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Five ways to reduce your insurance costs (without cancelling your policy)

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Your Money

To beat the rising cost of living, 21% of adults are considering, or have already, lowered the number of insurance policies they pay for or the cover levels they have, new research shows.

Two thirds are also more worried about their finances now than they were during the pandemic, according to the study from the review website Smart Money People.

Yet despite people reducing their insurance cover, just over a third, 36%, said they were unsure if they have the right financial products to cope with the current economic crisis.

It surveyed 2,086 people on how they have changed their insurance products this year. It says the figures show a worrying trend that many people are being left under or uninsured.

Separate research from NerdWallet shows that 41% of adults would look to cut or lower their cover for life insurance, while 38% would look at home and car insurance when trying to cut back on costs.

Next in line to be scrapped was mobile phone and pet insurance, which 35% would consider removing.

The study of 2,000 adults showed that 66% had seen their premiums increase in the last year.

Yet instead of scrapping cover altogether, which can lead to bigger bills down the line if you do need to claim, there are ways to cut costs.

Here we look at five ways to reduce your insurance bills, without removing a policy altogether.

1. Pay upfront instead of monthly

Paying monthly for insurance is always going to be more expensive because you’ll pay interest on top of the monthly payment.

However, you could save as much as £60 a year if you pay annually, according to data from Compare the Market.

If you can afford to, making one lump sum payment will be cheaper.

2. Increase your excess

When you take out an insurance policy, you can often choose the excess amount. You have to pay this if you make a claim and there’s usually a mandatory and a voluntary excess.

If you can increase this, it may reduce your premium. But make sure it’s still an affordable level as you will have to pay it if you make a claim.

3. Get rid of policies you don’t use

While some policies, such as car insurance, are legally required if you drive, others may not be necessary. It’s worth reviewing the policies you have in place and which you need.

There is always the option to self insure as well with some policies. If you are paying £10 a month for cat insurance, for example, you could put that money into a savings account paying interest instead. That way you will always have the money in case you need to pay out for vet bills but if not you can use it for something else.

It’s also worth checking you aren’t doubling up on cover. Many banks, for example, also offer insurance policies alongside current accounts so it’s worth checking you’re not paying for the same cover twice.

4. Compare your costs

The insurance market is competitive and there are lots of policies to choose from so there’s usually no need to be loyal to one insurer.

Even if your policy isn’t coming up for renewal you can always check you’re paying the best price. If you find a cheaper policy you’re free to switch, just be aware there may be fees if you cancel mid-policy.

5. Watch out for pricey add-ons

Insurers often throw in extra ‘add-ons’ to policies, such as breakdown cover on a car insurance policy, but you may not need these and even if you do, you could find them cheaper elsewhere.

When you’re looking at policies check what’s included to see if it’s something you actually need. If it is, compare prices with different insurers to check you’re paying the best price available.