How much does car insurance cost?
You can't legally drive without car insurance, but it's no small financial commitment.
How much you'll pay depends on a range of factors - from your age, the type of vehicle you have and where you live to your marital status and past driving history.
Several companies track prices within car insurance pricing and regularly publish trends. Differing calculation methods and dates of publication can mean that the average figures don't always align.
|Source||Index/survey||Premium||Premium is average of||Date|
|Association of British Insurers||Premium tracker||£460||premiums paid||Q3 2020|
|Compare the market||Premium Drivers index||£707||cheapest prices quoted to customers||Q4 2020|
|Confused.com||Car insurance price index||£763||cheapest prices quoted to customers||Q4 2020|
|MoneySuperMarket||Car insurance UK Price Index||£490||cheapest prices quoted to customers||Q4 2020|
While this range of figures outlines what your 'average' person might pay (or be quoted), in real life, there isn't an 'average' car insurance customer.
It's personally priced - meaning that according to your personal circumstances, you may find that you pay a lot more or substantially less than the figures cited above
Watch our video guide or read on to find out how to lower your premium, or click here for the best car insurers.
15 ways to get cheap car insurance
You don't have to simply accept the first quote you get from an insurer - there are plenty of legal tactics you can use to cut the cost of your cover.
1. It's cheaper to pay annually
Insurers will give you the option to pay for your cover in two ways - as a lump sum or in monthly installments. While paying monthly might seem like a sensible way of spreading the cost, you may actually be charged hundreds more over the year.
By paying in monthly installments you are, in effect, taking on a loan from your insurer. Most will charge you interest for it, and rates aren't cheap. In our last survey of insurers, the average amount of interest payable was 24% APR, with some charging as much as 44% APR.
If paying monthly is your only real option, be sure when shopping around to compare the insurers' monthly, rather than annual, premiums. Or you could consider paying using an 0% purchase credit card.
2. Your credit rating and insurance
If get a quote from an insurer, they will run a 'soft' search on your credit record. This is to verify the accuracy of your personal information (such as name and address) and won't impact your credit score or be visible to other companies.
If you then apply for insurance and opt to pay monthly, your insurer may then run a 'hard' credit check.
This information will help it decide whether to actually provide you the credit. Like any other credit application, this will be externally visible in your record and can affect how other lenders treat you.
Find out more in our guide to credit reports: all you need to know.
3. Pick the right job title
What's the difference between a 'kitchen worker' and a 'chef', a 'writer' and a 'journalist', or a 'housewife' and a 'homemaker'? In practice, your occupation may be aptly described by any two of these - but the one you choose could make a difference with your insurer.
Insurers look at many factors when calculating the cost of covering you, and how you describe what you do for a living makes a difference.
If you've got a choice of different labels when entering your occupation, check if there's a difference in impact to your premium.
However, remember that you should never lie about your job. Don't say you're a butcher if you're a baker. This is considered fraud and you could be prosecuted.
4. Don't just auto-renew
Come your policy's renewal date, it may be tempting to let your insurer do all the work and have your policy automatically continue.
You're paying for this convenience, and probably paying even more if you've stayed with the same insurer for a few years. The renewal offer sent towards the end of each policy year is rarely the best your insurer would be willing to make.
Customers who haggle are proven to save on their premiums (more on that below). And if you don't shop around, you could be missing out on far better deals from rival companies.
5. Comprehensive vs third party (less cover isn't always cheaper)
When it comes to choosing between levels of cover, buying more cover can sometimes lead to a lower quote.
You're usually offered three varieties of car insurance cover: in order of comprehensiveness - third party (TP), third party, fire & theft (TPF&T), and comprehensive.
Drivers who are typically offered the least competitive prices (such as younger drivers) may be tempted to a lower level of cover to reduce the premium. However, it's worth checking the prices of each level of cover - as sometimes, counterintuitively, comprehensive cover costs less than TP or TPF&T.
The reason is insurers don't just price policies according to the level of cover - but to how much they're paying out in claims for the drivers buying it.
Where less comprehensive policies are bought overwhelmingly by drivers that tend to claim more, insurers will work this into their pricing, making them more expensive.
This isn't always the case - but don't assume lower cover always means a cheaper deal.
6. Consider multi-car insurance
If you live in a household with more than one car, many insurers will offer savings for insuring them all together.
Some insurers offer policies that will cover more than one car, while others enable you to 'link' multiple policies together to earn a discount.
This is likely to work out cheaper than separately covering several vehicles with the same company. Bear in mind, of course, that the value of a discount is entirely relative to how expensive the insurer was to start with.
