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How to find value for money car insurance

No-one wants to pay over the odds for car insurance, but nobody wants sub standard cover either – so how can you find a car insurance policy that offers real value for money?

Here we look at what to look for from a policy and how to keep premiums low.

What level of cover do you need?

Before you begin shopping around, carefully consider what level of cover you need. Broadly, there are three options available:

Third party only: Covers liability for injuries to others and damage to their property as well as liability from towing a caravan or trailer.
Third party, fire and theft: Includes cover for your own vehicle against fire, theft and attempted theft on top of third party cover.
Comprehensive cover: Everything covered by third party, fire and theft plus cover for repairs/replacement of your own vehicle after an accident (subject to exclusions). Policies vary between insurers.

Third party and third party, fire and theft policies are best suited to those with relatively inexpensive vehicles and/or those who can’t afford a more comprehensive deal.

Should you opt for comprehensive car insurance, think about the cover you require ensuring the policy meets your needs. Most policies offer standard cover – features that are included automatically; and optional extras, which is effectively extra cover that you can pay an additional premium for. So when shopping around check to see what’s covered as standard – typical features include personal accident cover, a courtesy car, accidental damage and windscreen cover. Also consider which optional extras you are willing to pay extra for – these may include breakdown and legal cover.

To ensure you’re getting value for money, carefully consider which options you do and don’t need. For example, there’s no point taking out breakdown cover if you have a separate breakdown policy already; and you may not require a courtesy car if you have access to a second vehicle in your household.

Setting the excess at an appropriate level

The level of cover and the price aren’t the only considerations when you’re choosing a car insurance policy – you should also carefully assess the ‘excess’, which is the amount you pay towards a claim.

Normally the excess is split into a ‘compulsory excess’, a standard level set by your insurer; and a ‘voluntary excess’, an additional amount you can agree to pay should a claim be necessary. By setting the excess at a high level you can reduce premiums because the insurer has less to pay towards a claim. However, be careful about how high you set the excess - it should only be set at a level you can comfortably afford in case a claim is necessary. If you shop around you may even be able to find some insurers that do not carry a compulsory excess – although premiums may be higher as a result.

How to save money on car insurance

Once you’ve decided what cover you want and how high you can afford the excess to be, you’re almost ready to shop around to find the cheapest deal that meets your needs.

Before you do however, consider how insurers assess premiums. The higher the risk of you making a claim, the higher your costs will be. So reducing this risk to an insurer could reduce your premiums. Here are some tips:

Choose the right car: The type of vehicle you drive will greatly influence your premiums – from its age, to its engine size to whether or not it has any modifications. Stick to standard specifications and smaller engines as the less ‘sporty’ the car, the less likely it is perceived to be driven at fast speeds. Older cars tend to be cheaper to insure too because they would cost less to replace in the event of a write-off.
Cut your mileage: The more miles you travel, the more likely you are to be involved in an accident. So agreeing to a mileage limit from the outset could earn a discount.
Enhanced security: Fitting insurer-approved car alarms, immobilisers and tracking devices reduces the risk of car theft and should bring premiums down.
Park carefully: Many insurers offer discounts up to five per cent if you park in a garage overnight and in a secure car park during the daytime.
Take an advanced driving course: Completing an advanced driving course will earn a discount with some insurers – the Pass Plus for example, could cut premiums for new drivers by as much as 35 per cent.

Consider paying premiums annually as this will avoid interest charges, and look for policies online – most insurers offer cheaper deals through the internet thanks to the savings they make on overheads.

Now that you’re ready to shop around, remember to compare as many policies as possible to ensure you’re getting value for money as insurers assess risks in different ways and so there can be substantial variations in the quotes you are offered. This needn’t be an exhausting task as comparison websites can compare deals from more than 100 insurers with one search giving you an overview of the market while potentially saving you time and money.