Shopping around for quotes can drastically reduce motor insurance premiums, and save you an absolute fortune. According to Britain's biggest insurance broker, The AA, shopping around for comprehensive motor insurance produces an average saving of £296 a year. For non-comprehensive insurance, the shop-around saving is even higher at £395.

When you get the renewal notice from your current provider, think of it is an invitation to shop around, not an offer to sign up for another year.

Car insurance premiums rise sharply

Car insurance premiums have risen significantly over the past couple of years. The average cost of premiums jumped by about 1% a month throughout 2008 and according to the AA British Insurance Premium Index, the cost of cover rose by record rates during 2009. The last quarter of 2009 saw the biggest ever upward leap, a mammoth 7% rise in the average annual comprehensive car insurance policy to just over £1,000. Motorists opting for third-party only insurance to save cash may find it’s not always the route to cheaper premiums. The AA found that the average cost of a third party, fire and theft policy was £1,252, a rise of 8.9% on the previous quarter. 

The sharp upward trend in premiums is expected to continue throughout 2010 and has been attributed to insurers making substantial financial losses as a consequence of the rising cost of dealing with accident damage;  fraudulent claims, continuing costs associated with accidents involving uninsured drivers and significant personal injury claims and their associated legal costs.

Take steps to make car insurance cheaper

Car insurance is a cost few of us can afford to make willingly, but there are ways to beat price hikes. Your age, the model of your vehicle and even your marital status can reduce your car insurance premium, but there are some things you can do on an everyday basis and when shopping around for car insurance that will bring down the price you pay. 

Keeping your car locked up in a garage or even parked in a driveway will reduce the risk of vandalism or theft and make insurance cheaper. Insurers are also likely to reward you for lowering your risk by investing in an engine immobiliser or car alarm. 

Think about the way you drive. Insurers may overlook the odd misdemeanour, but more than one fixed penalty fine for speeding could see your premiums jump. 

If you are under 25 or over 60, you will have to pay more to insure your vehicle. While the ageing process sadly can't be altered, taking advance lessons could slash your premium.

You should never let your car insurance policy roll over from one year to the next without first checking to see if you could get a better deal elsewhere. New customers are nearly always offered better deals than existing ones, so loyalty doesn't pay. Ask your current insurer what it can offer you and then compare this quote by shopping around. Comparison websites are a good way to do this, but remember that cheaper doesn't necessarily mean better so read the policy details carefully. 

The higher the excess you pay, the lower the premium. Most people opt for an excess of £100, but experts recommend increasing this to £500 as your insurer will assume you won't claim on minor issues and will lower your premium accordingly.

Don't forget that if you've gone four or more years without claiming on your insurance then you could opt to pay extra to have this protected. A good no claims history will lower your premiums.

Use the quote finder to shop around for the cheapest car insurance deals!