Drivers across the UK have to renew their car insurance every year to keep on the right side of the law but when is the best time to do it?

Car insurance is fast becoming one of the UK’s most expensive insurance products with ClearScore having spotted a 92% increase in the number of online searches for ‘pay monthly car insurance’ in the past year, suggesting drivers are looking at pay monthly deals to help split the cost.

If you’re wondering how to get a cheaper deal when it comes to paying for your car insurance, look no further.

At the start of 2024, car insurance prices in the UK soared to a record high, with the average policy now costing nearly £1,000 a year, and almost £3,000 for 18-year-olds, according to data from Confused.com car insurance.

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According to 2022 Financial Conduct Authority (FCA) data, a third of motorists in the UK paid for their car insurance policy monthly.

How your credit score can affect the price of your car insurance

With online search data strongly suggesting that this figure could be set to rise, the team at ClearScore is reminding drivers of the little-known fact of what insurers use when pricing their car insurance policy - their credit report. 

Factors like a driver’s payment history and the type of credit they use helps insurers predict the likelihood that they’ll make a claim - it’s been found that people with good credit history tend to make fewer insurance claims.

While a high credit score doesn’t guarantee drivers will be offered cheaper car insurance rates, shaping up and improving their credit score might bring down the price of their premiums. 

Factors that affect car insurance cost

If drivers have been offered premiums that mean they won’t be able to afford the annual cost, splitting car insurance monthly can actually improve their credit score.

However, it’s worth knowing that paying monthly will add interest to the quoted policy cost, as car insurance providers will essentially be ‘lending’ drivers the cost of their premium, which means they’ll pay for the privilege. 

Over time, drivers who pay their monthly car insurance policy plus interest on time every month could improve their credit score.

How to get cheaper car insurance

During its research, the team at ClearScore noticed a 50% annual increase in the number of people searching for “how to get cheaper car insurance” and has shared the following tips to help drivers.

Switch about three weeks before renewal

You might have seen Martin Lewis speaking about actuarial risk recently, dubbing it “absolutely ridiculous”, according to ClearScore.

But what is it and what does it mean? Actuarial risk is something insurers use because they’ve found a link between drivers who renew their insurance at the last minute and those who make a higher number of claims so they ramp up the price of cover for those drivers. 

If drivers secure a new car insurance policy weeks before their existing policy ends, it is likely to show that drivers are less rushed and often gives them better prices. 

Choose your job title carefully

The prices insurers give are based on past claims data and they’ve found that some jobs are riskier than others.

The people who are considered riskier drivers are those with car-related jobs like mechanics and car salesmen.

This could be because they spend more time behind the wheel or because they’re more confident drivers, so they tend to drive faster.

As a result, insurers make them pay more in premiums to make up for that potential extra risk.

ClearScore advises drivers to get separate quotes if there is more than one way to describe what you do to see if one of them is the cheapest. For example, if you’re a barber, would you get a cheaper deal describing yourself as a hairdresser? What about an illustrator versus an artist?

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Don’t auto-renew

Auto-renewing your car insurance policy won’t get you cheaper insurance. If anything, it will probably increase your premium with research finding that auto-renewing costs consumers around £1.4 billion every year.

Looking for better deals could result in a saving of up to £222 but around 35% of motorists still let their policies renew automatically. 

Drivers can stop auto-renewal by changing their account settings online if they manage their policy that way, or by phoning their provider.

Then they can set a reminder on their phone or calendar so  they’re ready to switch three weeks before their current policy ends.

Boost your excess

Drivers who choose to pay a higher excess could reduce the cost of their policy but of course it means they’ll pay more if they need to make a claim. 

ClearScore says if they have savings that could cover the excess if they have an accident, for example, boosting their voluntary excess could be a sensible way to bring down the price of their cover.

Add another driver to your policy

If you’re a young or inexperienced driver, adding an older driver with a long no-claims record to your policy as an additional driver could help lower their premiums because the insurer assumes they’ll spend less time driving the car if it’s shared, reducing the chances of an accident.

Drivers need to be careful though as lying about who the main driver is can get them into trouble.

It’s called fronting and it’s illegal with drivers are at risk of adding six points to their license and an unlimited fine or a possible driving ban.

If drivers are taken to court, they could even face time in prison.

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ClearScore also explains that drivers can use an app called DriveScore which allows drivers to measure how they drive, similar to black box technology.

Once the app collects enough data, it will give drivers a score for the quality of their driving out of 1,000. 

Drivers can then share their scores with DriveScore’s insurance partners, who will be able to offer personalised insurance premiums based on drivers’ driving skills.

The minimum number of miles to get an initial score is 150, and drivers’ scores will be based on their driving over the past 365 days.