Eight ways to cut home and car insurance costs
In the year to November 2022, the cheapest car insurance quotes rose a hefty 17%. As households navigate the cost-of-living crisis, here are eight tips to get cheaper cover.
With many household budgets under the strain, drivers are urged not to automatically renew car insurance without checking prices elsewhere.
Reena Sewraz, Which? Money expert, said it there are a number of ways to keep down these costs.
She says: “Haggling and switching remain effective ways of bringing down the cost of insurance. It’s important to shop around and compare the rates on offer, as there’s likely to be a great deal of variation between providers for insurance.”
Which? share eight of its top tips to help you get cheaper car and home insurance without having to compromise on cover.
1) Shop around
The ban on the insurance ‘loyalty penalty’ at the beginning of 2022 brought an end to exclusive new customer discounts, but this appears to have contributed to prices rising for some customers.
It’s worth shopping around when a policy is up for renewal. Half (48%) of Which? members who haggled in the first six months of 2022 made savings – an average £56 for car insurance and £54 for home insurance.
There are also likely to be savings available by switching providers. Drivers who didn’t haggle, but had changed car insurers were paying £43 less, on average, than those who stuck with their original provider. Home insurance switchers paid £103 less.
2) Use comparison sites
Some insurers set different prices depending on the method used to get a quote and some comparison sites also offer cash-saving incentives to entice customers.
In December 2022, Confused.com and MoneySupermarket guaranteed to beat customers’ current car or home renewals or offered to refund the difference, as well as offering a £20 voucher. GoCompare offers free excess cover with car insurance. This reimburses up to £250 of the excess if you claim (excluding breakdown and glass damage).
In October 2022, Which? tested a quote for a 38-year-old Ford Focus Zetec driver and, adding a voluntary excess of £250, reduced the cheapest five quotes by between £55 and £58 – around 12%.
Not all insurers or policies feature on comparison websites, so it is also worth checking directly with the insurer.
3) Time it right
When you search for a new policy can affect the quote you receive. Generally, leaving it until the last minute means insurers are likely to charge more than if you bought cover in advance of the cover starting.
The time of year can also affect your quotes. Which? analysed 33 months of car insurance premium data from Compare the Market (Jan 2020-Sept 2022), and found variations of as much as £50 in the average premium depending on the month you buy, with prices peaking in December and dropping between February and April.
4) Make sure the cover is adequate
Consider whether the cheapest policy you find will actually save you money in the long run. If a policy is cheap but comes with steep excesses or significant exclusions, it could actually cost you more if you have to claim. Check the policy details before buying cover.
5) Adequate cover for your needs
When searching for insurance, choose a policy that fits your needs, and check you’re not paying for extras you might not use or benefit from. As an example, tweak the voluntary excess to see how it will affect the price…increasing it will reduce the premium. Make sure the ‘total’ excess (any compulsory excess plus the voluntary excess) is no higher than what you could afford to pay in the case of a claim.
6) Check the quote is accurate
Check assumptions made about your circumstances when it is time to renew. For example, if your daily commute to work during rush hour has changed you might be driving fewer miles each year.
For home insurance, you may have made a change to your property or the value of your insured contents might have changed.
Informing the insurer of any changes means you get a more accurate price, potentially saving you money.
7) Pay annually if you can afford to
Paying insurance in monthly instalments might be a more expensive option overall. This is because you’re effectively borrowing the year’s premium to repay in instalments. This typically comes with interest, with rates of around 30% APR not being uncommon. If you can afford it, pay annually instead.
8) Try a broker
If typical insurance doesn’t tick all your boxes, perhaps due to your age, the kind of house you live in, a medical condition, or various other circumstances that can make finding insurance difficult.
If you haven’t found a policy to suit your needs after searching online and via comparison sites, it could be worth trying a broker. A broker will find insurers, arrange cover, and can help with renewal and making a claim. They’re usually paid by commission.