Do not be lured into paying for your car insurance monthly. Although it seems cheaper or more manageable, it's not. Typically, you will be charged around 24% interest, thereby adding £50 to the average car insurance cost. Just over 50 per cent of the 26 million insured drivers in Britain pay monthly, and cumulatively this means £624 million is being handed to the insurance industry in unnecessary payments. Even if you pay on your credit card, taking two or three months to pay it off, it will still be more economical than spreading it over a year at 24% interest.



There are lots of saving tips you can use when it comes to car insurance. Firstly, don't accept a renewal quote, even if you have a substantial no-claims bonus. There is no such thing as customer loyalty in the insurance industry. Every one of the big companies target new clients by offering big discounts, some offering half price deals compared to those for existing customers for exactly the same level of cover. Try applying as a new customer to your existing insurer; you'll soon see how much the difference is.

Secondly, try not to make a claim on small amounts up to £500 because you'll only have pay a higher premium the year after when your policy is up for renewal and in some cases an insurer may not cover you at all if you have made a lot of claims.

Setting your level of excess at a high rate can also bring your premium down significantly.

The majority of people don't realise how job titles can affect insurance premiums. If you go to tinyurl.com/4n75a3 you can click on your occupation and search through a list of job titles within that group revealing the premiums that each will be charged. Some occupations are not well thought of by insurers – journalists, estate agents and sales reps to name but a few. You may be able to reduce your premium by being more accurate about you job title. A journalist for example may pay £600 but an editor only £576. You must, however, tell the truth. Any inaccurate or non-disclosed information would invalidate any claims you make.

Using security devices can also reduce your insurance premiums. Thatcham Motor Insurance Repair Research Centre calculates how good car security products like vehicle tracking are and because they use the British insurance industry's criteria, a lot of insurers recognise these benefits and give discounts if you have them fitted.

Avoid customizing or modifying your car significantly because around half of all insurers won't give cover and any that do charge more. Don't pimp your ride if you want to keep the cost down.

Another temptation is for young drivers to avoid supplying details of their parents' address in rural areas rather than putting down the address of their own city abode. Never do this. If insurers get an inkling that you have lied on your insurance application, they will completely invalidate your claim.

One final tip in trying to reducing premiums is to add another driver to your policy. For some reason, adding a driver can lower the total premium. Obviously, this works best if the additional driver has a safe, clean record.

Information at a glance from Sainsbury's Insurance (Jan 2008), reveals that the average car insurance premium in the UK is £497 per annum. The equivalent paid by a driver under 25 years old is £1,256 whilst the average for a man is £525.35.

And a report published by the AA in April 2008 claims that shopping around for the best car insurance quote can save you a massive £217 per annum.