Car insurance explained

Car insurance explained

How to get the cheapest car insurance you can

With the cost of everything on the rise, you want your car insurance to be as cheap as it can go. There are lots of things that affect the cost of your car insurance that you can’t control, but there are lots of things you can that will make your car insurance cheaper.

We were aiming for 10, but we’re at 17 and counting.  If we’ve missed any be sure to let us know.

How to get cheaper car insurance: shop smartly

Let’s start at the beginning. Make sure you know you know all the insurance basics. (Our Ultimate Guide to Getting Your Car Insurance is a good place to start.) Have all your details to hand and set aside some time to focus.

Shop around

Whatever you do, don’t let your car insurance just roll over with your existing provider.  It’s always worth checking on a comparison site to see if someone else could offer you the same car insurance for a cheaper price.

The good news is that you shouldn’t see big increases after a year with your insurer like you used to. This is because insurance companies used to tempt in new customers with low prices, and then subsidise them with higher prices for existing customers. It was called price-walking, it wasn’t fair, and since 2021 it’s been against the rules. Our founder, Mark Wilson, was one of the people who campaigned against it.

However, it doesn’t mean that your insurer won’t change their pricing or that someone else could be cheaper for you. So, it’s still worth shopping around.

Pay annually if you can

If you can, pay for your insurance annually as it’s often cheaper than paying monthly. This is because when you pay monthly, you’re usually doing it via a loan agreement (called premium finance) so you’re paying back interest as well as the premium itself.

Some insurers won’t charge you interest for your loan. This means you won’t pay any extra, but you will still be tied into a complex credit agreement and have a hard search sat on your credit file.  (Hard searches are one of the factors lenders take into consideration when they decide whether to lend to you. One shouldn’t be a problem, but a few could be).

As an alternative, at boom, we offer a subscription model with a simple flat fee for paying monthly.

Consider your add-ons

Do you really need all those extra covers? There are certain insurance basics that you must buy, but there are lots of optional extras, like motor legal expenses, breakdown, and glass covers. These are all really helpful, but if you’re on a budget you might want to consider leaving them off.

Also make sure that you’re not paying for cover that you already have elsewhere. For example, if you have a relatively new car, specialist breakdown cover might overlap with what’s covered in your warranty.

Check the admin fees

Most insurers charge admin and cancellation fees. There’s not a lot you can do about that, other than be aware of what they are and make sure your policy is what you need before you hit buy.

Use cashback sites

As with many online purchases, it’s worth heading over to one of the more reputable cashback sites to check if there are any deals before you buy. Insurance is a fairly chunky purchase, so even a low percentage cashback offer will be worth it.

How to get cheaper car insurance: fine tune your policy

Insurance is a bit Goldilocks – you want it to be just right. If you over-estimate what you need, you pay too much. If you under-estimate it, you could invalidate your insurance. Here are some of the areas you can adjust to make sure you’re paying just the right amount.

Pick your policy type

Third party insurance is the legal minimum you need to be out on the road, but the coverage is pretty basic. Many people go for either third party, fire and theft, or fully comprehensive. You can find out about more about these different types of car insurance here.

Now you’d think that fully comprehensive would be the most expensive, but, weirdly, that’s not always the case. Over the years insurers have noticed that third party policies attract more claims, so they’ve put their price up so fully comprehensive can often be cheaper.

Now obviously you should get the insurance that’s right for you, but if you were considering third party only, do check the other options as you might have a pleasant surprise.

Estimate your mileage correctly

One of the ways insurers know how to price your insurance is by looking at how many miles you drive. Broadly speaking, the more time you’re on the road each year, the more likely you are to have an accident. This makes it really important that you estimate your annual mileage as accurately as possible when you apply for your insurance.

If you are able to keep your mileage down, then you could get a cheaper premium or even switch to a specialist low mileage insurance.

A word of warning: don’t put down an artificially low mileage for a lower premium. If you go over it, your insurance could be invalidated, so it would be a waste anyway.

