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How to save money on Car Insurance.

Premiums are shooting up so find out how best to save money when you start a new car insurance policy or renew your old policy.

The first step you have to take is accepting that UK insurance companies make big profits every year. So don't feel guilty because you ask for discounts or organise your affairs to pay less. Yes, Parliament makes it compulsory to have insurance, but don't pay more than you have to.

You've started off in the right place. Using a site like this gives you online quotes from most of the top car insurance companies. Prepare for surprises. The difference in quotes can be measured in hundreds. So what should you look for to get cheap car insurance?

The uninsured excess

The standard is to pay the first £100 of any claim against you, but if you agree to accept a higher liability, you will get a bigger discount. In effect, you're insuring yourself, so you have to decide how much risk you want to accept. Ask yourself, "If you have a bad run, can you afford to pay out in three or four claims in a short period of time?"

Improving security

With a cheap car to get you around, you probably only have Third Party, Fire and Theft. There will be some savings if you fit better locks and keep your car in a garage, but the amounts are small. However, on a comprehensive policy with a more valuable car, you will save significant amounts of money if you fit an immobiliser and have a tracker installed. One factor in this will be your post code. Many pay a higher premium for living in areas where there are high levels of TWOC. The more security you have, the better.

Low annual mileage

If for some reason you do less than 5,000 miles a year, there are real savings to be made. This will be most likely where you have a classic car you only drive for fun at weekends, but there are other situations where you will be able to produce evidence of low use. A phone call will quickly establish what discounts are available for different mileage limits and what evidence is required. Remember, if your circumstances change and the mileage rises, you must notify your insurer immediately.

Buy a car in a low category

Remember that although the Association of British Insurers draws up the list classifying cars for insurance purposes, individual insurance companies can draw up their own list. Make sure you know how your target insurers classify your "dream" car before buying it. Generally, small, low-powered cars like the Punto and Fiesta are cheap to insure, the Astra and Peugot 307 are mid-range, and you will need an oxygen mask for anything else.

Named drivers

Depending on the age, gender and driving record of the drivers, it can often be cheaper to insure one + named driver(s) than for each driver to be separately insured. For example, a parent taking on a child for the first year of driving can be a big saving. Inexperienced drivers can be hit with a big initial premium. But the young driver doesn't begin to earn a no claims discount so it's a balancing exercise as to how long to stay together.

Don't renew automatically

Although you get your annual no claims discount increase for the first few years, your premiums still creep up. This is because insurance companies offer a good discount to get you through the door. Then, they rely on you to be on autopilot when it comes to accepting premium increases on renewal. Watch out for your renewal notice coming only a day or so before the renewal date. This is designed to limit your opportunity to shop around. Make a note in your diary and use a site like this two or three weeks before you need to renew. Never assume your premium remains good value. Always get comparative online quotes early.

Use specialist insurers

Some companies specialise in particular groups of drivers or different kinds of car. So, young drivers, women drivers and older drivers can find significant savings by going with a company that has large numbers of drivers in that group. Similarly, if you have a high-powered or sporty car, a modified or collectable car, you will attract lower premiums from specialist insurers.