Can’t afford car insurance? What to do and tips to lower costs

Struggling with car insurance costs? Find out what you can do when your budget is overstretched, plus ways to lower your bill with our easy tips.

Are you tired of your car insurance premiums skyrocketing every year? Me too!

Has your renewal notice just landed on your door mat and the price has gone up massively? Yep, me too!

Car insurance prices have risen 67.2% in the previous year (that’s almost twice the equivalent in 2020, and it’s still going up!), and with the cost of living soaring, finding room in the budget from somewhere else is getting harder to do.

The perfect scenario is to reduce your car insurance bill without compromising on coverage. Sounds easy, hey? We managed to get a lower premium when we renewed this year, so it can be possible.

Don’t let the spiralling costs you first see put you off or keep you off the road. Here are some top tips to lower your insurance premiums and some practical options if you just cannot afford the cover.

How to make car insurance cheaper

While the overall average car insurance currently sits at around £995 a year, as a comparison, to help with understanding where you are with pricing, the median costs of car insurance in November 2023 were:

• £607 – third party only
• £467 – fully comprehensive
• £456 – third party, fire and theft

Shop around

You may already be doing this, but I will shout it loudly as many people still don’t – compare, compare, compare!

You could save around £500 a year by getting a quote from somewhere else! Don’t just renew your insurance with the same company because it’s easy.

Look around and get prices from different insurers. There are lots of websites where you can do this and get rewarded, too:

• Confused.com – get free hot drinks from Greggs for a year, plus another reward of your choice
• Compare The Market – get 2 for 1 cinema tickets and Meerkat Meals)
• Go.Compare – get £250 excess refunded if you need to claim (and it’s settled)
• MoneySupermarket – get a free days out annual pass worth £160 with unlimited access to thousands of venues

Increase your excess

The excess is the amount you pay towards any claims you make.

If you agree to pay a bit more towards an excess, your overall insurance cost might go down.

Just make sure you can afford to pay the excess, as it’s a big lump sum in cash, should you need to claim!

Consider telematics insurance

This is where a small device, known as a “black box,” is added to your car to track your driving. It will monitor your driving habits, including your speed, braking, and when you use the car.

My daughter had one when she first passed (and still does, as it’s much cheaper for her).

While she dislikes the idea of being “watched” she was given a partial refund and her premiums were lowered in month 6 of her policy as the black box proved she was a safe driver.

Pay annually

If you can, try to pay for your insurance all in one go rather than monthly.

This often works out cheaper as some companies charge extra for the convenience of spreading the payments.

Drive safely

Insurance companies often offer you lower rates if you have a good driving record without accidents or speeding tickets.

Reduce mileage

If you drive less, you might get a lower rate.

Let your insurer know if you’ve cut down on driving, like working from home more often.

Remove add-ons

Quite a few insurances throw in extra covers such as breakdown cover, windscreen cover, personal accident, personal belonging cover, and legal protection.

While it might come in handy, you may find it cheaper to buy the cover individually as a standalone cover.

You may already have cover through your home insurance (for personal belongings) or potentially through any union subs (legal cover can sometimes be included).

Make sure you’re getting the right cover for your needs. It’s about finding a balance between cost and being properly protected.

No frills policy

Think about what cover you really need.

Do you need all the extras, like a courtesy car or legal cover?

If not, a more basic policy might be cheaper.

Multi policies

Some insurers offer discounts if you bring together multiple policies, like car and home insurance, or insure more than one car with them.

Avoid modifications

Adding extras to your car will mean it’s more expensive to repair should you need to claim, so avoid doing anything to modify your car.

Check for affiliation discounts

Some insurers offer discounts to members of certain organisations or professions. Check if any groups you’re affiliated with have partnerships with insurance companies.

This could be an alumni discount for certain universities, Blue Light Card for emergency workers, or a union discount if you are a member.

Park securely

Cars parked in a garage or a secure, off-road location often have lower insurance premiums due to the reduced risk of theft or damage.

