stated this leaves a comprehensive policy costing 31 per cent, or £142, more than it did in July 2009.

It said the price increases have been imposed in an attempt by insurers to make a return to profit, following increased claim costs, rising fraud and higher personal injury payouts.

Last year the industry had to pay out £400 million to the Motor Insurance Bureau to cover to cost of accidents involving uninsured drivers.

This alone added an average of £30 to the price of policies for motorists.

Simon Lamble, product director at Confused.com, said: "This is a massive blow for motorists who have already suffered at the hands of petrol price hikes and insurance premium tax increases and unfortunately we do not think we've seen the worst of it.

"In the last two years visibility of the market through price comparison sites has kept prices down and driven up competition. In order to secure customers, insurers have been forced to repeatedly slash their margins, but inevitably this could not continue."

Research found the biggest price hikes were imposed on drivers between the age of 41 and 55, as many in this age range paid to get their children added to their policy.

Women in this age group were hit too as they saw a 14 per cent jump in the cost of their cover if they added a driver who was not their husband to their policy, this comes in addition to a 14.2 per cent rise seen across the board.

The cost of car insurance also varies according to where you live and in the last quarter there was bad news for drivers in Bradford and Ilford, which saw an increase of 20 per cent.

Compare prices

It is always wise for those looking to save money to take steps to try and reduce the quote they receive.

This can be done through steps such as fitting an alarm, changing where you park and minimising the optional extras.

Once this is done it could be time to start the process of shopping around to find a deal that meets requirements and saves money.

There are a range of TV ads for comparison websites such as Money Supermarket and Go Compare, each claiming their service will allow drivers to compare the entire insurance market, which may prove confusing.

However, by only using one comparison site for car insurance people may only be comparing around 50 per cent of the market.

It may be wise to obtain a quote from two comparison sites from Go Compare, Money Supermarket, Confused and Compare The Market.

This process need only take a few minutes but could see a greater spread of providers covered.

It could also be worth cutting out the middle man and going straight to the provider. Quotes from Direct Line and Aviva - formerly Norwich Union - are only available by contacting them directly, as they are not listed on comparison sites.

People might also be able to save money by picking up the phone and haggling over the price as many insurance companies have a flexible policy on premiums if the caller is willing to take out a policy there and then.

Once an online quote is obtained, it may prove worthwhile financially to call the company to negotiate a discount to encourage an immediate deal.

By following the guide at Know Your Money consumers are able to search a substantially higher proportion of insurers than the average offered by comparison sites.

Important Notice
This guide is intended for general information only and is not intended as, and does not constitute, any form of advice, recommendation or endorsement by us of any particular product(s) or services and you should rely on your own further research and professional advice in relation to your specific requirements and circumstances before purchasing any products or services. Use of this guide is subject to the Terms of Use of the KnowYourMoney site.