Do you renew your car insurance with the same company every year just for convenience?  Always shop around for the best quote; I do this every year and have always saved £50+ on my renewal quote.  I always shop around online because it’s so much easier than phoning around and saves more time, besides you’d be running up your phone bill!  I normally use Confused.com as you only have to enter your details once and they do all the hard work for you because they are linked up to over 40 insurance companies.  If I find a couple of insurance companies that aren’t on their search list I may ring them up to compare.  I generally only ring up the companies with free phone numbers.  Another advantage of buying your car insurance online is that many companies give you a discount.

If you really want to spend the minimal amount on car insurance then firstly make sure you’ve got a sensible car that’s in Group 5 or less as these are the sort of cars that are less likely to be stolen and therefore carry a lower premium.  Hence cars that are more likely to be stolen are in a higher insurance group and therefore are more expensive to insure.  If you are unsure as to whether your car falls in to a lower insurance group you can find out by going to the Parker’s website. 

Generally the faster the car or bigger the engine the higher your insurance will be.  Now a sensible sized car would be to go for a 1.4 or 1.2, they obviously won’t be as powerful as a 1.6 but to be honest they have enough guts.  Of course that depends on what you actually use a car for, i.e. pottering around town and working locally or commuting up and down the motorway on a daily basis.  An added bonus if your car is less than 1549cc is that you can save up to £65 a year on your road tax compared to a car with a bigger engine.

There are different levels of insurance cover, so think about what is best for your needs.  They are:

Third Party Only – The cheapest you can get but only covers the person you hit, so you would lose out if you had an accident as you would have to pay for the repair of your car.  Probably only worth having if you car is worth £500 or less.

Third Party, Fire and Theft – This covers you and the person you hit in an accident and also covers you against theft or damage in the event of a fire.  I would probably chose this policy if my car is valued at less than £3000.

Fully Comprehensive – This is the most expensive of policies.  It is the same as Third Party, Fire and Theft but on top of that covers accidental damage to your car.  Only worth doing if your car is valued at more than £3000 but it’s entirely up to you.

Fitted security systems and where you keep your car at night make a huge difference on your insurance.  If you have a garage, use it.

One thing I’ve always found is that insurance companies try to diddle you out of a few more pounds by adding wonderful things such as legal cover, breakdown cover, windscreen cover etc…  Think carefully about whether you really need any of these and don’t be afraid to opt out if you don’t.  For example if you bank with Lloyds TSB and have a Select account with them you will already have breakdown cover.  You can also save a few more pounds on your insurance by increasing your excess (the amount you would have to pay in the event of an accident).

When you have found an insurance policy with a competitive rate it’s always best to try and pay it off in one go as installment plans generally cost more because they add interest on and sometimes an admin/setting up fee.  If you really can’t afford to pay it all in one go, ask them what the Apr is on their payment plan.  Chances are you’ll probably find that your credit card has a lower Apr or even better apply for a new credit card that has 0% interest on purchases for x amount of months.  That way you still get to pay monthly but won’t be paying any interest at all.

Last but not least, try not to get caught for speeding as this will bump up your insurance!