Tracking Down the Best Motor Insurance Deals

Six months ago, Norwich Union, Britain's second-biggest motor insurer, gave a grim warning to drivers: its premiums would have to rise by between 16% and 40% to meet rising claims, especially from rocketing personal injury compensation claims.

Norwich Union's lead was followed by other giants in the sector.

The average premium of pounds 408 in July 1994 hit nearly pounds 806 by December 2006.

Says Ian Crowder at AA Insurance: 'For every pounds 100 insurers took in motor premiums in 2006, they paid pounds 109 in claims.

'While repair costs of accidental damage to vehicles has risen, the biggest problem is the bill for settling personal injury claims which is rising at the rate of 12%-a-year as 'No win, no fee' companies tell people they can win damages after an accident.'

But as we approach the spring peak for car insurance sales, those grim warnings of last autumn are fading into the background.

In fact, says Richard Mason, insurance specialist at leading price comparison site moneysupermarket.com, Norwich Union's 40% threat was aimed at young drivers, many so accident prone that insurers like them to take their business elsewhere.

Mason points out: 'Norwich Union actually said its premiums would rise by an average 16% - and possibly by no more than 6% for careful, older drivers with good safety records.

'No one firm is cheapest for every driver. In every application, there are 15-26 pieces of data which decide whether a driver's business is worth having, or not.'

Drivers can also save money by following these simple, common sense rules:

n Use an expert broker, like AA Insurance, to scour the market. Leading online sites include moneysupermarket.com and confused.com - but sites might not list every company, so the AA is a useful back- up.

n Ensure only people who drive regularly are named on a policy. Says Abi Clark at Churchill: 'You can always add someone for a few days when they really need to drive the car.'

n Protect your No Claims Discount. It adds a few pounds to the cost of a policy, but this fades into insignificance against the potential loss of a 65% discount on a premium of several hundred pounds.

n Accept a mileage restriction; the fewer the miles a car covers, the greater the saving.

n When you change cars, check with an insurer if a model will have a significant effect on premiums.

n If you have a garage, use it. Says Ian Crowder at the AA: 'Chuck the junk from a garage to save 15% on premiums.'

n Drive carefully to avoid licence endorsements and penalty points. Some insurers increase premiums for up to three years after a conviction, so the standard pounds 60 fine actually costs a driver four times as much.

n Pay the premium upfront in full; it costs more, sometimes a lot more, to pay by instalments.

(c) 2007 Wales on Sunday. Provided by ProQuest Information and Learning. All rights Reserved.