Insurers set premiums by assessing your chance of
- having an accident,
- the likely cost of repairs if you do have an accident, and
- the risk of having your car broken into or stolen.
They judge these risks according to where you live, your age and occupation, and where you keep your car overnight, for example. Some insurers will also take other factors into account, such as your marital status.
Money fitness tip
Lower your risk and your costs by fitting an approved alarm or immobiliser and make sure whatever you choose is Thatcham approved.
The car make and model
As you’d expect, the kind of car you drive will have a large bearing on how much you pay for your insurance.
There are a few things you need to keep in mind when looking at this:
- Value: The more expensive your car, the more it’d cost to replace if stolen or written off in an accident. Pricier cars may also cost more to repair, particularly if they’re rare and have expensive spare parts. But don’t assume that just because your own car isn’t worth much, it’ll be cheap to cover.
Insurance isn’t just for damage to your own vehicle - it also protects other road users against accidents you might cause.
- Power: The faster and more powerful your car is, the more likely it is to be involved in an expensive accident. So generally, the larger your engine, the higher the insurance costs.
- Modifications: If you modify your car to make it more powerful or to look different, you should inform your insurer. It'll probably increase your premium, but if you don’t tell them, your cover could be invalid if you make a claim in future. You can find out more in our guide to modified car insurance.
- Desirability: If you own a particularly desirable car, your insurer may consider you at greater risk of theft. Improving your vehicle’s security can help offset this – that or get an uglier car.
Different insurers, different quotes
Most car insurers specialise in certain sectors of the market: high-risk or low-risk cars, for example, or people over a certain age.
if you're posted abroad
You can keep your No claims Bonus for up to three years and insurers will waive fees normally charged if you need to cancel a policy at short notice when you're posted overseas - see the ABI website.
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However, it's not always clear who their policies are aimed at so, if you call an insurer who doesn't specialise in covering people with your profile, you may get a very uncompetitive quote. An insurance broker might be able to help, especially if you have trouble getting insured or if the quotes you’re getting are too high. A broker is someone who arranges a policy with an insurance company on your behalf. They will be able to offer advice on the best cover for you, and should be able to find a good policy for a competitive price.
You can find out more about brokers from British Insurance Brokers' Association.
It's always important to know your car's current market value when getting a quote for insurance and the Which? Car Valuations tool can help. For a small fee, the tool allows you to tailor a valuation to the car in question, quickly and easily.
Shop around for your car insurance
Money fitness tip
Don't put up with poor customer service and interest rates - switch to a better deal.
Most people know you can save money by shopping around for car insurance, but did you know that insurers often hike up prices after the first year?
Don't be afraid to haggle or play one insurer against another – some insurers will match or even beat your best quote, so it never hurts to ask. If you're faced with a huge premium hike, do your research and challenge your current insurer to be competitive. If they can't or won't, then you'll probably have to switch.
Don't overstate your car's value, as most insurers will pay only the current market value of your car if it's written off.
Keeping costs down
You can reduce your annual car insurance premiums if you take out a policy with a bigger excess. This is the amount you have to pay towards a claim. Savings vary from one insurer to another, so it's worth shopping around to find a deal that suits. See Choose the right cover for more information.
It's also common sense not to claim for minor damage, as all insurers offer no-claims discounts (though you should still tell your insurer about any damage). The size of discount varies among insurers, but clocking up one year of no-claims usually saves around 30%.
There’s a whole host of ways you can help keep the cost of car insurance down. Here’s a few of the better ones:
- Annual payments - pay your insurance in one go each year - lots of insurers charge you interest if you opt to pay for by monthly instalments.
- Accurate mileage - don't overestimate your annual mileage when getting quotes, and tell your insurer if you drive fewer than 12,000 miles a year or if you don't use your car to drive to work. If you use your own car for Service reasons you must declare that you will be using it for business purposes.
- Cut out the frills - think about whether you need a courtesy car - some insurers offer basic policies – with no courtesy car, for example – at a lower price.
- Check the add-ons - many insurers offer breakdown cover at an additional cost, typically around £65. This might seem tempting at the time, but you may be able to buy it more cheaply elsewhere.
- Add another driver - adding a second named driver living at the same address may reduce your car insurance premiums if they're experienced and have a good driving record.
- Enhance your skills - further driver training such as the Advanced Driving Test may help you get a discount.
- Bump up your security - extra security features, such as an alarm or immobiliser, can cut your premiums. But check first with your insurer whether it offers a discount and, if it does, exactly what devices qualify. Most insurers will give you a discount if you park your car in a garage or driveway overnight, rather than leaving it on the street. For information on the features included in insurance policies see What to look for.
You can change insurer at any time and you'll get back a proportion of the annual premium. How much you get back depends on how close you are to the renewal date. But if you've claimed on the policy, you won't get anything back.
If you cancel a policy you’ll have to pay an admin charge which can be between £25-£35 and sometimes as much as £50.
Now Choose the right cover and see What to look for to get ther right policy for you.