Table of Contents
- When is the right time to renew car insurance?
- Why does the cost of car insurance often increase at renewal?
- How else can I cut the cost of car insurance?
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Getting the best price on your car insurance is particularly important at a time when premiums are rising, even if you’ve not made a claim.
Car insurance is a necessary expense and a legal requirement. Fortunately, there are ways to keep your car insurance costs to a minimum, including knowing the best time to renew your cover.
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When is the right time to renew car insurance?
Generally, the closer you get to your renewal date, the more you’re likely to pay for your car insurance. The cheapest time to renew your car insurance policy is generally about two to four weeks before your renewal date.
Why? Because insurers know that you’ll be increasingly keen to get your cover in place the closer you are to your existing policy expiring. Their logic is that this will make you more willing to swallow a higher price.
It’s also the case that some insurers take the view that anyone who leaves renewing their cover to the last minute might be disorganised when it comes to general car maintenance, potentially increasing the likelihood of a claim.
They might even conclude that a disorganised person might be more at risk of having an accident.
Why does the cost of car insurance often increase at renewal?
Many people renew their car insurance policy with the same provider each year. But, of course, the cost can go up, even if your circ*mstances haven’t changed from the year before.
There are two main reasons why car insurance costs can go up at renewal. The first is economic factors such as insurance premium tax, vehicle repair costs and the number of uninsured drivers on the road. The second is risk.
If you’ve made a claim on your car insurance in the past year or you’ve had a driving conviction, insurers will regard you as higher risk and will push up your premiums accordingly.
Similarly, if your estimated annual mileage has gone up from a year ago, there’s a greater risk of you being involved in an accident and your premiums will rise as a result. You might also pay more if you’ve moved to an area with a higher level of car crime, or if you’ve changed jobs and are now in what insurers deem to be a risky occupation.
But one factor that can no longer affect your car insurance premium is whether you’re a new or existing customer.
Previously, insurers frequently offered their best prices to new customers in a bid to get more people on their books and grow their market share, while existing customers paid more. But thanks to a rule change in January 2022, car (and home) insurance providers can no longer charge existing customers more for their renewal than they would charge a new customer for the equivalent policy.
However, this ruling doesn’t mean that your existing car insurance provider will necessarily offer the cheapest price when your car insurance policy is up for renewal. The only way to be sure you’re getting the best deal is to continue to shop around for your car insurance on an annual basis.
How else can I cut the cost of car insurance?
Fortunately, there are a number of steps you can take to cut your car insurance, alongside shopping around to find the best deal.
For a start, it’s cheaper to pay for your car insurance upfront on an annual basis rather than in monthly instalments as you’ll be charged ‘interest’ to pay monthly.
If you can’t afford to pay for your insurance in one go, a 0% purchase credit card will enable you to spread the cost interest-free. It’s best to spread your payments over a maximum of 12 months so that your payments for this year’s insurance don’t overlap with next year’s.
It’s also important to think carefully about whether you need any add-ons. Car insurance providers will often require you to pay more for extras such as courtesy car cover, windscreen cover and legal cover. But you might not need them all, so choose wisely.
Increasing the amount you’re willing to pay in voluntary excess towards the cost of any claim you make is another way to bring down your insurance costs. Just remember that you will also need to pay your policy’s compulsory excess so it’s vital that you check the total excess will still be affordable.
Reducing your mileage will also help to cut premiums, as will increasing your car’s security. You can do this by parking your car on your driveway or in a garage, rather than on the street, or by fitting extra security measures such as a tracker or immobiliser.
Remember that, if anything changes before your policy is due to renew – if you’ve changed address, for instance – you must inform your insurer as soon as possible. If you don’t, you risk invalidating your policy.
You might have to pay an admin fee in the region of £25 – £50, and the premium might be adjusted according to any changes in your risk profile.
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