January always feels like a particularly long month. Many are feeling the pinch after Christmas and the ongoing cost of living pressure only compounds this feeling. As the new year begins, many people take a closer look at their finances, hoping to highlight areas where savings can be made. But does this include your car insurance premium?

Car insurance premiums rose 29% in 2023, reaching a record average high of £561. Unfortunately, this doesn’t look to be coming down any time soon, with experts predicting that premiums will rise a further 10% in 2024. This isn’t the news that motorists were hoping for, but are there steps you can take to reduce the amount you are spending on your car insurance?

While car insurance is a legal requirement, it doesn’t mean you have to pay more than necessary for the cover you need. Your style of driving, choice of vehicle, type of insurance policy, and no claims history are all factors that can impact your insurance premium.

  1. Choose a vehicle that belongs to a low insurance group

If you’re looking to reduce your car insurance premium, one way is to choose a car that belongs to a low insurance group. Cars are categorised by risk and assigned to an insurance group, which influences the cost of your insurance premium. The lower the group, the cheaper the insurance premium.

There are several factors that influence a car’s insurance group. This includes the average cost of repairs, the likelihood of it being damaged or stolen, the value of the car, the performance, the price of parts, safety, and security. For example, the higher the value of your car, the more expensive it is to repair, which therefore increases your premium cost. Different models of the same car can also affect insurance premiums. A sports version of the model may be more expensive to insure than an estate version, purely because it’s more likely to be driven in a different way.

Every vehicle in the UK is allocated an insurance group to help insurance providers determine the cost of cover. The groups start at 1, for the cheapest cover, rising to 50 for the most-expensive cover. You can check the group your vehicle falls into here.

  1. Don’t guess your annual mileage

The number of miles that you declare you will travel in a year will have an impact on your insurance premium. It is important to be as accurate as you can be. If you drive significantly less miles than stated, you could be missing out on a lower premium cost. On the other hand, if you drive more miles than you have declared to your insurance provider, you run the risk of invalidating your insurance.

The easiest way to check your annual mileage (unless your car is less than 3 years old), is to look at your MOT Certificates. A link to check online using your vehicle registration can be found here.

  1. Protect your No Claims Bonus

A No Claims Bonus, sometimes also referred to as a No Claims Discount, is a discount that can be applied to an insurance policy based on the number of consecutive years that a policyholder has gone without making a claim. Providing there are no claims on your policy, you will continue to get a discount on renewal. You can build up a No Claims Bonus for a maximum of 15 years and any discount you have built up is usually valid for between two to three years after a policy ends, although this does vary between insurance providers. This means that if you don’t have a car for a period, you won’t lose any No Claims Bonus.

Insurance providers will offer you the option to either ‘protect’ or ‘guarantee’ your No Claims Bonus. Guarantee means that a claim won’t reduce your No Claims Bonus, but you won’t get a discount during that insurance period. Protect allows a set number of claims within a certain number of years before your No Claims Bonus is reduced. This number will vary between insurance providers and again, you won’t get a discount during that insurance period.

  1. Choose the right type of cover

There are 3 main types of cover: fully comprehensive, third-party, fire & theft and third-party only.

Historically, third-party cover used to be the cheapest option because third-party levels of car insurance offered fewer benefits. However, fully comprehensive car insurance offers the best level of cover and can be the cheaper option, depending on certain risk factors such as age and claims history. This is because drivers identified as ‘high risk’ have been opting for third party policies in an attempt to reduce their insurance costs. Insurance providers now recognise that the risk profiles of many drivers with lower protection policies makes them more likely to claim, so have increased the cost of third-party policies.

The lowest level of cover doesn’t necessarily mean the cheapest premium price.

  1. Increase your voluntary excess

Voluntary excess is an amount that YOU choose to pay on top of the compulsory excess set by the insurance provider. Many insurance providers will offer you a cheaper premium if you agree to pay this sum when you make a claim. It is important to choose a voluntary excess amount that you are comfortable with. This amount is not negotiable when you make a claim and as such, it needs to be factored into your budget. It can be tempting to keep the voluntary excess at £0 when you are taking out a new insurance policy, but choosing to pay a voluntary amount could reduce the overall price of your policy.

  1. Pay annually

When it comes to paying for car insurance, you have the option to pay either annually or monthly. Paying for your car insurance annually is generally cheaper than paying monthly. This is because when you pay monthly, you are essentially taking out a loan from the insurance company and paying interest on that loan. The interest rate can be as high as 30%.

  1. Consider telematics

Many insurance providers offer you the choice to install a small device in your vehicle which monitors your driving style, more commonly known as a ‘black box’. This black box monitors how you drive, taking into consideration things such as your speed, braking and miles driven. As well as providing feedback on how you can improve your driving, it uses the collected data to give you a driving score.

While predominantly aimed at younger or newer drivers looking for a way to reduce their insurance premium, a black box policy can help any good driver get a discounted policy.

  1. Speak to your insurance provider

If your situation changes in a way that could affect your policy, you need to speak to your insurance provider as there may be an impact on your insurance premium. It doesn’t always mean that you will pay more. For example, if you move house, your new postcode may reduce your risk category, resulting in a cheaper insurance premium. Likewise, if you change jobs, as different jobs have different risks attached to them.

Factors you can’t control

There are factors that can have an impact on your premium that are completely out of your control. For example, on average, women typically pay less for their car insurance than men. By law, insurance providers can’t discriminate or alter prices based on gender. However, female drivers generally have fewer accidents and make fewer high value claims, which means that typically they have cheaper premiums.

Car insurance providers use the information on claim numbers and crime rates to rank UK postcodes according to risk. That risk classification is one element that determines the amount you’ll pay for your car insurance.

Car insurance is typically more expensive for newer and younger drivers, as they present more risk. Drivers who insurers think will be more likely to be in an accident or cause damage to another person’s car or property will get a more expensive premium, as the insurance company will want to protect its profits. Car insurance tends to reduce in price over time as the driver becomes more experienced and builds a higher no-claims discount. However, as you reach 80+, this goes in to reverse, and your insurance then typically starts getting more expensive again. The rationale is that older drivers aged 80+ tend to be involved in more accidents.

Car insurance is all about risk. Therefore, if an insurance provider views your job as low risk, your insurance premium will be cheaper. Occupations such as nurse, teacher or clerical assistant will see lower insurance premiums compared to ‘high risk’ occupations such as hairdresser, social worker or bar staff.

Tony Buckingham, Managing Director of Buckingham Insurance says, “It is important to be as accurate as possible with the information you provide for your insurance quote. If information is found to be incorrect, you run the risk of insufficient or invalidating your cover. Our staff are more than happy to guide you when it comes to providing information for a quote.

Please contact us or telephone us on 01246 575 625 (Clowne) or 01773 748 627 (Ripley). We will be more than happy to assist you every step of the way.”

Buckingham Insurance provides our Motor Insurance policy holders with a claims line that can be accessed 24 hours a day, 365 days a year.

Who is Buckingham Insurance?

Buckingham Insurance is an independent general insurance broker. From our offices in both Clowne and Ripley, we have been serving households and businesses across Derbyshire and South Yorkshire for over 40 years. Our brokers provide our customers with professional, impartial help and advice about their personal and business insurance, and our extensive relationships in the insurance markets mean that we can provide tailored cover from the UK’s leading insurance companies and specialist providers.

We aim to offer a truly modern broker experience. We pride ourselves on putting our clients first, and the quality of the service we offer is demonstrated by our growing client base and the high number of clients that choose to stay with us, year after year.