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Get a quoteCar insurance costs on the rise – 9 ways to save on your premium
A new policy now costs £545 on average
The average cost of car insurance cover has risen by 16% in the first quarter of this year, according to data from the Association of British Insurers (ABI).
Drivers paid an average £478 in the first three months of 2023 – the highest figure recorded since the final quarter of 2019, when premiums cost £483 on average.
A separate poll by comparison site Confused.com revealed a 20% increase in the cost of premiums between April 2022 to April 2023.
So if you're renewing your policy or buying for the first time, is there anything you can do to reduce your premium? Here, Which? takes a closer look at what's behind the price hikes and offers nine tips to help you get the best deal.
Why have premiums gone up?
While the overall average cost of cover was £478 in the first quarter of this year, the ABI figures vary whether you are renewing or buying a new policy.
The average price of renewing was £436 – a rise of £8 compared to the last three months of 2022. The average premium for a new policy saw the biggest jump in price, rising by £14 over the same period, to £545.
As with many industries, soaring inflation over the past year is the main culprit for rising motor insurance costs. In particular, the ABI points to energy charges, paint prices and courtesy car costs as factors pushing up the price of repairs.
Customers' reluctance to switch also mean providers have little incentive to compete on price. GlobalData’s 2022 UK Insurance Consumer Survey found that only 28.8% of motor insurance customers switched insurer at renewal (down from 30.7% in 2021). This was despite a further 46.6% shopping around but staying with the same provider.
This apparent loyalty could be down to changes brought in by the Financial Conduct Authority (FCA) in January 2022. The new rules stop insurers offering better deals to new customers than those offered to renewing customers.
- Find out more: how to find cheap car insurance
How to save on your car insurance premium
Despite increases to premiums over the last year, there are simple ways you can reduce the cost of your cover in 2023.
1. Renew your policy early
If your car insurance policy is coming to an end soon, don't wait until the last minute to renew. Generally, the later you leave it, the more you're likely to pay.
Insurers know that customers that have procrastinated on renewing will be anxious to get cover sorted as soon as possible and are more likely to stomach a higher price.
According to comparison site MoneySuperMarket, the best time to get a good deal on your car insurance renewal is 15 to 29 days before your policy end date. Renewing on the last day could see you paying 17% more.
2. Shop around for the best deal
Whether you are renewing or buying a new policy, it's always worth shopping around – even with less competitive prices out there.
Price comparison sites which allow to view multiple car insurance quotes at a glance are a good place to start. The main ones for insurance are Compare the Market, Confused.com, GoCompare and MoneySuperMarket.
Once you're on the insurer's website, check the policy details again, just to be sure the insurer has received all the correct information about you and is providing an accurate quote.
3. Check insurers that aren't on comparison sites
Not all insurers are on price comparison websites: Which? Recommended Providers Direct Line and NFU Mutual are both examples of this.
So you should also make sure you go direct for quotes with these providers, to see if you can get a better deal.
- Find out more: best and worst car insurance companies
4. Pay annually rather than monthly
Choosing an annual policy could save you hundreds of pounds.
Data from comparison site GoCompare showed that in November 2019, monthly payers were charged £673 on average compared with £456 for those paying a lump sum – a difference of £217. By November 2022, the gap had widened to £302 (a 39% rise), with monthly payers forking out £758 compared with £455 for annual payers.
Insurers tend to charge monthly payers interest, which means the policy will be more expensive overall compared to paying up front.
If you are unable to pay a lump sum then an interest-free credit card could help. It allows you to make an upfront purchase for the entire year and spread the cost without attracting interest.
- Find out more: best 0% purchase credit cards
5. Check your job title
What you do for a living can affect your premium and some occupations are considered more risky than others.
For example, GoCompare looked at the average best price available for each job and found that taxi drivers, barbers and even librarians paid the most, while scientists, nursery workers and college lecturers had the cheapest policies.
One trick to get around this price hike – without lying – is to try and tweak your job title. For example, instead of 'barber', try saying 'hairdresser' or 'hair stylist'.
6. Try haggling
If you don't want to switch to another insurer, you might be able to get the price down by haggling.
We surveyed 14,408 Which? members who renewed or switched car or home insurer between May 2021 and June 2022. Of the members who discussed their premium with their insurer, 48% were able to get their price reduced.
Do your research first and come to the negotiation table armed with any cheaper quotes for the same level of coverage. You may find they are happy to give you a discount rather than lose a customer to a rival company.
- Find out more: our car insurance haggling script
7. Keep mileage in check
Less mileage equals lower risk to insurers and therefore cheaper cover. So try to limit the miles you clock up over the year if you can.
But be honest about it. Lying could lead to your policy being invalidated.
8. Be careful who you add to your policy
If you want to add a friend or family member as a named driver to your policy, then be warned.
While adding an older, more experienced driver to your policy can sometimes reduce your annual premium, including someone younger who doesn't have a clean licence and claims history can have the opposite effect.
9. Avoid too many add-ons
Car insurers offer additional elements of cover, which are optional. If you want to add them to your policy, you'll have to pay extra on your premium.
So think carefully about whether you really need them. For example, while personal accident cover and breakdown cover are useful, they are not a must. It's also worth checking whether you're already covered by other policies you own, such as life insurance. In the case of breakdown cover, you might even be part of a packaged bank account.
- Find out more: add-ons, fees and charges
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