7. Named drivers
If you're considered a high-risk driver, putting a lower risk driver on the policy as a 'named' driver can bring the overall premium down.
For instance, drivers under 25, who face the steepest premiums, can benefit from having an older and more experienced driver on their policy.
Bear in mind, however, that it's illegal to put someone down as the main driver if this isn't the case. This practice is known as 'fronting', and is a kind of insurance fraud that can lead to your policy being invalidated.
8. Modifications to your car
Don't be fooled into thinking that insurers only consider boy racer cars as being modified. Even a small modification to your car, such as new alloys, can cause your premiums to rise.
If you're going to make any changes to your car always discuss them with your insurer first.
Conversely, any modification to your vehicle that increases its safety could save you money. Installing an alarm, tracker or immobiliser - especially if approved by car safety research firm Thatcham - can set your car insurance premiums tumbling.
9. Play around with your excess
If you're willing to fork out more on your excess - the amount you have to pay yourself in the event of a claim - your insurer will reward you with lower premiums. However, make sure you select your excess carefully.
Setting the bar too high, especially if it starts getting too close to your claims limit, might make claiming on your car insurance either pointless or too expensive.
10. Are add-ons necessary?
Car insurance add-ons may be loading £50 or more onto your premium. They're by no means all a waste of cash but think carefully about which you need and which you don't
For instance, you may already have breakdown cover, or not require a hire car if your car is put out of action.
Find out more in our guide to car insurance add-ons, fees and charges.
11. Can black box cut costs?
Black box insurance, also known as telematics policies, use GPS devices in your car to track your driving.
If your day-to-day driving passes criteria laid out by the insurer (these can range from not driving at specific times of the day, staying within a certain mileage, to measurements of your safety in cornering and braking), you'll be rewarded with discounts in your premium.
These types of policy are most popular with - and generally aimed at - younger drivers, who face the steepest premiums.
12. Be a better driver
Insurers primarily set your premium based on their experience of drivers that seem statistically similar to you (in terms of age, locality, type of car owned, and so on).
However, there are some ways you can demonstrate that you're a better driver - which may help hedge things further in your favour.
Certificates such as Pass Plus (for younger drivers) or from the Institute of Advanced Motorists can help set you apart and will earn you a discount from some insurers.
More obviously, maintaining a good no claims bonus and clean driving record will keep your premium low
13. Consider a cheaper to insure car
The make and model of your car is a major factor in how your car insurance policy will be priced.
Cars are given an advisory risk rating by an organisation called Thatcham Research.
Thatcham works in conjunction with insurance trade body the Association of British Insurers to award ratings on a 1-50 scale, giving an indication as to how expensive it will be to insure.
You can visit the Thatcham website (www.thatcham.org) and plug in your car's specs to see how high it features.
A more direct route, of course, is to run insurance quotes on a prospective car prior to buying it. Car insurance can be a serious addition to its annual running costs - so factor this in before buying a new car.
14. Use a broker
15. Avoid 'ghost brokers'
So-called 'ghost brokers' aren't actually brokers but fraudsters who sell insurance at too-good-to-be-true prices. They target drivers who have been struggling to find affordable cover.
The catch is their policies are fraudulently obtained, often substituting some of the policyholder's details (such as their address) with those of lower risk drivers - usually without either's knowledge.
The car will seem insured on paper, with the policyholder having documentation to demonstrate it - but were they to try and make a claim, the policy would be revealed as fake and the ruse would collapse.
Ghost brokers often operate on social media platforms, as well as student websites, money-saving forums, and marketplace websites. Telltale signs include:
- Guaranteeing a specific insurance price prior to securing a quote
- Lack of a professional-looking website
- Mobile phone number as a means of contact
- Offers that seem too good to be true
If you're uncertain whether you're dealing with a legit broker, you can check if they're authorised on the Financial Conduct Authority's or the British Insurance Brokers' Association websites.
Cheap car cover on price comparison sites
Price comparison sites are a good place to start as they allow you to get multiple quotes quickly.
The main price comparison sites for insurance are Compare the Market, Confused.com, Go Compare, MoneySuperMarket and Uswitch.
Which ones should I use and in which order?
As with insurance generally, loyalty isn't much of a virtue - though some comparison sites do have reward schemes to incentivise repeat customers.
While you'll find a lot of big-name insurers across all the main sites, their panels of insurers vary, and in some cases, the prices - which means you should check as many of them as possible for deals.
While this might sound like a chore, it's effectively the equivalent of running about five or six quotes rather than one - to access offers from scores of insurance firms. Compared to the days when it was necessary to contact each insurer individually, this is time well spent.
Does using a price comparison site affect my credit rating?
