Mark Adams, Tuesday February 05, 2008

Car insurance premiums are rising at twice the rate of inflation - taking the average annual premium to a new high of £630. Don't pay more than you need to - we reveal seven simple ways you can drive down your car cover premiums

The cost of car insurance hit a new high last year - and it seems that 2008 is set to bring no respite for hard-pressed motorists. A double whammy of petrol prices hitting an all-time high of £1.04 a litre and further motor insurance premium hikes is set to see the annual cost of motoring creep towards the £3,000 mark.

Last year the average annual cost of running a car was £2,259, according to figures from Sainsbury's Bank - yet this figure is expected to soar in 2008 due to sharp rises in motor insurance costs. Figures released this week from price comparison website Moneysupermarket.com show that premiums rose 4.5% in the second half of 2007.

The cheapest typical premium for a male driver rose 4.9%, according to the survey. Premiums for female drivers climbed 4.1%. The research also reveals that drivers in their sixties continue to enjoy the cheapest quotes of all.

Car insurance costs have been rising steadily over the past two years - the AA's annual British Insurance Premium Index shows that average quotes for both comprehensive and third-party fire and theft (TPFT) insurance are now at an all-time high. A typical annual comprehensive policy is now £629.04 - the average TPFT policy is £628.60.

The soaring cost of premiums has been fuelled by a number of factors. Crashes caused by uninsured drivers and the increasing cost of repairing new cars involved in them are two primary contributing factors - despite the insurance industry's increasingly successful efforts to identify uninsured vehicles.

Seven steps to cheaper car cover
Don't just accept your renewal quote - there are steps you can take that can help bring down the cost of your policy. We reveal seven of the best.

1: Shop around
Drivers who shop around can actually save money on car insurance - price comparison websites allow you to compare quotes from most of the market. The AA index reveals that the average premium paid by those who shop around at renewal time was just under £400 - a 33% saving on the average premium.

Find the cheapest car insurance quotes

2: Secure your car
A car alarm, immobiliser or tracker makes it less likely that your car will be stolen and therefore should reduce your premium. If you do fit such security devices, make sure that they are approved by your insurer. It's worth calling your insurer to see which ones will cut your car insurance quote the most.

3: Don't pimp your ride
New wheels, seats, colour changes and adding a spoiler are all changes that could add significantly to your premium. To pay as little as possible, keep modifications to a minimum.

4: Drive less!
The fewer miles you drive each year, the less your cover will cost. Make sure your insurer has an accurate estimate of your annual mileage. Driving less than the 8,000-12,000 average should get you a significant discount.

5: Pay upfront
Most insurers charge a hefty fee for the privilege of paying by monthly instalments - the levy can range from between 13% and 29% APR. Paying your insurance in one lump sum can work out cheaper than paying monthly or quarterly. Insurers may also give a discount if you pay by direct debit.

6: Protect your no-claims bonus
Your no-claims bonus (NCB) grows for each year you drive without making a claim on your car insurance. You can protect your no-claims bonus even if you do claim by paying a little more. An NCB of five years or more can entitle drivers to a 60%-75% discount on car insurance premiums.

7: Park off-road
Parking your car in a garage or private driveway can help bring your premiums down dramatically. Generally, having to park on the street, especially in a city, will bump up your costs.

For all your other motoring needs, head to the Sky Motoring website