How To Compensate Your Sales Force

We find that one of the most difficult challenges for many businesses is determining just how to compensate sales people. Developing an effective sales compensation plan is critical to your company's success and it is important that the plan that is developed make sense both for your business and your sales staff.
There seems to be a mindset among many sales people that they are entitled to a larger percentage of a given sale than they actually deserve. Unfortunately a number of businesses have made the critical mistake of overcompensating sales people in an effort to motivate them to higher levels of performance. When they discover that this rarely has the desired impact, they change the plan only leading to an alienation of the sales force.
Conversely, some businesses have taken a very conservative approach to compensating sales people and quickly discovered that underpaying sales people leads to high turnover, inadequate performance and low morale. Striking a balance between paying too much and too little is one of the challenges inherent in the process of developing of a sound sales compensation plan.
Business owners and managers must avoid "dabbling" in sales compensation if they are to arrive at a plan that works well for all involved. It takes a fair amount of thought and a lot of number crunching to arrive at a sales compensation plan that avoids as many pitfalls as possible and establishes internal equity within the sales force. In other words, the plan will end up being a true pay for performance plan that rewards sales staff for their productivity in terms of dollars generated.
There are many variations of sales compensation plans that will work well. Combinations of base salary, commission, and bonus usually work well as long as the numbers involved don't under or overcompensate the sales force. And the plan must be simple enough to both understand and administer.
As a manager of sales people, it is very important to understand that sales people will almost always tell you that they are motivated by a large sales commission and/or bonus percentage. In reality, most sales people will perform as well at reasonable numbers as they will at inflated numbers.
There are a few exceptions to this, but generally speaking, effort expended is not affected greatly by moving commissions or bonuses up unless those commissions and bonuses are too low to begin with. In fact, it can be argued that overpaying sales people actually causes a reduction in performance for many sales people because they don't have to work as hard to achieve strong compensation levels. In other words, they end up being compensated very well for underperforming. And that is the last thing that should result from your sales compensation plan.
The term "at risk compensation" is an important one in the context of sales compensation plans. "At risk compensation" is nothing more than that amount of potential compensation that is not guaranteed in any way, but is associated with the level of performance. Some portion of a sound sales compensation plan must be allocated to at risk compensation.
But why is this important? It is important because, very simply, you want to create a mentality among your sales force that they must work hard and perform at high levels each and every day in order to earn enough money to meet their immediate needs.
Some sales compensation plans have been developed around a salary only component. This type of plan is generally not recommended because there is nothing really at risk from a compensation standpoint. Sales people need to understand that in order to achieve sufficient compensation levels, they must generate acceptable sales numbers at a minimum. How you develop the "at risk" components of your plan is one of the questions that you will face.
Generally speaking, we recommend that between 17 and 26 percent of the gross profit generated by a sales person in any given sales year be paid to them. This range includes any base salary and all at risk compensation. For very high performers, the top end of this range can be expanded some, but it must be built into the plan initially. When businesses routinely give 30% or more of the gross profit generated from a sale back to the sales person, that leaves too little to contribute to other expenses of most businesses.
In developing a sales compensation plan, it is generally wise to think very carefully about what sales levels you expect from your sales force given their territory or market potentials. In other words, what are the sales objectives by representative? We strongly discourage basing any commissions or bonuses on the revenue levels generated by sales people.
Our preference, whenever possible, is to base sales compensation plans on the gross profit each representative will generate. Therefore, any specific commission and/or bonus plan will be based on gross profit levels for each person in your sales force rather than gross sales dollars generated.
Some businesses prefer a plan based on gross dollars generated. This can work, but it is critical that the sales force not be able to control pricing or discounts. When the incentive is based on gross dollars, any price or discount control allows too much room for negotiation to "get the deal". In that case, the sales person wins and the company loses. It must be a win-win situation.
A simple plan involves one commission and/or bonus rate across all gross profit levels. More complex plans use tiers for any of the at risk components. To illustrate, a simple plan might consist of a base salary of $25,000 per year plus 10% of the gross profit generated plus a year-end bonus of $5,000 if the representative generates at least $350,000 worth of gross profit in that sales year. Total compensation in this example would be $65,000 (assuming the representative hit exactly the $350,000 gross profit level). This amounts to 18.6 percent of the gross profit generated being paid out to the representative.
A more complex plan might look like this; a base salary of $25,000; a commission schedule of 8% for monthly gross profit up to $17,000, 10% for monthly gross profit between $17,001 and $25,000 and 14% for monthly gross profit in excess of $25,000; a bonus plan that would pay at year-end an additional 3% of gross profit if the representative hits a minimum of $400,000 in gross profit. For illustration purposes, let's assume that the sales rep hit exactly $30,000 in gross profit each month or $360,000 in total gross profit for the year. The calculation of the annual compensation would look like this:
Base salary: $25,000
Commission: ($204,000 x .10) + ($96000 x .12) + ($60,000 x .14) = $40,320
Bonus: $0 since the representative did not reach the $400,000 level
Total Compensation: $65,320 or 18.14% of gross profit generated
(In this example, we show an annual commission payout for illustration purposes only, but monthly commissions are almost always the rule. The sales commission number shown above would actually be paid out over the course of the sales year.)
These simple examples are provided only to illustrate possible approaches to sales compensation. There are a number of ways to develop a workable and effective sales compensation plan. The Sales Compensation Handbook is a widely used guide offered through mybusinessbooks.com. This handbook explains and illustrates various ways to create a sales compensation plan that helps increase sales and maximize productivity.

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Website Business Tips

If there is one problem that I have seen people run into whenever they start out trying to make money on the Internet, it is that they try to be everything to everyone.  Somebody will come up to me and the conversation will start by them telling me that they put a website online and that they are ready to start making money.  When I asked them what the website is about, they say a little bit of everything.  They’re offering all kinds of items from cars to children’s toys and everything in between.  Unfortunately, their Internet marketing career has ended long before it officially started.
The reason why this is the death stroke of any Internet marketing effort is because things are different on the Internet than they are in real life.  In real life, somebody will walk into a store wanting to pick up an item, perhaps a DVD.  On the way back to the entertainment section in order to pick up the DVD, they pass by some shoes and remember that they have wanted to pick up a pair of shoes for quite some time.  They finally make it back to the DVD section, with their shoes in hand and then pick up the movie that they wanted.  On their way out of the store, they remember that they needed some toilet paper for the house and then it while they are in the checkout line; they grab a pack of razors.
This may work well in real life at the Wal-Mart but it is not going to work on the Internet at all.  The Internet is very focused and that is why you need to make sure that your website is focused as well.  If somebody does a search on Google and is looking for your product or service, they are not going to be interested in coming to your website and buying something other than what they were searching for.  You need to theme your website and then you need to attract targeted traffic to your website in order to make sales.
The beauty about this is that once you have it set up, it will continue to work on autopilot indefinitely.  This is especially the case if you use affiliate programs in order to fill the products that people are buying.  All that is necessary for you to do is to start a stream of traffic coming to your website that is very targeted to whatever it is that you’re offering.  They will continue to come, day after day and your income will truly be one that is passive.
Does this mean that there is never anything else that you’re going to need to do?  No, any business needs work.  The simple fact of the matter is, however, it is not going to take all of your time in order to keep things going.  Set your website up properly in the first place and you will have a recurring source of income for a long time to come.

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Niche Site Income Pt 5: Choosing a URL that Will Get You Ranked

One of the easiest things you can do to help get fast, free traffic to a new niche site is choose the right web address.
Some careful thought before grabbing web hosting and launching a site will increase the chances that you get ranked this month rather thank next year.
It’s also helps increase the chances that you end up on the first page or two rather than down in traffic-less purgatory.
So what’s the secret to a good URL?

Getting Some Google Love

It’s important to realize that there’s no guaranteed magic bullet when it comes to getting ranked. The trick is to stack as many factors in your favor as you can to increase your chances of search traffic. Getting the right URL is one of those factors. Choose a  URL that has the exact keyword phrase in it that you want to rank for. This has proven to be a rank a site quickly, especially for a hyper-targeted phrase that is not overly competitive.
There’s some debate as to whether a keyword-based URL still has the same benefit. It’s certainly possible that Google has lowered the impact this strategy has.
But for now it still works at least to some degree. I say, if it give you one more leg up then why not do it. In my experience it really helps.

