Decide on the level of car insurance cover
- The cheapest car insurance cover is third party. This protects you from liability if you injure someone and pays to replace or repair their car, but does not cover damage to your car.
- A slightly more expensive option is third party, fire and theft. In addition to third party cover, it pays for repair or replacement of your car if it's stolen or damaged, or destroyed by fire.
- The most expensive car insurance is comprehensive. These policies also cover damage to your car if you are involved in an accident.
Things to look out for in car insurance cover
- Check that you're covered if personal belongings are stolen from your car.
- Check for upper limits, i.e. what the policy will pay out on individual items—for example, expensive in-car audio equipment.
- Check for legal protection cover, which is essential if you're involved in a legal action as a result of a car insurance claim.
- Ask about any excess, i.e. the amount you have to pay on each claim.
How to cut the cost of car insurance cover
- Shop around—buying online can be up to 10 per cent cheaper than a phone quote.
- Check to see if you're entitled to any no-claims discount. These vary widely between insurers, but if you've driven without making a claim on your car insurance for a year, typically you can save 30 per cent on your car insurance premium and up to 70 per cent after four years without a claim.
- Are you a woman driver? If so, you could be in line for cheaper car insurance. Some insurers look more favourably on female drivers as, statistically, women's claims are for relatively minor accidents.
- Keep your mileage low—if you do fewer than 12,000 miles a year, you could save money on your car insurance.
- Fit extra security. Installing an alarm or immobiliser can cut car insurance premiums, as can off-street parking or keeping your car in a garage.
If you're under 25
Statistically, young drivers are more likely to have an accident and claim on their car insurance, so premiums can be very high. To help reduce these:
- Buy a car deemed by insurers to be in a low-risk group.
- Enrol in the Driving Standards Agency Pass Plus scheme.
- Shop around for a specialist policy aimed at young drivers.
If a young person occasionally uses their parents' car, they can be added to their parents' car insurance policy as a named driver. Don't do this if the child is the main driver, however—it's illegal and car insurance companies are clamping down on the practice.