Adjust your job title

Sometimes, slight adjustments in how you describe your occupation (while still being honest) can impact premiums. Different job titles can be seen as higher/lower in risk.

Install a dash cam

Some insurance companies offer discounts if you have a dash cam installed in your car, as it can provide evidence in case of an accident.

Take a driving course

I’ve added this to the end because I’m not entirely sure if it’s true. Could you let us know?

I remember being told that having a Pass Plus, or other similar approved driving courses to prove you are a safe driver, was meant to help bring down premiums, but I’ve never seen an insurer ask whether I have this when I’ve compared cover!

Can’t afford car insurance

Even if after hunting around for a better deal, the costs are just too high, there are some options you could consider:

Prioritise your needs

This is where you need to be totally honest with yourself.

You need to really consider how essential your car really is to your daily life.

If it’s not crucial for work or other reasons, it’s worth weighing up whether you can manage without it for a while, perhaps using public transport or car sharing.

You’ll save on insurance, general upkeep, MOT, road tax, fuel costs, but you will have to pay out more in buses and trains.

We got rid of our car in 2014, and while it took a bit of getting used to, it did save us loads of money while we were getting ourselves out of debt,

Change your car

If possible, consider selling your current car and switching to one that’s cheaper to insure.

Even the cheapest electric cars might not be a good idea. Although they have low running costs, insurance can be higher as their parts are more expensive to source and fit.

A Group 1 vehicle, such as a Fiat Panda or Chevrolet Spark, might not be as powerful as you’re used to, but they are some of the cheapest cars to insure.

Or, still cheap, look to get a Group 2 – 5, which includes cars like the Ford Ka, Renault Clio, Skoda Fabia, and Nissan Micra.

Generally, smaller, less powerful engines and models that are cheaper to repair will see you pay less for insurance.

Speak to your insurer

Contact your current insurer and explain your situation.

They might be able to offer a more affordable plan or suggest ways to reduce your premium without compromising too much on coverage.

Join a car sharing club

If you only need a car occasionally, joining a community car sharing scheme might be cheaper than owning and insuring your own vehicle.

When you want to use a car, you can book one near you through a car sharing site or app and then collect and drive it for a small charge.

Some companies offer cars solely for short-term rentals (and the prices are not as high as general car rentals), and people also rent out their own cars if they don’t use them too much (just like Airbnb, but for cars).

Use a broker

Insurance brokers can sometimes find deals that aren’t widely advertised.

They can negotiate on your behalf and may have access to special rates.

Consider Pay-As-You-Go insurance

This is a more flexible option where you only pay for the miles you drive.

It can be a good choice if you don’t use your car often.

Why has car insurance gone up?

To be fair, we hear the same thing each year that car insurance prices go up, but this year has been a really sharp rise.

And, with the cost of everything else jumping, but salaries and any benefits only going up but a few quid here and there, it’s not easy to absorb the costs in our household budgets!

Inflation

Inflation is a big reason why everything goes up.

For car insurance, in particular, when it takes a long time to settle claims, the value of money can change significantly.

For instance, studies have found that with inflation at about 3% in 2024, the price of insuring your car has gone up because of these changes.

The energy crisis

Since 2021, the cost of energy has shot up by 36%.

This increase has made it more expensive to fix cars, which in turn has made car insurance more expensive.

Rising costs of repairs

Repairing cars has become 33% more expensive since early 2022, according to the Association of British Insurers (ABI).

Also, the money paid for work (labour costs) jumped by 40% at that time.

These hikes have led to higher car insurance premiums.

Supply chain slowdowns

In 2023, supply chain problems affected 77% of mid-sized businesses, leading to delays in the manufacturing sector.

This has extended car repair times, requiring more courtesy cars and pushing up insurance costs.

No more loyalty discounts

The Financial Conduct Authority (FCA) put a stop to loyalty premiums, also known as price walking, in 2022.

This practice used to offer cheaper prices to new customers while increasing prices for existing ones over time.

Now, companies start with higher premiums, leading to pricier insurance.