How to Find a URL When All the Good Ones are Taken

When we started Internet Business Mastery, we knew we wanted to rank for the phrase internet business. We included it in our brand name as well as our web address.
Before launching my podcasting site, I figured out the top phrase that people searched for in my niche was how to podcast.
The ideal URL for this phrase would have been HowToPodcast.com. Sadly, that was already taken. This will often be the case for hot keyword phrases.
Fortunately you get the same benefit even if you add a word to the end of the phrase. For example, we added the word mastery to Internet business to get InternetBusinessMastery.com.
For my podcasting site I added the word tutorial to how to podcast. You might notice this gave me a URL that targeted two phrases: how to podcast and podcast tutorial. So my URL is: How-To-Podcast-Tutorial.com.

To Hyphenate or Not to Hyphenate

I get asked a lot about the hyphens. In 2005 when I launched the site, there was a lot of talk about using hyphens to help each keyword stand out more to Google. There’s no longer any benefit to this. Luckily I own the non-hyphenated version of the URL. I’ll change the site over to that in the near future.
The bottom line is don’t use hyphens. It’s seems to hinder more than help now.
But What About the Brand?
Another direction to go is to create a brand-based name and URL instead of keyword-based. Examples of niche sites with brand-style URLs are:

• Money Crush
• Bodhimed
• PuttyLike

Incidentally, these sites are are all from Internet Business Mastery students.
None of these addresses contain a primary keyword phrase for the purpose of ranking. Rather, the site creators have gone for catchy brand-based names.
In the last post I talked about three money-making models: ads, affiliate and original products. If your plan is to build an authoritative site that is a top resource in your niche, then it’s entirely valid (and maybe even better) to choose a URL that has brand power.
But if the goal is to get fast traffic for a micro-niche site that makes money from AdSense or other ads, then a keyword-based web address is much more important.
The reason is that it’s not likely to be worth your time to do other traffic generation. So it’s important to stack every search engine factor in your favor early on to get faster cash flow.
So when choosing your URL keep in mind the long-term goals of your site.
An ideal URL is a hybrid of the brand and keyword approach. InternetBusinessMastery.com is an example of this. It’s a strong brand name in addition to being keyword-based.

URL Selection Action Guide

Action Item: Here’s the process for picking the best URL for your niche site.

1. Decide what your long-term goals are for the site
2. Choose whether it’s more important to have a keyword-based or brand-based URL for the site
3. Choose the primary keyword phrase that you would like to target
4. Brainstorm web address names that contain your keyword and find one that is available OR brainstorm brand name ideas for your site
5. Choose your URL and register it with hosting for your  site

A great tool for checking available domains quickly is Instant Domain Search.

And now I want to hear from you. How do you choose the right URL for a new site? What questions do you have about finding the best URL? Sound off in the comments below.

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Google Analytics: The Rising Cost of Free

I don’t know about you, but I’ve been quite happy with Google Analytics for a long time; years, in fact. I’m not alone. According to Builtwith.com, there are almost 14.8 million websites on the Internet using the dominant web traffic reporting tool. Automating delivery of insightful web traffic reports has always been an easy way to add value for my web clients—until now.
With the forced migration to the new Google Analytics (G5) platform, it seems the days of “easy” are gone, at least temporarily. The following comments are taken straight from the Google Analytics product forum pages. It seems there is no shortage of frustration over the recent “improvements” made to the popular analytics tool.

“As a webmaster for multiple companies I lived in fear for the day the old Google Analytics version was deleted. Today is the day. What a nightmare—not in one single overview my accounts with statistical info on site visitors in one overview! New versions should be better. As far as I see on the Internet all people want this old dashboard functionality and people would pay to keep the old version of Analytics live.” ~TopTravelAngebot
“Why has the snapshot dashboard been removed!? ABSOLUTELY RIDICULOUS! :( Any solutions to this AT ALL?” ~Falin
“I’m googling (or binging) around frantically trying to find an easy method for using New Google Analytics (which I hate) to send clients a condensed 6-page summarized PDF of their analytical data, rather than having to schedule for them 6 separate emails. [Has] anyone found any methods, or simpler ways of doing this?” ~Daniel1980
“Bring back the old version. Is anyone listening?” ~chanback
Oh, and a comment or two appear to have gone the way of “This message has been deleted.” I’m betting those folks simply had trouble reigning in their explicatives. Just guessing.

We’ve Been Here Before

Well, for better or for worse, Google has released a beta product onto the world and then summarily forced the market into using it. Hmm. Let’s see. Do any other companies have a reputation for doing this? Oh, I know one! Hint: Begins with an “M” and rhymes with “Bike-ro-soft”.

Is Anyone Listening?

Sure, maybe more focus group testing could have been completed prior to forcing this migration. Though, as one writer above asks, “Is anyone listening?” Maybe focus groups were had. Maybe the results never made it to the design and development teams? Or, maybe the focus groups all consisted of Google software engineers? We may never know.
The new Google Analytics is a very powerful traffic reporting tool, no doubt. In fact, from a software engineer’s point of view, likely it’s the difference between a howitzer and a peashooter. Unfortunately, software engineers are not the primary demographic using Google Analytics.
Beyond individual site owners, I have to believe web and marketing professionals make up the next largest user base. So if your trusty peashooter was doing a great job for you and you were forced to trade it in for a quirky howitzer that blows your productivity out of the water, how would you feel?

Free? Really?

“Suck it up,” you might say. “Google Analytics is a free, powerful analytical tool and one of the best available.” I would say you’re right about “powerful” and “one of the best” but it’s certainly not free. After all, Google gets paid volumes in inside traffic statistics—your traffic statistics.
By opening your website to Google, the search engine goliath gains intimate knowledge into what’s hot and what’s not. You think click-throughs, backlinks and keyword relevancy (and over 100 other metrics) is all Google uses to determine the popularity and position of your site? If you could produce a powerful tool that served others while increasing your own ability to serve others, wouldn’t you do just that?

Afterglow

After years of comfortable reliability, maybe we just needed this flounder by Google to help wake us out of our satisfied stupors. Traffic reporting, for me, has always been an easy part of the web service business. You could always rely on those Analytics reports going out, and you could see who was performing, at a glance.
Yes, the new Google Analytics offers more power in its custom reporting abilities, but it seems they forgot about the user experience this time around. If they can bring back some of the core functionality and smarter workflow (a global dashboard, default report templates that are as complete as the old default report, a single email for delivering those reports, maps in those emailed reports, etc.), I think they could continue their winning streak with Analytics.
Will Google listen to the marketplace? Will they fix the howitzer? Only time will tell.
In support of your efforts,
Matt
P.S.- One of the items you’ll need help with in the new Google Analytics is reconstructing your reports. Here I’ve collected several Google Analytics report templates for you to use. Enjoy!
————–
Matt Schoenherr is a husband, father of four, marketing consultant and founder of Marketing Ideas 101. As a student, teacher and published author, Matt supports the worthy goals of service and commerce in the small business and nonprofit communities. Creative marketing ideas and marketing strategies may be found at MarketingIdeas101.com.
References
Builtwith.com. Websites Using Google Analytics. Retrieved from http://trends.builtwith.com/websitelist/Google-Analytics.
Google Product Forums. Google Analytics. Old version Google analytics dashboard.  Retrieved from http://productforums.google.com/forum/#!topic/analytics/oMqoYOOYDJM.

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Compare policies that cover you on the Continent

Are you insured for driving on the Continent?

Millions of people take their car onto the Continent every summer, but how many of them have adequate car insurance for European travel? Most drivers assume their insurance policy is the same in Europe as in the UK. But it could be a costly mistake as many insurers do not automatically offer comprehensive cover abroad. Experts estimate that one in ten motorists sustain damage to their car while driving abroad, so it is important to get an appropriate European car insurance policy before leaving the UK.

Is it illegal to drive in Europe without comprehensive cover?

If your car is insured in the UK, you can legally drive in most European countries, including countries outside the EU, such as Switzerland. But you will only have the minimum legal level of cover. A green card, or International Certificate of Motor Insurance, is no longer a legal requirement within the EU, but it can be useful because it proves you have the minimum insurance cover required to drive on European roads. You can usually get a green card from your insurer, but it is not a substitute for insurance. In some countries, it would not even provide as much protection as third party cover in the UK. 

What does European Car Insurance cover?

If you plan to drive in Europe, it's a good idea to find a policy that offers the same level of cover as in the UK. But no two policies are exactly the same, so you need to read the small print carefully. Remember too that the cheapest policy is not necessarily the best.

