Average car insurance premiums have dropped by 18 per cent in the past year, according to latest data from Pearson Ham.
Before this fall, the price of car insurance premiums rocketed, so if you are faced with a renewal quote that is the same as last year, shopping around to find a better deal could ensure you don’t overpay.
But pinpointing the best time to renew your car insurance could help make it considerably cheaper, experts suggest.
This is because leaving it too late can be used as a mark against you as a bigger insurance risk, but going too early can limit our options.
Completing your renewal in this golden window could help you save £231 on your motor insurance policy, the analysis suggests.
Time it right: The best timeframe to renew your car insurance is 20 to 27 days before your current policy expires
The best time to renew your car insurance is 20 to 27 days before your current policy expires, according to MoneySupermarket.
If you leave your renewal to the last minute and start collating quotes days before your policy is due to expire, insurers generally view you as higher risk and somewhat disorganised, MoneySupermarket says.
Conversely, if you start hunting for car insurance renewal quotes 28 days or more before your policy is due to expire, you are likely to face higher premiums, potentially from a more limited number of insurers.
Alicia Hempsted, car insurance expert at MoneySupermarket, said: ‘Renewing your car insurance policy 20 to 27 days before your current policy is due to expire is the most economical time to do so – and our data shows it can save drivers over £200 on their premium.
‘This is because insurers tend to regard those who organise their cover early as more responsible and therefore lower risk, often translating into more favourable rates.’
Insurers typically fire out renewal notifications 28 days before a policy is due to expire.
One option is to get on the phone to your existing provider and try to negotiate a better renewal quote. However, some insurers are no longer negotiating or budging on their quotes.
The other option is to use comparison websites and search for the best deal for your requirements. If you go for a new provider, introductory discounts are sometimes available.
While the cheapest policy on offer may be appealing, you will need to check carefully that it covers everything you want it to, including any add-ons or a lower voluntary excess. You should also make sure your no-claims discount is preserved.
There are several reasons why motor insurance policy renewal quotes change each year.
Some of these are based on you. If, for example, you made a claim under your policy in the last year, you are likely to be deemed higher risk and your renewal quote will be higher.
However, external factors also play a major role in shaping renewal quotes. Taking one example, if new legislation increases compensation payouts to accident victims, insurers will factor this in and push up their premiums for customers.
The greater use of complex technology in cars often drives repair costs higher, which in turn also prompts insurers to ramp up their premiums.
Once you have renewed your car insurance, it is a good idea to keep monitoring it and your vehicle usage.
If you initially thought you would be driving 10,000 miles a year but are now likely to drive only 2,000 miles, it is worth phoning your provider to see if your policy can be amened and reduced.
If you have taken steps to improve your driving like completing an accredited course, you may also be able to get a lower premium, though this is not always guaranteed.
> Ten tips for cheap car insurance: How to save money
