Ways to save money on your car insurance and insurance tips should you be thinking about using your car as a side hustle
Car insurance is a necessary expense for every driver, but it doesn’t have to break the bank. Recent reports from the CPI, highlighted by Vertu Motors, show a 11% drop in car insurance prices over the past year – the first significant decrease since 2020 – and now is the perfect time to reassess your policy and find a better deal. However, with the overall cost of car ownership still on the rise, it’s more important than ever to be proactive about saving money on your insurance.
Whether you’re a new driver or a seasoned motorist, here are some practical tips to help you reduce your car insurance costs without compromising on coverage.
1. Don’t Settle for Auto-Renewal – Shop Around
It’s easy to let your car insurance auto-renew, especially when life gets busy; we've all done it, haven't we; the thought of having to trawl through comparison sites or having to call to get quotes is, frankly, often something I couldn't have been bothered with in the past, so I stuck with what I had, and that's what the insurance companies hope you'll do!
I learned the hard way when a few years ago I just accepted the price, to find a month later that I could have saved £300 a year with a rival insurer, and this sticking with your current provider without exploring other options shows that you could be missing out on significant savings.
Comparison websites are a great starting point, allowing you to compare quotes from multiple insurers in minutes. Remember, loyalty doesn’t always pay – switching providers could save you hundreds of pounds.
Services such as Rooster are worth looking into as they give you an app to put on your phone, and it records your driving habits. Then, based on your driving results, they'll provide you with insurance quotes based on how safe a driver you are, so if you drive really well, it can save you money on your car insurance!
2. Choose the Right Level of Cover
Understanding the different types of car insurance is key to finding the right policy for your needs. While third-party insurance might seem like the cheapest option, it often offers the least protection. On the other hand, though slightly more expensive, comprehensive insurance provides broader coverage, including damage to your vehicle, vandalism, and accidental damage. In many cases, opting for comprehensive coverage can save you money in the long run by reducing out-of-pocket expenses in case of a claim.
3. Be Honest About Your Driving Habits
When applying for car insurance, accuracy is crucial. Misrepresenting details like your estimated annual mileage or listing someone else as the main driver (a practice known as “fronting”) can lead to invalidated policies, fines, or even prosecution. Instead, be upfront about your driving habits and consider adding an experienced driver to your policy as a named driver – this can sometimes lower your premium without compromising your honesty. Included in this is making sure that you do actually have the right policy for your needs. I was offered a great deal last year, which I nearly went with, but I realised at the last minute that the policy didn't cover me for commuting to my place of work, so If I'd had an accident when driving tow ork, my insurance wouldn't have been valid, so its importnat to tell the insurer EXACTLY when and where you'll be using your car, even if that costs more; the costs of not having the right insurance could be massively more!
Also, if you want to earn extra money from your car, ensure you have the right type of insurance for your needs. If you want to work as a food delivery driver for services such as Deliveroo, Just Eat, or Uber Eats, or perhaps want to deliver parcels for Amazon via the Amazon Flex programme, you'll need to have 'hire and reward' insurance, which will cover you whilst delivering/working.
I've written about driving as a side hustle in more detail on the blog here.
Normal car insurance won't cover you for this so you'll need to get the right insurance. Hire and reward insurance is much more expensive if you buy a dedicated H&R insurance policy. Still, you can get pay-as-you-go hire and reward insurance, which is charged by the hour for when you are working (around £1 an hour, depending on your type of vehicle), from companies such as Zego or Inshur, and keeps your insurance lower, but this is top up insurance. You'll need to have your normal insurance as well.
Top up, hire and reward insurance is no longer available on vans, so you'd need to buy a full hire and reward policy if you want to use a van to deliver; very annoying as I do have a car and will now need to pay £1600 a year to be able to deliver food/parcels, over £1 an hour I was paying on top of my yearly £400 insurance!
You'll need to speak to your normal car insurer to make sure that they allow you to use top-up insurance on top of their policy, as many don't. If you do have an accident, they'll invalidate your insurance. You'll essentially not be insured, so this is the type of question to be asking a potential insurer before you buy!
4. Consider a Black Box Policy
Telematics policies, often referred to as “black box” insurance, are becoming increasingly popular, especially among younger drivers. These policies use a small device installed in your car to monitor your driving behaviour, such as speed, braking, and cornering. While some drivers worry about privacy or restrictions, modern black box policies rarely impose curfews and can reward safe driving with lower premiums. If you’re a careful driver, this could be a great way to save money.
5. Review Your Policy Regularly
Your circumstances can change over time, and so can your car insurance needs. For example, if you’ve moved to an area with lower crime rates, started working from home, or reduced your annual mileage, these factors could lower your premium. Make it a habit to review your policy annually and update your insurer about any changes. This ensures you’re only paying for what you need.
6. Take Advantage of Cashback Site Offers
One of the easiest ways to save money on car insurance is by using cashback websites. Platforms like TopCashback, Quidco, and others often partner with insurance providers to offer cashback rewards when you purchase a policy through their links. These cashback deals can range from £20 to £100 or more, depending on the provider and the policy, so it's very much worth checking to see if the insurer you want to use has cashback available.
Several of the price comparison sites have cashback options on these cashback sites, so always check before you buy!
Here’s how cashback works:
- Sign up for a cashback website (most are free to join).
- Search for car insurance deals on the site.
- Click through to the insurer’s website and purchase your policy as usual.
- The cashback will be tracked and paid into your account after a waiting period.
It’s essentially free money back in your pocket, so it’s worth checking these sites before finalising your purchase. Just make sure to compare the overall cost of the policy, including the cashback, to ensure you’re still getting the best deal.
Bonus Tip: Pay Annually if You Can
While paying for your car insurance monthly might seem more manageable, it often comes with additional interest charges. If you can afford to pay for your policy upfront, you could save a significant amount over the course of the year, I know I pay about £10 extra a month for not paying in one go, and that's an extra £120 out of my pocket, which is a substantial amount of money to lose out on, but like many of us, I don't always have enough in the bank account to pay outright sadly!
Reducing the cost of car insurance doesn’t have to be complicated. By shopping around, choosing the right level of cover, being honest about your driving habits, and taking advantage of cashback offers, you can find a policy that offers both value and peace of mind. With car insurance prices finally on the decline, there’s never been a better time to take control of your expenses and secure a deal that works for you.
So, before your next renewal date, take a moment to review your options – your wallet will thank you!