Insurers will usually cover motoring abroad only for a certain number of days during the policy year, often up to 90 days. But the limits vary between insurers, so check that the cover is adequate. If you expect to exceed the limit, you might be able to negotiate a deal for extended European car insurance cover.

Some insurers offer temporary or short term European car insurance that will typically cover your car for between one and 28 days. If you plan only one, short motoring trip to the Continent, temporary cover might be cheaper than standard cover in Europe, but you should still scrutinise the policy details.
  
You should also make sure that the policy includes the countries you intend to visit. Some insurance policies, for example, will only cover countries that belong to the European Union. Don't forget to include countries that you might drive through en route to your destination.

Does my policy include breakdown cover?

Breakdown cover in Europe is not automatically added to a European policy, even if it is standard on your UK insurance. However, most experts recommend European breakdown cover as it can be a lifeline to a stranded motorist. 

Is European motor insurance expensive?

The cost of European car insurance depends on the insurer, the car and the level of cover provided. But repairs and replacement parts for your car can be more expensive abroad - and some insurers charge a higher premium to offset the risk. MoneySupermarket.com compares deals with leading insurers to help European car insurance customers find cheaper quotes online.

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Compare insurance quotes for young female drivers

How young female drivers can save money on their car insurance

Young drivers car insurance premiums are rather expensive compared to the those offered to older motorists- as you might have noticed if you have compared the quotes offered through various insurance companies.
This isn't about prejudice; it's about statistics. Just one in eight British drivers is under 25, but they are involved in one in four fatal crashes, according to Brake, the road safety organisation. In other words, young drivers cost insurers more in claims, so insurers charge young drivers more in premiums.

Young female car insurance market

But it's not all doom and gloom - at least not when it comes to car insurance for young female drivers. Your male friends might not agree, but women are actually better drivers than men. Government figures show that men are responsible for more than 92% of UK driving convictions and 98% of all convictions for dangerous driving. Men therefore tend to pay more for their car insurance than women.
You will find more specific guides for young females in these age bands in our guide to car insurance for young drivers.

The impact of new regulations on car insurance for young female drivers

So far, so good. However, there is a lot of speculation that the cost of car insurance for women could rise by the end of next year because of an anti-discrimination ruling by the European Court of Justice that bans insurers from charging men and women different premiums because of their gender. The new rules will come into effect in December 2012 when young female car insurance premiums could jump by 25% to 30%.
The timing could not be worse with 1.3 million motorists having already been driven off the road in the past 12 months because of the rising cost of car ownership, according to Sainsbury's Finance.

Find cheap car insurance for young female drivers

So it's more important than ever for young women drivers to choose the right policy at the right price. One of the easiest ways to drive down premiums is to shop around using MoneySupermarket's online comparison service. A number of specialist firms target women drivers with the promise of cheaper premiums - and the offers can be tempting. But it's always wise to check their quotes against the mainstream insurers.
Women might statistically be better drivers than men, but there's always room for improvement. If you want to enhance your driving skills - and pay less for your car insurance - you could consider either the Driving Standard Agency's Pass Plus course, or the Institute of Advanced Motorists Advanced Driving Test.
The courses cover various aspects of motoring, including motorway driving and night driving, and aim to promote greater confidence and road safety. You should also get a discount on your premium of as much as 10%. The courses aren't free, but the reduction in the price of your car insurance is often enough to cover the course fee.
Young female drivers can also benefit from the experience of an older motorist. Let's say your Mum has a clean driving record. If you put her on your policy as an additional named driver, she could bring down the price of the premium. Just be careful not to put your Mum down as the main driver, with you as an additional driver. It's known as fronting and is illegal.
If your car isn't worth very much you could reduce the cost of car insurance for young female drivers further by cutting your level of cover. Most drivers take out comprehensive car insurance, but the minimum legal requirement is third party only. A third party policy covers any damage or injury to other people or their property, but will not pay out for any damage to your own car, so is not appropriate for everyone. You might also find that it's no cheaper than comprehensive insurance.
You can find more ways to cut the cost of car insurance for young female drivers with MoneySupermarket.com's money saving tips.

Pay as you go car insurance for young drivers

Pay as you go insurance can be ideal for young female drivers because it rewards careful motorists who cover a limited number of miles. If you take out as pay as you go policy, the insurer will install a tracking device in your car. The 'black box' then monitors not only how many miles you drive, but also whether you drive at night or rush hour, on country lanes or fast motorways. The technology can even record your braking and acceleration to gauge how safely you drive.
The policies all work slightly differently but you basically pay for the miles you drive, rather like a pay as you go mobile phone. You can also earn bonus miles, or a reduction in premiums, if you abide by certain conditions, perhaps agreeing not to take the car out at night when a crash is more likely.
If you can avoid any accidents, you can hopefully also avoid any claims and so build up a no claims discount (NCD). Insurers reward careful drivers with a discount on their premiums. The discounts add up until after five consecutive claim-free years, you could cut your premium by more than 50%.

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Compare fully comprehensive car insurance quotes

Our guide to fully comprehensive car insurance

If you are buying car insurance, you first have to decide on the type of policy you need. There are basically three options. Third party insurance covers damage or injury to another person or property and is the legal minimum requirement to take a car on a UK road. The downside of a third party policy is that it does not insure your own car. If it is stolen, for example, you would have to pay for a new vehicle out of your own pocket.
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 Motorists who choose third party fire and theft (TPFT) are buying limited protection for their own vehicle because the policy would pay out if the car was stolen by thieves or destroyed in a fire. But what if your car was damaged or written off in an accident? If the accident was your fault, you would not be able to claim on a TPFT policy. In other words, you would have to pay for the cost of repairs or a new car yourself - and that could run into thousands of pounds.
So it's perhaps not surprising that most drivers choose fully comprehensive insurance - about 75% according to some estimates. When you buy fully comprehensive car insurance, you also buy all-round protection for you and your car.

What does fully comprehensive insurance cover?

A standard fully comprehensive insurance policy covers your liability for injuries to other people, including passengers, as well as damage to other people's property. Your own car is also insured against fire, theft and accidental damage. The policy also usually covers personal effects, up to a certain limit, such as a sat-nav system. 
Most comprehensive policies insure the policyholder to drive another car, but you might only get third party insurance - and you will almost always need the owner's permission.   
Don't assume that all fully comprehensive insurance policies are alike. Some insurers, for example, include a courtesy car if your vehicle is off the road. Or they might offer European cover if you want to take your car on the Continent. Other common add-ons include legal expenses and windscreen insurance. But the extras usually come at a price. So make sure that compare like for like when you are searching for car insurance. And remember that the cheapest policy is not always the best deal. MoneySupermarket's comparison service can help you choose the best policy for your needs.

Is fully comprehensive insurance the right choice for me?

If you drive an old banger, you might be happy with a more limited third party or third party fire and theft policy, especially if the premium for fully comprehensive insurance is more than the car is worth.
But always check out all types of policy because third party cover has become more expensive as it has become more popular. The cost of fully comprehensive car insurance for young male drivers is often prohibitively high - the average premium for a 17-22 year-old man is currently £2,872. So many opt for third party or third party fire and theft insurance to save money. But young men are statistically more likely to make a claim. They are therefore more risky and costly to insure, so insurers have pushed up the price of even basic cover. These days there is often little or no difference between the premiums for third party cover and fully comprehensive insurance.
Of course, motor insurance is expensive, whatever your age or gender. The average premium is currently just over £900, an increase of 40% over the past year. But there are ways to keep the cost of cover under control.
You should always shop around for competitive quotes when your insurance is due for renewal, but one in four drivers automatically sticks with their existing insurer. MoneySupermarket's free independent comparison service is a quick and easy way to search the market and save money - the typical customer cuts more than £300 off their car insurance through our website.   
Almost all car insurance policies include a compulsory excess, which is the amount you must pay towards any claim. If you agree a higher voluntary excess, you can usually negotiate a lower premium.
If you fit your car with an approved security device, such as an alarm or immobiliser, you can help to deter thieves and so reduce the likelihood of a theft claim - and that could mean a discount on your premium. You should also keep your care secure, preferable in a locked garage overnight, or at least off the street.
Motorists who drive fewer miles are less likely to make claims. So if you drive your car infrequently, negotiate a low mileage limit with your insurer and you should be able to cut the cost of cover.
Drivers who don't make any claims on their car insurance policy can build up a no-claims discount (NCD). The discount can be valuable: in some cases it can knock up to 75% off your premium after five consecutive claim-free years. It can therefore make sense to pay for any minor damage yourself to protect your NCD.