Increase your voluntary excess

The excess is the bit of the insurance claim that you pay yourself. Usually, if you pay a higher excess, you’ll pay a lower premium.

It’s split into two parts: the voluntary and compulsory excess. 

As the name suggests, there’s nothing you can do about the compulsory excess. You have to pay it.  But when you get your quote, you can experiment with different levels of voluntary excess to see how it affects your premium. If you’re happy to pay a higher voluntary excess, then your premium will be lower.

Of course, that will mean that you have to pay more towards any claim that you make, so you need to make sure that you’d be able to afford the amount of voluntary excess you’ve signed up to.

How to get cheaper car insurance: get rewarded for safe driving

Drive safely because it’s a good idea, but also because if you can prove this to your insurer then you could pay a lower premium. Here’s how:

Build your no claims discount (and then use it)

A no claims discount is money off your premium based on the number of years that you’ve been insured without claiming. If you make a claim and the accident was your fault, then you lose some or all of the discount you’ve built up.

Every insurer will have their own way of calculating what discount a certain no claims history will translate into. There are also products you can buy to protect your no claims discount if you do have an accident.

Consider telematics insurance

While we’re on safer driving, you could also consider a telematics box. This monitors your driving and shares that information with your insurer. If you drive well, they may be able to reward you with a lower premium.

How to get cheaper car insurance: your car usage

Drive less

This goes back to the principle we talked about above, where fewer miles driven translates into a lower insurance premium. Take a look at your habits and your car usage. If there are times when you can cut out a journey or walk, cycle, or take public transport then not only are you saving on fuel and parking, but you could contribute to a lower annual mileage and lower insurance premiums.

Look at alternatives to the standard annual policy

If you don’t drive a lot, then look at when you use your car to see whether you need to fork out for a whole year’s insurance.

If you’re planning on driving for a short period, then either a subscription model with no cancellation fees (like boom’s) or temporary insurance, from a company like DayInsure (which offers insurance that covers as little as a day) could be the answer.

If you know you won’t drive much but it will be across the whole year (rather than a in a specific time frame) then usage-based insurance might be most economical. This means you pay for insurance based on how much your drive.

Just use your car socially

When you get your insurance, you’ll be asked how you’re using your car. There are various categories, starting from ‘Social, domestic and pleasure’ then adding on ‘Commuting’ and different levels of ‘Business Use’.

‘Social, domestic and pleasure’ insurance is cheaper as you’ll spend less time on the road. Insurance that covers commuting will be more expensive. And if you drive for ‘business use’ you’re getting into the territory of needing specialist (and probably more expensive) cover.

Park on a driveway

When you get your insurance, you’ll be asked where your car is parked overnight. If you have the option of secure parking off road parking, like a drive or even (be still your insurer’s beating heart) a garage, then the increased security will likely lead to a decreased premium.

How to get cheaper car insurance: your car

Be selective about the make and model

Ok, so the horse might already have bolted on this one. But if you’re in the market for a new car and you know that you’ll be watching your outgoings in the next few months and years (and let’s face it, who isn’t), then think about insurance costs when you pick which make and model. Cars with smaller engines are much cheaper to insure.

Upgrade your security

All cars now come off the production line with security features built in. As standard you can expect a factory-fitted immobiliser and an alarm. Taken together these provide decent protection against thieves.

However, car theft is on the rise and some insurers may give you a discount if you install extra security features to keep your car safe.  These are things like more sophisticated immobilisers, insurance-approved alarms, and trackers that make it harder for thieves to get away with your car.

The important thing to note here is that not all these devices are created equal. You should look for Thatcham-approved devices and check with your insurer to see which ones will give you the discounts.

Avoid modifications

Generally, modifications will make your car more expensive to insure for a couple of reasons.

Firstly, the specialist parts are expensive to replace and are likely to increase the overall value of your car. Insurance considers the cost of replacing parts or the whole car, so your premium will be higher.

Secondly, some mods, for example an engine supercharger, make having an accident more likely.  Up goes your premium once again.

Get a quote

Ready to find cheaper insurance? Get a quote from boom.

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