How to Cut Back on Car Insurance

Around a million people are expected to cut back on their insurance cover because they simply cannot afford it. However, there are ways to save without sacrificing cover altogether.

Research by insurer LV= has revealed that more than one in five Brits plan to cancel at least one insurance policy over the next 12 months because of the recession. Around 37 per cent are considering downgrading their car insurance, but this can be a costly mistake. Motorists should be aware that car insurance is a legal requirement and that being caught without it could lead to a fine in the region of ?5,000, a driving ban and even the seizure of your vehicle by the police.

So instead of sacrificing cover altogether, motorists are encouraged to look at ways in which they could save money on their policies.

To achieve this you don't need to downgrade your cover though it can be worthwhile checking your policy to see if you're paying for any non-essentials. For example, there's no point paying for breakdown cover attached to an insurance policy if you already have separate breakdown insurance elsewhere. Similarly you might not need a courtesy car if there is another vehicle in your household available to drive.

In terms of savings, much depends on whether your car insurance policy is close to renewal or not. When your policy expires you can shop around for cover elsewhere - but if your renewal date is still some way off and the insurer charges a fine for cancelling a policy you should look at other ways to save.

Among them, you could ask the insurer to recommend a security system that could earn you a discount - fitting an alarm, immobiliser or tracking device could pay for itself within a year. Think about your circumstances too - if you don't drive too often, could you agree to limit your mileage to earn a discount? Could you clear out the garage so that you can park in it each night, which also earns a discount with several insurers?

The most effective way to earn cheap car insurance, however, is to shop around for premiums at renewal time. Most car insurance companies offer their cheapest deals to new customers so don't pay over the odds for misplaced loyalty.