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Compare new driver car insurance quotes

How to get your first car insurance policy

Whatever age you are when you pass your driving test, it's a thrilling achievement. But the excitement can soon fade when you catch sight of your first motor insurance premium.
New drivers of all ages typically pay more for policies than experienced motorists, simply because they are statistically more risky. The figures show that one in five people who pass their test are involved in a crash within 12 months.

Why is car insurance for new drivers so expensive?

If you are a new driver in your teens or early 20s, you could stump up more for the insurance than you did for your car. The reason is statistics: motorists aged between 17 and 25 are responsible for one third of all fatalities on UK roads. In other words, they are more likely to be involved in an accident and so more likely to claim on their insurance.
Young men typically pay more than young women, because male drivers are responsible for more than 92% of UK driving convictions and 98% of all convictions for dangerous driving.

Car insurance for new women drivers

However, this will not be the case for much longer. The European Court of Justice has ruled that, as of 21 December 2012, insurers will no longer be allowed to take gender into account when setting premiums, whatever the statistics say.
As a result, female car insurance premiums are expected to shoot up by an average of 30%. But for young female drivers aged between 17 and 25 the news is even worse - they could see premiums rise by a whopping 34% in many cases. So, for the first time, newly qualified female drivers will be hit just as hard as males.

Car insurance is compulsory

Of course insurance is not optional. You must have at least third party cover to drive legally on a UK road. And if you were thinking of trying to dodge the law, think again. The government has recently introduced Continuous Insurance Enforcement regulations to clamp down on uninsured driving. Anyone found guilty of driving without insurance risks a fine of up to £1000. They could also have their vehicle impounded.
As with any kind of insurance, it is important to scour the market for the best policy at the cheapest price. MoneySupermarket's online service can help you compare new driver car insurance quotes from more than 100 insurance companies - and can lead to big savings.
You can also find insurers recommended by other moneysupermarket.com customers in our forums or by reading our car insurance reviews.

Find cheap car insurance for new drivers

There are a number of other steps that can be taken in order to ensure you are getting the cheapest car insurance for new drivers available:

• Choose your cover with care- Third party insurance is the minimum legal requirement and is the most basic level of cover. Young drivers can sometimes save money on their premiums by choosing third party instead of comprehensive insurance - but not always. It's always worth finding out the cost of a comprehensive policy because you might be able to get more cover for the same or even a cheaper premium.
• Buy the right car- The rule of thumb for car insurance is the bigger the engine, the bigger the premium. And, as you might expect, the more expensive the vehicle, the more expensive the policy. All models are placed into one of 50 car insurance groups and a car in group one will be cheaper to insure than a car in group 50. If you have just passed your test and are thinking of buying a car, it's worth checking out its group rating at: www.thatcham.org
• Don't modify your vehicle- Insurers will usually increase the premium if you modify your car - even if you add an extra set of lights. Either resist the temptation, or think twice before buying a secondhand model that has been altered from the original specification.
• Increase the excess- Your policy will impose a compulsory “excess”, which is the amount you have to pay towards the cost of any claim. So, for example, if you have a £200 excess and make a successful claim for £500, the policy will pay £300. If you volunteer to increase the excess, the premium will reduce. But don't pick too high an excess or you may not be able to afford it if you have to make a claim. This is explained in more detail on our insurance excess page. 
•  Lose the extras- Policies can come with all sorts of add-ons such as breakdown cover or insurance for driving overseas. But the extras come at a price. You can save money if you buy a no-frills policy, or only include the extras that you really need.
• Add another driver- New drivers can often save money if they add an older more experienced driver to their policy, perhaps their mum or dad. Just don't name your mum as the main driver - the tactic is known as fronting and is illegal. Find out more information about this on our named driver car insurance page.
• Buy online- Some insurers offer a discount if you buy online rather than over the phone.
• Keep your car safe- You will find cheaper new driver car insurance quotes if you fit approved security devices such as an alarm, or an immobiliser. If you can park off-road or in a garage, the premium often falls further.
• Driver fewer miles- Insurers work on the basis that the more miles you drive, the more likely you are to be involved in an accident. So if you can keep your mileage down, you should also keep the premium down. Just remember to tell the insurer if you expect to breach your mileage limit otherwise you might invalidate the policy.
• Pay-as-you-go- You can often cut the cost of insurance with a pay as you go car insurance policy. A “black box” will then be fitted to your car to monitor your motoring and you will typically pay a lower premium if you driver fewer miles and avoid hazardous conditions, such as night driving and rush hour traffic.
• Don't claim- If you don't make a claim on your policy, you will be rewarded with a discount on your premium. The discounts can add up, often cutting the cost of cover by up to 70% after five consecutive claim-free years.

For more ways to save on car insurance, read our money saving tips

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Compare young driver car insurance quotes

Young drivers: how to save money on your car insurance

If you thought your driving test was difficult, wait until you try and buy car insurance - that's when things could start to get really tricky.
Not only are young drivers forced to pay significantly more for car insurance than older and more experienced motorists, but more than half of insurance companies simply refuse to cover teenage drivers altogether due to the higher risk that they represent.
Don't be tempted to drive without car insurance, though. The government estimates that 1.4m motorists do not have insurance cover, but they risk a fine of up to £5,000 and six to eight points on their licence.
And if you are the main driver or registered keeper of a car, do not insure the car in your parents' name and add yourself to the policy as a named driver. Known as 'fronting', this is a form of insurance fraud that will invalidate your policy and could lead to a charge of driving without car insurance.

Why are young driver car insurance premiums so high?

Car insurance for young drivers is disproportionately high compared to the national average because they are quite simply more risky. Motorists aged between 17 and 25 are responsible for one third of road fatalities in the UK. And one in five drivers is involved in a crash during the first 12 months behind the wheel. Statistics also show that young drivers are more likely to be the victim of theft, fire and vandalism resulting in insurance claims.

How to find cheaper car insurance for young drivers

However, there are several ways that young drivers can reduce the price of their car insurance premiums.

• A number of firms will fit a so-called 'black box' to your car to track your movements. It sounds a bit like 'Big Brother' but it can reduce young driver car insurance premiums because you will usually be rewarded if you drive a limited number of miles and if you avoid driving late at night, when most accidents are likely to occur.
• Buy a sensible car. Every new car is assigned to a car insurance group - and the lower the group, the lower the likely premium. So, it will be cheaper to insure a Fiat Punto than an Audi TT. You can find details of the car insurance groups on the website of the Association of British Insurers (www.abi.org.uk). 
• Don't modify your car. Insurers don't like boy - or girl - racers and modifications such as turbo charging, rally lights, nitrous oxide kits will send your premium soaring.
• Consider taking the Driving Standards Agency's Pass Plus course, which gives extra tuition on night, motorway and inner city driving. You can take the course any time, although it is aimed at new drivers within the first year of passing their test. The course is made up of six modules and takes at least six hours. There is also a fee of about £150, but it is often worth the money as drivers who have successfully completed the course can earn discounts on their motor insurance of up to 35%.
• Shop around and compare young driver car insurance quotes. But make sure you compare like with like. A car insurance policy might be cheap because it does not offer many benefits.
• Don't assume third party insurance is the cheapest option. Many consumers purchasing car insurance for young drivers assume that third party cover will be the best value option as it is usually the cheapest car insurance you can buy. If damage another vehicle while driving it will cover the cost of the repair to that vehicle, but any damage to your car won't be covered so you'll have to pay for any repairs yourself. Fully comprehensive car insurance on the other hand, protects your car as well as any other vehicles.

However, third party car insurance is popular with young drivers as they assume it is the cheapest option due to the fact it offers less protection. But because claim statistics are one of the factors insurers take into consideration when calculating premiums, the cost of third party cover can actually prove more expensive than fully comp due to the fact that a higher proportion of drivers are involved in accidents and make a claim. It therefore important to get quotes for third party; third party, fire and theft, and fully comprehensive car insurance and weigh up which will be most cost effective. 

