How to save money on car insurance

Written by Hejab Azam

17 June, 2019

Everyone knows that owning and running a car comes at a price. Aside from the cost of buying or leasing, there’s fuel, MOTs, services and insurance charges to consider. Car insurance can be a major expense for motorists and while lease cars require comprehensive cover, there are a number of things you can do to get cheaper car insurance.

One of the key factors when determining the cost of your insurance premium is the model of car you drive. All cars are assigned to one of 50 car insurance groups, with those in group 1 likely to provide the cheapest premiums and the most expensive sitting in group 50. Read this handy guide for plenty of tips and tricks to help you save money on your car insurance and find out which models offer the cheapest premiums on the market.

Compare Providers Online

Almost all car insurance policies have an auto-renewal clause, which allows an insurer to roll over your contract to a second year unless you tell them otherwise. Your insurer will usually notify you of the renewal by post and should outline the full details of your new policy and the premium. However, letting your insurance renew means you could miss out on potential savings. Shopping around and comparing different insurance providers online is the best way to reduce the amount you pay for comprehensive cover, as insurers rarely offer their best deals to existing customers.

If you’re disappointed with your car insurance cost at renewal time, then don’t be afraid to look for a better deal. Most companies allow you a charge-free period of 21 days to leave before your policy is automatically renewed, and although it may take some time to research the best car insurance rates, it’s worth it if you end up with a deal that cuts motoring costs. If you’d prefer to stay with your existing provider but aren’t happy with the new price, you could try haggling if you have a cheaper quote to compare your premium to. Your insurer may be able to discount your premium or give you another incentive to stay.

Increase Your Excess

Opting for a higher voluntary excess when setting up cover is another way to save money on car insurance. Insurance excess is the amount you’ll need to pay out towards the cost of a claim before your insurer will make a contribution. Most insurance providers will stipulate a standard excess required before they can offer cover. This means you’ll always have to pay a certain amount towards a claim no matter what policy you choose, as providers seek to prevent people from making fraudulent insurance claims.

On top of this, most providers will also offer you the option of adding a voluntary excess to your policy, which will increase the amount that you need to pay when you make a claim. For example, if you claim on your car insurance for the cost of an £800 repair and you had an excess of £250, you would pay the first £250 in order for your insurer to supply the other £400. However, it’s important to remember that you must be able to afford your higher voluntary excess, as you must pay it if you make an insurance claim.

Avoid Adding Extras

All car insurance policies are different, and some offer more benefits as standard than others, with most providers giving drivers the option to add on extras to their cover. However, if you’re looking to save money on your car insurance, you need to think carefully before adding extras such as windscreen cover, legal expenses cover, breakdown cover or the use of a courtesy car to your insurance package. Only add on extras if they’re absolutely necessary, you’re sure that you’ll benefit from them, and they’re worth the cost.

Calculate Driving Distance

One of the main factors used when calculating a car insurance quote is the amount of miles you’ll drive on average per year. This is because car insurance premiums are based on risk, and companies assume that the further and more often you drive the more likely you are to be involved in an accident and subsequently need to make a claim. Therefore, the higher your annual mileage, the higher your premium is likely to be.

Although restricting your annual mileage can reduce your car insurance, it’s important to be as accurate as possible when calculating the distance you drive. If you underestimate your mileage and need to make a claim, it could invalidate your policy and result in your provider refusing to pay out. To work out how many miles you cover, check your annual MOT certificate, review your car’s service record, or simply calculate how many miles you drive each day and add this up. Remember to include both the business and personal miles you’ll cover in your lease car.

Pay a Lump Sum

Although spreading the cost of your car insurance may feel less intimidating than paying your premium in one go, it will likely cost you more in the long run. This is because insurers charge interest when customers opt to pay their insurance monthly, with some companies adding up to 10.75% extra onto the quoted premium. Choosing to pay in one lump sum means that you only have to factor in lease payments, fuel, services and other running costs outside of insurance for the following year.

One way to pay in a lump sum is to put the upfront annual cost on a purchase credit card that offers an interest-free period. However, if you do choose to finance your insurance in this way, you’ll need to make sure you can pay off the entire credit card balance before the interest-free period ends. If you don’t, you may end up being hit by much higher interest payments than you would have otherwise been charged.

Other Ways to Cut the Cost

Another way to save money on car insurance is to add a named driver to your policy, but it’s important to bear in mind that this doesn’t always result in a saving. If you’re an older driver who is adding a younger, less-experienced driver to your policy, the price may go up to accommodate the increased risk. If you can, car share to cut motoring costs, either as a permanent agreement with someone or on your work commute.

Increasing your car’s security can mean that insurers offer you cheaper premiums. Fitting an improved alarm, immobiliser or tracking device can result in a discount. Securing your car against theft will also work to protect your no-claims bonus if you have one.

You could also consider taking out black box insurance. This is when a small telematics box is fitted beneath the dashboard of your car to monitor your performance, speed, braking, cornering and overall driving style. Results are reviewed regularly and may result in a discount on your insurance premium if you’re considered a careful and responsible driver.

If you’re looking for new comprehensive cover for your existing car, avoid making any kind of modifications to the interior or body. Defined as a change made to a vehicle that makes it differ from the manufacturer’s original specifications, insurance companies may judge a modification as increasing the likelihood of an accident or the risk of theft.

Cheapest Cars to Insure

Every car on the market is categorised into one of the 50 car insurance groups set by the Group Rating Panel for the Association of British Insurers. Some insurance providers can also use their own grouping system if they choose, so be sure to check where your car sits before applying for cover. Many factors impact how each car is categorised, including the average repair cost, the price of parts, the value of the car and the level of security.

With this in mind, here are five of the cheapest cars to insure in 2019:

  • Volkswagen Polo: The VW Polo with a 64 or 79bhp 1.0-litre engine is one of the cheapest cars to insure, qualifying for insurance groups one and two. This is primarily due to its impressive safety features.
  • Nissan Micra: Entry-level 1.0-litre Nissan Micra models sit in insurance group one, making it one of the least expensive superminis to cover. The 1.5-litre diesel is more expensive to insure as it sits in group seven.
  • Vauxhall Corsa: The Vauxhall Corsa is a solid choice for young drivers due to its low insurance rating, starting in group three for the least powerful models.
  • SEAT Ibiza: The SE trim SEAT Ibiza is fitted with a 1.0-litre MPI engine, placing it in group two, while those with the turbocharged 1.0-litre engine start in group eight.
  • Ford KA+: The Ka+ Studio gets a group one rating, while the Zetec trim bumps it up to group two. Opting for the more powerful engine will result in a group five categorisation.

To summarise, insuring a car can be expensive – particularly if you’re a relatively new driver who’s made a couple of claims in the last year. It’s important to do your research to find the best deal on your comprehensive cover or consider choosing a new lease car to save money on your car insurance.

At AMT Leasing, we’re committed to providing a quality service that’s tailored to you. If you’re looking for a new lease vehicle, contact our dedicated team today to discuss your requirements on 0113 417 0155.

Find out more about leasing with insurance​

If you want to find out more about leasing with car insurance, take a look at our handy guide  in which we look at the type of insurance you need, how much it costs to insure a leased car and how you can lower the cost of your insurance premium.

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