Ways to cut the cost of car cover

September and March are the busiest times for cover renewals as the issue of the latest registration plates triggers a spike in new and second-hand vehicle sales.

According to GoCompare.com, almost six million motorists throw away an average of £208 annually by failing to shop around before signing up for their new policy.

The comparison website says half of all drivers don’t bother to check their quote against what they paid a year ago, and one in five auto-renew without investigating what they might pay elsewhere.

Many wrongly assume that because their provider was cheapest last year, it will be again. Others hope they will be rewarded for their loyalty, while a significant minority simply can’t be bothered to find an alternative. As a result, the site calculates, they collectively waste £1.2 billion every year.

GoCompare.com spokesman Matt Oliver said: “The car insurance market is fiercely competitive and insurers often offer better deals to new customers than for those renewing existing policies.

“So, our advice is simple – even if your current insurer offered the best deal last year, you shouldn’t automatically assume that they will when your policy comes up for renewal.

“Use your renewal letter as a prompt to take action as soon as it arrives. Compare the price and cover against last year’s documents, consider any changes you might need to make, and take a look at similar policies on a comparison site to see if you can make any savings.”

Spending a few minutes inputting your details will produce a wide range of quotes. However, comparison sites don’t all list the same providers, so check more than one. Several popular insurers, including Aviva and Direct Line, are not on any sites, so get prices from one or two of them as well.

The whole process shouldn’t take more than an hour or so and could save you several hundred pounds, making it time well spent.

Mr Oliver added: “If you decide to switch, don’t forget to notify your current provider. Most policies automatically renew unless you tell the insurer otherwise within the 14-day cooling off period. Miss the cut-off date and you could face hefty cancellation charges.”

But don’t go too far in pursuit of a bargain. If you are offered cover in a pub, car park or other unlikely place, the seller is probably a ‘ghost broker’, pedalling worthless, fake policies.

Also be wary of insurance offered through social media or other sites that seem unfeasibly cheap. As well as scrutinising the details, check the provider’s credentials on the Financial Services Register at www.fca.org.uk/register before proceeding.

Never twist the truth in the hope of cutting costs. Industry body the ABI says more than 200,000 fraudulent insurance applications are uncovered every year.

The most common lies include failing to disclose previous claims or unspent convictions, giving a false address or postcode to get into a lower risk bracket, and parents insuring a vehicle mainly driven by a son or daughter in their own name, an offence known as ‘fronting’.

Mark Allen, the ABI’s fraud and financial crime manager, said: “Insurers recognise that innocent mistakes and oversights happen, but anyone lying to get cheaper motor insurance, or tempted by cheap insurance offers without first checking that they are genuine, risks driving illegally.”

Driving with a fraudulent or fake policy could lead to a fine, points on your licence or even a ban. The car could be seized by the police and sold or crushed, and you might even end up with a criminal record.

There are many legitimate ways to reduce the price of cover. You can lower your risk by fitting an approved alarm and immobiliser and keeping the vehicle garaged or on a driveway overnight.

Don’t make modifications and don’t insure yourself for vastly more miles than you need. It is also worth considering a telematics-based pay-as-you-drive policy, as these can be cheaper than the conventional variety.

Opting for a higher voluntary excess – the amount of any claim you pay yourself – may make a significant difference too, but don’t raise the excess to more than you could afford.

It is generally cheaper to take third-party, fire and theft, or just third-party cover, but this could prove a very expensive mistake if your vehicle is damaged or written off.

Stay within the speed limit, as points on your licence increase policy costs, and drive as safely as you can to minimise the chances of needing to claim.

Kevin Pratt, insurance expert at MoneySupermarket.com, said: “When an insurer assesses a driver’s risk profile, any history of accidents will probably mean the motorist pays more.

“It’s good to know, however, that some insurers are more lenient than others, so drivers in these circumstances may find it is worth looking for an alternative provider.”

If your household has more than one car, you might save by putting them on a single multi-car policy. These are open to family members and groups of friends sharing an address, and the cars can have different levels of cover and excesses.

Moneysupermarket.com says these policies can be as much as a third cheaper than individual ones, and you don’t have to sign up all the vehicles at once. Just start the policy, and add each one at its renewal date.

If, after checking the alternatives, you still want to stay with your current provider, don’t accept their initial quote. Tell them you are looking elsewhere and ask what they can do to make it worth your while to stay – they may well improve their offer.

Whether you stay or move on, always check the small print carefully, so you know exactly what is and isn’t covered in case you do need to make a claim.