•  If you are driving your parents' car, it will be cheaper in the short term to add your name to their policy. However, if you take out your own insurance cover, you can start to build up a no claims discount, which will lead to even greater savings in the future. The NCD can be valuable, reducing the cost of cover by a third after one year. You can even add an older, more experienced family member with a clean driving record to your own policy and it could cut the cost.
• You stand a better chance of obtaining cheap car insurance for young drivers if you fit additional, approved security devices, such as an alarm or immobiliser system. If you can, keep your car in a locked garage when not in use, or off the street if possible.
• If you are prepared to pay a bigger voluntary excess, you might pay a lower insurance premium. But remember that the excess is the amount you contribute towards any claim, so it should be affordable.
• It can be convenient to spread the cost of your car insurance over monthly installments, but it is also more expensive because you will be charged extra. So try and pay up front, even if you have to ask your parents for a loan.

For more ideas on how you could obtain cheap young drivers car insurance quotes visit our money saving tips page.

More young driver car insurance guides

MoneySupermarket.com recognises that young drivers have to pay significantly more than the average driver for car insurance. We have therefore crafted a number of young drivers car insurance guides to give more specific help in a variety of different situations.
Obtaining your first car insurance policy can often be a very confusing period and it is very easy to make mistakes which could cost you serious amounts of money. Our guide looking at car insurance for 17 year olds aims to make the process as simple as possible. However, not everyone passes their test at 17 and 18 year old motorists could find themselves in a similar pickle. We have this covered as well with our guide looking at car insurance for 18 year olds.
19 year old motorists will also generally pay above the national average for car insurance as a result of them being statistically more likely to be involved in an accident and make a claim in the eyes of insurers than older drivers. Even 19 year olds with a couple of years no claims under their belts will be affected. Increase your chances of overcoming the odds by taking advantage of MoneySupermarket's guide to car insurance for 19 year olds.
For a thorough look at how people in these age bands can overcome statistics we have produced a teenage car insurance guide.
You might think you are in line for significant savings once you reach the age of 21. While it will normally work out cheaper than the sort of premiums that you could expect in your teenage years; 21 year olds can still expected disproportionately high premiums compared to older motorists on account of statistics. Take a look at our guide to car insurance for 21 year olds for more information on this.
25 year olds motorists are still classed as being young drivers and road safety organisation Brake recently revealed that one in four of the fatal and serious injuries sustained in crashes on the road involve motorists who are under the age of 25. Our page looking at car insurance for 25 year olds aims to prepare you for this; outlining potential cost saving methods and techniques.
Up until 21st December 2012 male motorists in all of these age groups will ordinarily pay more for insurance than their female equivalents as a result of males being statistically more likely to be involved in accidents. This will all end on this date when gender discrimination will be outlawed. Up until this point there are things that male motorists can do to overcome these higher prices and we take a more extensive look at these in our guide to car insurance for young male drivers.
After the 21st December it is expected that male prices will drop on average by 10% while females could well pay up to 30% more for the same policies. Our guide to car insurance for young female drivers aims to help motorists negatively impacted by these regulation changes prepare.

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Compare insurance quotes for 25 year old drivers

Affordable car insurance for 25 year old drivers

By the time you reach 25, you may have a few years' driving experience under your belt and be starting to see your car insurance costs fall.
Car insurance for 25 year olds is generally cheaper than it is for those in their teens or early twenties, especially if they've managed to build up a few years' worth of No Claims Discount, but premiums can still be significant.
Twenty five is an age where you may be starting to think about saving for the future, so it makes sense to shop around for your car insurance to make sure you're getting the best deal. MoneySupermarket's car insurance comparison tool can help you to find cheap quotes on the cover you need.

Why car insurance for 25 year old drivers is expensive

The cost of your car insurance is a reflection of how likely the insurer thinks you are to make a claim. The level of risk you pose is determined by a number of factors, not least your age and experience.
Though statistics show drivers aged 25 are less likely to be involved in an accident than a 17 year old driver, they're still more likely to make a claim than older, more experienced drivers. Insurers weight car insurance premiums according to statistics like this.
Inevitably, this means younger, less experienced drivers are penalised with higher premiums.
But it's not just young drivers being squeezed by the cost of car insurance as it is relatively expensive across the board. There are also factors which continue to inflate the cost of cover for all age groups.
A rise in the number of personal injury claims in recent years, including fraudulent claims where someone falsely claims for whiplash or other injuries following a crash are pushing up everyone's premiums.
Car insurance is a legal requirement in the UK, but some drivers continue to flout the law by driving uninsured. The Association of British Insurers estimates that this illegal activity adds around £40 a year to the average premium, but new regulations which came into force this year aim to deal with the problem.

New car insurance rules

The new Continuous Insurance Enforcement (CIE) regulations mean that unless your vehicle is registered as off the road with a SORN declaration, it must be insured.
As the Motor Insurers' Bureau (MIB) and the DVLA are working together to clamp down on uninsured vehicles by comparing DVLA records against the Motor Insurance database, you should be careful not to get caught out.
Anyone who breaches the new regulations will get an initial warning, followed by a fixed penalty of £100 if they do not comply with the warning's advice. Worse still, if the driver does not take action, their vehicle can be clamped, seized and disposed of and a court prosecution with a maximum fine of £1,000 can be imposed.

The ECJ's 'gender ruling'

Traditionally, there's always been a difference in prices for men and women, but a new ruling will put an end to this in 2012.
A ruling by the European Court of Justice in 2011 means that as of December 2012, insurers won't be able to charge drivers different amounts for cover based on whether they are male or female.
It remains to be seen how much of an effect the ruling has, but estimates say that car insurance for women will rise by up to 30%, and fall by around 10% for men.

Get cheap car insurance for 25 year old drivers

MoneySupermarket data consistently shows that drivers can save money on their car insurance by shopping around for cheapest quotes. Beyond comparing prices, there are still some other things you can do to reduce your costs.
For instance, adding an older, more experienced driver to the policy as a named driver can help to lower your premium because in theory, it cuts the amount of time you'll spend behind the wheel.
You must not be tempted to add them as the main driver and yourself as a named driver to get a cheap quote though. This is called 'fronting', is illegal and can invalidate your insurance if discovered.
Increasing your excess can lower your premiums, but you must set it to amount you'll genuinely be able to afford in the event of a claim.
Safe and conscientious driving is one of the best ways to keep premiums down, as it'll earn you a No Claims Discount (NCD). Eventually, an NCD can cut your premiums by as much as 60%, so it's well worth taking your time and taking care behind the wheel.

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Compare business car insurance quotes

Insuring your car for business use

Do you commute to the same office every day and work from 9am to 5pm? Some people stick to the traditional work pattern, but many jobs these days are more flexible and varied. You might, for example, visit clients around the country one or two days a week. Maybe you run your own mobile hairdressers, or you are a care worker who regularly visits people at home.
If you are one of a growing number of people who drive their own car for business purposes, you need to make sure that you have appropriate motor insurance. Most standard policies cover the car only for social, domestic and pleasure use - so visiting friends and family or running the kids around. Many also include commuting to and from one place of work. But anything else and you need a different level of cover.
Business car insurance is essential if you use your car for work. It is typically more expensive than standard car insurance because you will probably drive more miles and at busier times and so are more likely to make a claim. But don't be tempted to stint on cover or lie about your car usage. If you don't take out appropriate insurance, you can invalidate your policy and the insurer can refuse to pay out in the event of an accident.

Picking the right business car insurance policy

Insurers will want the answers to a number of key questions when you apply for business car insurance, as for standard motor cover. For example, your age and postcode, the make and model of the car, and your no claims history. They will also ask about the nature of your business, the amount of time you spend behind the wheel and a rough estimate of your work-related mileage.

There are various different types of business car insurance. Private and occasional business use covers the main driver or their spouse who only occasionally have to drive a car for work. The vehicle is not registered in the name of the business and it must not be essential to the job.

Private and business use policies are a step up. They offer broadly similar cover, but the vehicle can be registered to a business and the policy will cover any driver.

If driving is a permanent aspect of your job, perhaps if you are a travelling salesman, you need a commercial travelling policy. You will probably pay a higher premium on your commercial car insurance because you will be considered to be a bigger risk to the insurer as you are likely to accumulate more miles on the clock each year.

It's important to be clear about the different types of policy and to find the right level of cover so that you don't drive without appropriate insurance. 

Find cheap business car insurance quotes

Business car insurance prices can still be a significant expense. It is therefore important to make sure that you do all that is possible to get the cheapest premiums available.
The make and model of your car can have a big impact on the cost of cover, so if you are buying a new vehicle, check out the car insurance group at www.thatcham.org. Cars in lower insurance groups generally pay lower premiums.

