How to get cheaper car insurance

The cost of insuring our cars is accelerating this year. We explain how you can put the brakes on pricey premiums with top tips from Mustard.

Car insurance already accounts for a sizeable chunk of our household finances and drivers will pay even more this year with premiums typically rising by £96, pushing an average policy to £691.

Why are premiums rising?

  • The rise can be attributed, in part, to the three hikes in Insurance Premium Tax (IPT) over the past two years. IPT is a tax on insurers but the cost is passed on to us via our policies and is charged as a percentage of the whole premium. From June 1, there will be a further hike taking the tax to 12 per cent.

  • Whiplash fraud is another major pressure on insurance costs. Fraudulent claims – ones that are either exaggerated or fabricated – add £40-£50 to an honest motorist’s annual policy. The good news is the government has promised to introduce reforms to tackle whiplash fraud and it’s hoped insurers will pass on savings by reducing premiums. But there are currently no concrete plans - so it’s vital you try to get the best deal you can.

Don’t accept your renewal

Unless you tell your car insurance provider that you don’t want to continue with your policy, it will be automatically renewed - and you’ll almost certainly end up paying over the odds. There simply is no reward for loyalty.

Whether you’re buying a new laptop, a new pair of trainers or a new car, you want to make sure you’re getting good value for money. That usually means looking at lots of different retailers to see whose price is lower.

Fortunately comparison websites like allow you to compare insurance prices from lots of different brokers in one place, showing you the cheapest deals available.

Shop around

Consumer Intelligence found 20 per cent of insurers matched a rival’s quote so it’s worth going to your insurer once you’ve compared other quotes to see if they can beat it.

The nearer you get to your policy start date, the more expensive your premium will be, so make a note to shopping around early to save money. Aviva, LV and Nationwide give new quotes that are valid for 60 days before your renewal is due.

Be a careful driver

Being a careful motorist can also help reduce your premium. Selected insurers now fit a clever device into your car that measures how well you drive. Your premiums are then based on how safe and conscientious a driver you are, instead of paying for insurance based on the average driver.

Don’t forget your no-claims discount (NCD) either; it can knock more than 70 per cent off your premium after five claim-free years. Pay to protect your NCD and don’t claim for minor bumps. Ensure you always stick to the speed limit as points on your licence push up insurance.

Make sure you are always as accurate as possible when filling out your details. If you drive for 5,000 miles a year but told your insurer you will drive 10,000 miles, you’ll pay for 5,000 miles that you don’t actually use. That’s a waste of money. As a result you should be as accurate as possible so that you are not paying for miles you don’t drive.

6 speedy ways to cut car insurance

  1. Ditch the ‘optional extras’ such as a courtesy car if you have two cars at home.

  2. Recently retired? Lower annual mileage can save money.

  3. Adding your spouse to your policy can cut your premium if they’re a careful driver.

  4. Pay for cover upfront to avoid being charged for spreading the cost.

  5. Increase your excess to lower premiums, ensuring you can afford it if you do have to claim.

  6. Tweak your job description e.g. describing yourself as a PA rather than a secretary could save you money.

  • Words Yours Money Editor, Sarah Jagger

  • Find cheaper car insurance at or speak to a Mustard adviser on 0330 022 8814