This is potentially the case if you apply for a deal paid for in monthly installments - but this wouldn't be different if you'd not used a comparison site and gone to the insurer directly.
What you may notice is that a number of insurers will run 'soft' searches on your credit record to verify your identity. You will see these on your credit file, but soft searches won't be visible to other companies and won't affect your rating.
Can I trust price comparison site prices?
The price you're shown on a comparison site is a genuine, live quote from the insurer. However, take into account the following:
- After being provided the initial quote, you'll have an opportunity to optimise your cover by purchasing add-ons. That final inclusive price could be higher than a competing deal that included some of these features as standard.
- Insurers have sometimes featured versions of their policies on comparison sites that come with slightly less cover as standard than those available from their website. This means that they're cheaper - and therefore more likely to stand out on a comparison site - but it also means you have to be careful it includes the cover you're after.
- Sometimes a great price can be explained, on closer inspection, by a steep excess. You can amend what's called a 'voluntary' excess when running the quote, but many insurers also include a 'compulsory' excess, too.
Once you're on the insurer's website, check the policy details again, just in case the comparison site had described details incorrectly.
2. Set the right excess
Check car insurers that aren't on comparison sites
Comparison sites are a great aid to your search, helping you cover vast amounts of terrain quickly when shopping around. But some insurers don't feature on any comparison sites.
Click on the links of each insurer to read our expert review of their policies.
Aviva - Aviva policies can't be found on comparison sites - though its sister brand Quote Me Happy, is. Aviva fares decently in our analysis of policies - and has recently launched a product with no fees and a renewal price guarantee.
Direct Line - Direct Line insurance is only available direct. Direct Line is a high performer in our analysis, offering a total loss hire car as standard. Churchill and Privilege are part of the Direct Line Group but both sell policies on comparison sites.
NFU Mutual - NFU Mutual doesn't sell online at all. For a quote, you'll need to call one of its broker centers. NFU is a high performer in our tables, offering a lifetime guarantee on repairs and purporting to have a 'no quibble' approach to claims.
- Find out more: the best car insurance providers
Use cashback sites to getting even cheaper cover
Another variety of comparison site is the cashback site. As the name suggests, these sites - such as Quidco and TopCashback - pay you a cash reward when you click through from them to buy goods or financial products.
These are worth checking out while you shop around for deals but they won't necessarily offer you the best value deals, even with cashback included.
A £300 insurance policy with £75 cashback is far from a bargain if you can get the same cover elsewhere for £150.
Haggle for cheap car insurance
Insurers reserve the best deals for new customers and often push up the premiums for their loyal policyholders so it can pay to haggle with your provider when the time comes to renew your policy.
In a way similar to other utilities - such as energy and broadband - the offer you get in advance of your insurance renewal should be taken with a pinch of salt.
The best prices will generally go to switching customers or to existing ones who have picked up the phone to negotiate.
Does it work?
Our research suggests it does. We've found that customers who haggle pay less than those who don't - and in our most recent survey they reported an average discount of £50.
How do I haggle?
First thing's first: prepare.
Your renewal offer should also tell you the premium you paid the previous year. Note how much it's changed.
Then do some shopping around. This doesn't have to be too extensive - the objective is to get an impression of what your insurer's rivals will offer for your business, putting your renewal quote into context.
If you can, see if you can also obtain an online quote from your current insurer. What would they offer you if you were a new customer? Some insurers don't allow you to do this, but a number do.
Now you're ready to pick up the phone.
What do I say?
Haggling doesn't come naturally to everyone - but fortunately, it's not a dark art as far as insurance goes and you don't have to be the most confident or savvy negotiator to do it.
Start with: 'I would like to find out why my renewal price has increased'
Wait for the response. Explain that you have shopped around, and provide details of the cheapest quote you have received.'[Name of other provider] has quoted me [details of offer]. Are you prepared to better this quote?'
Wait and see what the call handler says. If they don't better this offer, you can push a little harder.'What's the lowest rate you can quote me to keep me as a customer? If it's not better than this cheaper quote, I'll go elsewhere.'
At this point, the call handler should offer you some sort of incentive to stay. It's up to you whether to accept or switch to a cheaper provider.
If they're still not offering you a quote you're happy with, ask them what they would be prepared to offer you if you cancelled your existing policy and bought a new one (as a new customer) with the same cover.
This isn't viable with all insurers - some block their customers from doing this.
What happens if they don't budge?
Insurers are usually prepared to be flexible, but not all will be willing to improve their offer.
You shouldn't be afraid to walk away if this is the case - especially if you know you can get a better deal elsewhere.
However, if you're keen on staying with the same insurer, you may consider increasing your excess or removing components of your cover to bring the cost down.