You should be able to negotiate a cheaper business car insurance quote by agreeing on a mileage limit. Just make sure the limit is feasible or you could come unstuck.

If you fit your car with approved security devices, such as an alarm or immobiliser, you should get a discount on your premiums. Try also to keep your car in a locked garage or secure business premises overnight.

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More tips to help you save on your car insurance

Car Insurance Advice

Where there is a car, there is almost certainly a car insurance policy. But just as there are different types of car, so there are different types of car cover.
If you drive a cheap runabout only at the weekend, you will need a different policy from your neighbor who commutes to the office in an executive saloon.
But whatever car we drive, we all need advice on the best motor policy with their essentially being three different types of car insurance from which motorists can choose:

The three different car insurance types

Third party car insurance cover is the legal minimum requirement and is the most basic policy. Third party insurance pays out if you damage another person or their property, but does not cover your own car. So, if you smash into the back of another car, you cannot claim for any damage to your own vehicle.
Third party fire and theft is the next level up from this; providing the same levels of cover afforded through third party car insurance but also insures your own car against loss or damage by theft or fire.
Then there is fully comprehensive car insurance, which offers maximum coverage to you and your vehicle.
Most people assume that third party insurance is cheaper than comprehensive cover. Well, it makes sense that the premiums would be lower if the protection is more limited. But these days you can often buy a comprehensive policy for the same price or only slightly more than third party insurance. So it is always worth comparing prices on different types of policy.
To find out more about the different levels of cover, visit our car insurance policy types page.

Don't be tempted to drive uninsured

Whether you opt for third party or comprehensive, car insurance isn't cheap. The average policy now costs more than £900 a year, according to figures from the AA. It is therefore easy to understand why some of us might be tempted to drive without insurance cover in an attempt to save money. However, this would be a mistake - and it could prove costly.
The government recently introduced rules to crack down on uninsured motorists, known as Continuous Insurance Enforcement (CIE). The rules basically mean that if you tax your car, you must also insure the vehicle, even if it is sitting idle in your garage. Your car is exempt only if it has been declared off the road with a Statutory off Road Notification (SORN) from the DVLA. Anyone caught flouting the rules will have to pay a fine and could face court action.

Where are you covered?

Motor insurance does not only cover your car in the UK, but also often insures the vehicle if you drive in Europe. But you should pay particular attention to the policy details if you plan to take your car abroad as you might only have the minimum legal level of cover. In other words, a fully comprehensive car insurance policy in Britain might only cover third party damage in France for instance. Most policies also only cover motoring abroad for a limited number of days, typically up to 90 a year. If your existing policy does not provide adequate cover for motoring abroad, you can usually buy additional short term insurance to cover travel to other countries.
There is more advice on driving abroad on our European car insurance page.

What are you covered for?

It is a good idea to check whether any policy includes breakdown cover, which can be a lifeline if you are motoring abroad. European breakdown cover is not automatic, even if it is a benefit of your UK policy.

The impact of age

Young drivers often struggle to find an affordable car insurance policy because they pay higher premiums than the average motorist. The higher premiums are not a result of some ageist conspiracy. Instead, they are the result of statistics. The figures show that young drivers are more likely to be involved in an accident and are therefore more likely to make a claim.
Young drivers can often lower their premium if they add an older, more experienced driver to their policy - perhaps mum or dad. The insurer is comforted by the presence of a motorist who has some miles on the clock, and so is happy to cut the cost of cover. But be careful. You should not put your mum or dad down as the main driver of the policy if they use the car only occasionally as this is a tactic known as fronting and is deemed illegal.

Why the car you drive matters

Your choice of car can also affect your premiums - a souped up Ferrari will be more expensive to insure than a Ford Fiesta. So it is worth checking a car's insurance rating before you buy.
Every car manufactured in the UK is put into one of 50 car insurance groups, based on a number of factors including its engine size and the likely cost of repairs. The lower the car insurance group; the lower the likely cost of cover.
You can find more details on this on our car insurance groups page.

No claims discount

Claims are costly for insurers so one of the best ways to cut your car insurance premium is to build up a no-claims bonus or discount. Most insurers reward careful drivers with a discount - and it can add up. If you can manage five consecutive claim free years, you could earn a discount of up to 75% in some cases, although the size of discount varies between insurers.
The main driver usually earns the no-claims bonus, but some policies also allow a named driver to accumulate a discount, which could reduce the cost of cover when they eventually buy their own insurance.
Motorists can often pay an extra premium to protect their no claims discount. They can then usually make a certain number of claims within a year without forfeiting their bonus. Although it costs more to protect your no-claims discount, the price is often worth paying. You can read more about the no claims discount and its effect on your premiums on our car insurance no claims bonus page.
There are a number of other ways that motorists can bring down the cost of car insurance cover, including agreeing a bigger voluntary excess and driving fewer miles. For more ideas on how you could reduce the cost of your premiums, take advantage of our money saving tips.

What if you have an accident?

If you have to make a claim on your car insurance policy, you have probably been involved in an accident. So it's not going to be pleasant or easy. You are likely to be shaken and confused, possibly even hurt. Of course, if anyone has been injured, then you should call 999. You should also contact the emergency services if the other driver leaves without stopping.
Try to keep calm and get the names, addresses and telephone numbers of anyone involved, including any witnesses. Try also to note down as many details of the incident as possible, including the cars involved, the date and the time.
It's a good idea to sketch out how the accident occurred while it is fresh in your mind - and take photographic evidence on your mobile phone if possible. Never admit liability for an accident at the scene or offer to pay for any damage which has been caused.
And contact your insurer as soon as possible because there is often a time limit on claims. The insurer will then process the claim and arrange for an assessor to come and look at the vehicle.
It is important to give as much information as possible to the insurer - and always to be honest. If you fail to disclose any relevant details or if you lie about a claim, you could invalidate the policy.

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Find out how black box insurance works

How Does Black Box Insurance Work?

If you are a young driver or you've recently passed your test, you could be facing an eye-watering quote for your car insurance. This is because most insurers base their premium calculations on a block of driver profiles and general statistical evidence - and, unfortunately, young and newly qualified drivers are statistically more likely to be involved in an accident than any other group.

However, black box insurance - also known as 'telematics' or 'pay as you go car insurance'- aims to offer drivers a cheaper alternative by delivering driver-centred premiums based upon actual driving style rather than statistics.

Telematics policies in detail

Black box insurance works when your car is fitted with a small 'black box' device, about the size of a smartphone, which records speed, distance travelled and the time of day or night that you are on the road.

The device also assesses your driving style by monitoring braking and cornering. It will also record the types of road on which you typically travel, and the times of day and night you tend to drive, to build up a comprehensive profile of you as a driver.

With a device fitted to your car you can access a secure website to find out how you are performing in each category. This will show you if you need to make any changes to your driving style, and will provide tips on how you can improve your driver score and bring down the cost of your insurance.

As a rule of thumb it is assumed that driving fewer miles on less dangerous roads, while also limiting your night time driving, will result in lower premiums. Policies linked to black box recorders charge premiums on a monthly basis, which means the insurer can adjust them swiftly to reward better driving (and punish those who show themselves to be a risky proposition).

However, although your driving can have a direct impact in the cost of your car insurance, it still makes sense to shop around and compare black box insurance quotes - prices will vary from insurer to insurer as each will have different per-mile and peak-time driving charges.

Who benefits from black box insurance?

Anyone who typically pays a relatively high price for their car insurance, such as young or newly qualified drivers or drivers with any claims or convictions, would benefit most from this technology.

This is because premiums are based primarily on a driver's current behaviour, which gives them an opportunity to demonstrate that they are capable and responsible behind the wheel.

In addition to effectively giving drivers a direct say in the cost of their car insurance, it is hoped that telematics technology will help to improve overall standards by rewarding safe driving with cheaper insurance premiums. Careful drivers may also be given incentives such as 'bonus miles' so they can drive more often on with no increase in future policy price.

In short, if you are a considerate driver that stays away from the more hazardous roads, you should see a reduction in the price of your policy.

Furthermore, if you can limit the amount of driving you do, particularly at night or at peak times, you should also see a reduction in the price of your policy.

Again, to get the full benefit from a black box insurance policy you should shop around to find the cheapest quote for your circumstances as different insurers will operate different pricing approaches for off-peak driving.

So what are the drawbacks?

Although black box insurance seems like a much fairer system, it's not without its drawbacks. One is that you could have the cost of the 'black box' and its installation added to the cost of your cover. However, it is unlikely that this will outweigh the potential savings.

Another drawback is that, if you cover a lot of miles, say during a lengthy commute to work and back, you may not see any savings at all - and may even end up paying more than if you had taken out a traditional policy.

In addition, if it turns out that you are not as safe and considerate a driver as you first thought, you may also end up paying more for your cover. However, the way the system works means that you would at least have a chance to put this right.

And while it may seem a little unsettling to have your every move tracked via satellite, this can have its advantages. For instance, it can pinpoint blame if you are involved in a collision or can even trace your vehicle if it is stolen.

Compare cheap black box insurance quotes

Pay as you go car insurance can be a great way to reduce your premium if you are a young or newly qualified driver, or a driver with a motoring conviction, and you're not going to drive a great number of miles annually.

However, if you are not in either of these groups, or you cover a lot of miles over the course of a year, black box insurance might not be right for you and might actually increase your premium.

That said, it is still worth considering, so it is worth getting a quote from MoneySupermarket to see if it has a positive impact on the cost of your renewal.

If you find that telematics insurance is not for you then there are still a number of ways in which you can cut the cost of your car insurance, the easiest of which is to use MoneySupermarket's comparison tool to find the cheapest quote to suit your circumstances.

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AVOID PAYING TOO MUCH FOR CAR INSURANCE COVER

Find Cheap Car Insurance quotes online with MoneySupermarket

It is not an easy time to be a motorist, with a recent study by MoneySupermarket.com revealing that 62% of motorists have been forced to alter their driving habits as a result of sky high fuel prices. The last thing that you need right now is to be being paying too much for car insurance.
Car insurance is after all a legal requirement, with the Continuous Insurance Enforcement (CIE) regulations making it a legal requirement for every motorists to have their vehicle covered by a relevant insurance policy at all times. The only exemptions to this are vehicles which have been declared off the road, with a SORN (Statutory Off-Road Notification) having been sent to the DVLA. Failing to comply with these regulations will result in financial penalties and potentially even court appearances.
There is no longer any way you can avoid this obligation, but there are still a number of actions you can take in order to may sure you are not paying too much for your car insurance policy.

Car Insurance Groups

Every car on the road in the UK has been classified into a car insurance group numbered between 1 and 50. These are decided upon by a Group Rating Panel, who differentiates vehicles based on the likely cost of repair, the value of the vehicle and its overall performance; with vehicles that are capable of higher performance levels being statistically more likely to be involved in accidents and hence attracting more expensive premiums.
The cars which are the cheapest to insure are normally classified in one of the lower car insurance groups (i.e. groups 1-3). It is therefore advised that you opt for a vehicle in one of these lower groups if you are keen to avoid paying too much for your car insurance cover.
For more information on car insurance groups and directions on where you can find the car insurance group to which your vehicle has been assigned, take advantage of our car insurance groups guide.

Modifications

The car insurance group which a vehicle has been assigned to will be completely irrelevant if any performance enhancing modifications have been made to the vehicle. This could include things such as alloy-wheels or spoilers which were not part of the original design of the vehicle. Insurers recognise that people who have made modifications to their vehicles are more likely to be involved in accidents and hence make car insurance claims.
It is therefore recommended that anyone who is aiming to avoid paying too much for car insurance avoid making these kinds of modification.
The exception to this rule is any modification which results in improve vehicle security such as alarms and/or immobilisers. These will obviously reduce the statistical likelihood of theft and the insurer will therefore be inclined to offer cheaper car insurance quotes on account of the fact that they will be less likely to be forced to fork out for claims.
There is more information on the impact of modifications on our modified car insurance page.

Keep tabs on your mileage

Insurance companies recognises that the more miles you complete, the statistically more likely to be involved in an accident and make a claim. You could therefore avoid paying too much for your premiums by keeping your stated mileage allowance to a minimum.
However, if you exceed your stated allowance your car insurance policy could be rendered void. It is a difficult balancing act to get right but can bring significant savings.

Park Safely

Where you park your car at night and during the day will also have an influence on car insurance quotes. Drivers who park their cars in less secure locations where they are exposed to the elements are likely to attract higher premiums due to the increases statistical likelihood of the vehicle being stolen or vandalised.
It is therefore recommended that you park your vehicle in a locked garage, or failing that a secure driveway, so as to ensure that you don't end up paying too much for your insurance.

Utilise our car insurance comparison site

You stand a better chance of avoiding paying too much for your cover by utilising car insurance comparison sites such as MoneySupermarket.com. We compare deals available through over 100 different car insurance companies, including some of the country's leading providers. It is all part of our aim to help you find the most competitive deals available.
Alternatively you could compare quotes on the go with our free car insurance comparison app which is available to iPhone, iPad, iPod Touch and Android phone owners.

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Compare car insurance quotes for American vehicles

How to save on insurance for American cars

A Cadillac or a Chevrolet, a Mustang or a Dodge, the number of cars imported from the US to the UK grows each year as more motorists try to live the American dream on the streets of Great Britain.
Sadly, the dream can turn into a nightmare when you try to buy insurance for an imported American car. Many mainstream insurers steer clear of cars that were not manufactured in the UK. A number of specialist firms can help, but the premiums are often higher for American imports than for cars that were made in Britain.

Why are American car insurance premiums so high?

The higher premiums partly reflect the potentially higher cost of claims. For example, it can be more expensive to repair an American car because you might have to import spare parts and find a specialist mechanic. Classic American car insurance prices can be particularly pricey as parts for classic American vehicles are often rare. It could therefore pay dividends to compare premiums available through classic car insurance companies or more specialist insurers who offer classic American car insurance cover.
Insurers are also wary of cars built to overseas specifications because they often have bigger engines than vehicles that are manufactured to European standards. And with fewer insurers willing to quote for American car cover, competition in the market is less fierce, so the cost rises.
Of course, it's all a bit tiresome for owners of American cars. Enthusiasts tend to take better care of their cherished vehicles than the average motorist, yet they still have to pay more for specialist American car insurance companies.

Check the policy exclusions

It's not even as if American car insurance cover is much different from conventional policies. Cover is usually broadly similar, though you should always check any exclusions, particularly if you want to take your car abroad, or use the vehicle as a wedding car.
It's also worth finding out whether the insurer will pay an agreed value for your car if it is written off in an accident. If not, you could end up with a payout that falls way below your expectations.

How to cut the cost of American car insurance

There are a number of ways to cut the cost of cover for an American car. You can often negotiate a lower premium if you agree to drive only a limited number of miles in a year, sometimes as few as 1,500. Many firms offer limited mileage policies, which can be ideal if your car is more of a hobby than a runabout. Perhaps you drive your car only at weekends or only during the summer months. If so, you will cover fewer miles and so are statistically less likely to be involved in an accident. Just make sure you don't breach the limit - at least not without telling the insurer.
It can pay to join a members club, with some firms offering premium discounts of up to 15% to motorists who join a recognised club for owners of American cars. Membership of a club is also a great way to get to know other car enthusiasts and find out about local events and activities.
American cars are popular targets for thieves and vandals, so you can reduce the cost of insurance if your car is secure. You should keep the car in a locked garage when it is not in use. And fit an approved alarm, immobiliser, or tracking device to deter thieves.
Try not to modify your car in any way as insurers tend to load premiums for modified cars.
Finally, MoneySupermarket's online comparison service is a quick and easy way to find cheap American car insurance quotes. It can help you find the right policy at the right price.

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Compare car insurance quotes for 4x4 vehicles

Reduce the cost of 4x4 insurance

Drivers of 4x4 vehicles have felt the recent rise in fuel costs as much as anyone and this, coupled with expensive road tax and higher than average insurance costs, has made running a 4x4 a costly business.
Although there is not much that can be done about the cost of fuel and road tax, you could significantly cut the cost of your 4x4 car insurance by simply comparing quotes with MoneySupermarket.
In just a few clicks, MoneySupermarket can compare quotes from over 100 car insurance companies to find the best 4x4 car insurance deals available and save you money.

Why is 4x4 insurance more expensive?

Car insurance costs are calculated by taking into account a number of factors such as the age of the driver, whether they have any convictions, how often they will be using the vehicle and where it will be kept overnight.
Another crucial factor in determining the policy price is the insurance group that the car has been placed into. These groups range from between one and 50 and the rule is that the lower the group, the lower the insurance cost.
The bad news for drivers of 4x4 vehicles is that theirs tend to sit amongst the higher groups.
This is mainly due to the fact that, should a 4x4 vehicle be involved in an accident, then the repair costs could be high as spare parts for these vehicles tend to be quite expensive.
In addition, due to their size and build quality, 4x4 vehicles are more likely to cause significant damage to any other property involved in an accident and this is reflected in the price of the premium.

Who needs 4x4 insurance?

In short, anyone that owns a 4x4 vehicle is required by law to have appropriate insurance cover unless they have declared the vehicle to be off the road and have a Statutory Off Road Notification (SORN) from the DVLA.
This is due to Continuous Insurance Enforcement (CIE), a set of regulations that make it a legal requirement for a registered keeper to have their vehicle insured at all times, whether or not they are driving it or keeping it on the public highway.
Failure to comply could result in a fixed penalty notice, court prosecution and seizure of the vehicle which could result in it being impounded and destroyed.

What types of 4x4 insurance are available?

As with other cars, when insuring your 4x4 vehicle there are three levels of cover available: third party, third party, fire and theft and fully comprehensive.
Third party is the minimum level of cover required by law but is probably not suitable if you drive a 4x4 as it only covers the cost of damage caused to other people's property and not the cost of repairs to your own vehicle.
Third party, fire and theft offers the same level of cover as third party but will also pay out if your vehicle is fire damaged or stolen.
Fully comprehensive covers the cost of any damage to your own vehicle as well as any damage incurred by others and arguably the most suitable for 4x4 drivers as it is unlikely that you will want to foot the bill for expensive repairs to your vehicle.

Find cheap 4x4 insurance quotes

Although 4x4 vehicles can be expensive to run, you can lower these costs by saving on your car insurance. There are a number ways in which you can obtain cheap 4x4 insurance quotes.
Limit your mileage
The less time you spend on the road, the less likely you are to have an accident and so many insurers will offer a lower priced premium to drivers who cover fewer miles. So it is worthwhile calculating the amount of miles you are likely to cover over the course of the year to see if this can bring your insurance costs down.
You may also want to consider ways in which you can cut your annual mileage, such as only using the car when necessary or car sharing for the commute to work, as this can save you money on your running costs as well as on your insurance.
Only get the cover you need

Many comprehensive policies will offer optional extras such as legal cover and courtesy cars that can bump up the price of your premium. So check your policy and take out anything that you will not need.
However, you must make sure that you still have the right level of cover for your circumstances and one consideration for 4x4 owners is that off-road use will not be included in all insurance packages. So if you plan on getting off the beaten track then make sure that you are covered for this as failure to do so will invalidate you policy.
Improve your security
There is a good chance that your 4x4 will have a factory fitted alarm and immobiliser, particularly if it is a newer model, but you can cut the cost of your premium further by adding a tracking device.
Before you fit any device you must check that it is approved by the insurance company to ensure you get a reduction in your policy price.
If possible you should also try to keep your 4x4 in a locked garage overnight or on a driveway as this can also bring down the cost of your car insurance.
Pay up front for your policy
Although it may be more convenient to pay for your policy in monthly instalments, it works out cheaper if you can pay for it all in one go.
This is because insurance companies will charge interest on policies that are paid for monthly and they may also charge admin fees so by paying up front you can avoid these fees.
Compare quotes and buy online
One of the easiest ways to save money on 4x4 car insurance is to shop around and by using MoneySupermarket you can instantly compare prices from over 100 insurers to find right cover at the right price.
Furthermore, some insurers will offer a discount to customers who buy online as these applications are cheaper to process so it is worth checking to see if you can save money in this way.
However, the most important thing to consider when choosing your 4x4 insurance is that you get the right level of cover to fit your needs. So be sure to shop around for the best price and the best cover to suit your needs.

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Find cheaper car insurance with our money saving tips

MoneySupermarket.com car insurance money saving tips

Car ownership is expensive. You not only have to buy a car, but you also have to tax and insure your vehicle - not to mention fill the tank with petrol.
Insurance can take a big chunk out of any driving budget, with young drivers paying a lot more than the average because they are statistically more likely to claim. So MoneySupermarket has drawn up a list of money-saving tips to cut down the cost of cover and help you find cheaper car insurance quotes.

Save time and money on your car insurance

Choose your car with care

Insurers divide cars into 50 groups according to various factors including their engine size and the likely cost of repairs. The higher the insurance group, the higher the premium. So if you are buying a new car, it pays to check its rating. You can find out details of car insurance groups at www.thatcham.org.
And don't modify your car with spoilers or fancy wheel trims because many insurers will load the premium. For more information on this visit our modified car insurance page.

Limit your mileage

If you drive your car only on local roads at the weekend, you are statistically less likely to be involved in an accident than someone who commutes along a busy motorway every day.
Talk to your insurer about your driving habits because a low mileage usually leads to a low premium. Our car insurance comparison tool features a useful calculator to help you work out how many miles you drive each year. But make sure the figures are accurate because you could invalidate your policy if you breach the agreed mileage limit.

Pay as you go insurance

Motorists who drive relatively few miles or are willing to avoiding driving during a rush hour could cut the cost of their premiums with pay as you go car insurance.
With pay as you go, the insurer will fit a tracking device or 'black box' to your car to monitor your driving habits so that you pay only for the insurance you need. Pay as you go cover can be particularly useful for young people who often cannot afford standard insurance.

Drive with care

Points on your licence mean pounds on your premium, so obey the rules of the road. If you have committed a serious traffic offence, you could find it difficult to buy cover at all.

Increase your excess

Most policies carry a standard compulsory excess of about £150, which is the amount you must pay towards any claim. If you agree to a bigger voluntary excess, you will normally be rewarded with a lower premium. Just make sure you can afford the higher amount should you have to make a claim.

Don't claim

Drivers who don't make claims can build up a no-claims discount (NCD). The NCD can be valuable, knocking more than 50% off your premium after five consecutive claim-free years. If you have a minor accident, it can therefore work out cheaper to pay for the repairs yourself and safeguard your NCD. You can also pay to protect your NCD - and the cost is often worthwhile.

Check your cover

There are three types of motor insurance policy: Fully Comprehensive, Third Party, Fire & Theft and Third Party. Third Party is the most basic and the legal minimum to drive on a UK road. It covers the policyholder for any injury or damage to another person or their property. Third Party Fire & Theft is a step up and includes loss or damage to your car as a result of fire or theft. Then there's the more common Fully Comprehensive, which offers a broad range of cover including damage to your own vehicle if you are involved in an accident.
It can be cheaper to opt for a more basic level of cover - and it might be a sensible option if you are a young driver with a car that isn't worth very much. But you should always compare all policy types, because the cost of comprehensive cover sometimes stacks up well against the more limited third party fire & theft.
For more detailed information check out our guides to the different types of car insurance policies.

Cut out the frills

Many comprehensive policies offer a range of optional extras such as legal expenses and courtesy cars, but they come at a price. It's a good idea to work out which, if any, additional benefits you need so that you don't pay for unnecessary cover.

Buy online

Many insurers offer a discount to customers who buy their insurance online because the applications are cheaper to process. It's also a good idea to pay for your policy up front if possible. Monthly installments are convenient but they are usually more expensive because of interest charges and admin fees.

Make your car more secure

Motorists who make it tricky for thieves to steal their vehicle often pay less for their car insurance. So fit your car with an approved alarm and immobilizer. If you have a more expensive car, the insurer might insist that you install a sophisticated tracking device.

Watch where you park

More than half of vehicle thefts occur at night, so keep your car in a securely locked garage overnight. If that's not possible, at least try and park the car off the road, perhaps in a drive way.

Enhance your driving skills

The Driving Standards Agency's Pass Plus course is aimed at newly qualified drivers and covers various aspects of motoring, including night and motorway driving. It's not free, but if you complete the course, you could earn a reduction on your premium of up to 35%. If you are considering completing this course, please take advantage of our pass plus insurance page.
The Institute of Advanced Motorists also runs driving courses to boost driving skills and so reduce the statistical likelihood of an accident.

Search online for the best deal

It's tempting to stick with your current insurer when your policy comes up for renewal, but it might not be the best deal. Motorists should always shop around for quotes and they can compare deals from a wide range of insurance companies on MoneySupermarket's price comparison website. It's quick, easy - and it's free.

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