RECORD Money: DRIVING A BARGAIN ; Shopping Around for Insurance Cuts Rising Car Costs

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Melissa M
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By ALEX MORGAN

EVEN in these tough times a car is one expense most households can't manage without, but running costs are rising far faster than other prices.

Annual inflation is currently just over five per cent for goods and services, but you will need to spend nearly 14 per cent - almost a sixth - more to stay on the road this year compared to 2007.

Sainsbury's Bank says the typical cost, excluding car loan interest repayments, is now pounds 2,544, up from pounds 2,240 12 months ago.

The average driver now spends pounds 1,441 on fuel, an increase of nearly 20 per cent, and pounds 514 on insurance, up almost six per cent.

Joanne Mallon, of Sainsbury's Car Insurance, says: "Rising oil prices pushed up the cost of fuel higher than ever this summer and road taxes too have increased, making motoring a very expensive business."

If the journeys you make are essential it isn't easy to cut back on fuel, although you can save a bit by looking for the best price and trying to drive in a way that reduces your consumption (see panel). An MOT certificate, road tax and insurance areessentials too - go without any of these and the penalties are stiff.

You can be fined up to pounds 5000 for failing to insure your car, with up to eight penalty points added to your licence.

The fine for driving without an MOT or tax is up to pounds 1000.

However, it can be surprisingly easy to save on the price of your insurance.

Don't just accept your renewal quote - shop around. As our table shows, this could save you a staggering pounds 500 a year.

The easiest way to compare prices is to go online. Popular comparison websites include Moneysupermarket.com, uSwitch.com, Confused.com, Gocompare.com, Tescocompare.com and Comparethemarket.com.

Provided you have information about your car and driving habits to hand, it takes just a few minutes to get dozens of prices.

However, no two sites deal with exactly the same insurers, so it is worth putting your details into two or three to get the widest range of quotes.

Insurers base their prices on a number of factors so every customer's quotes will be different, but it always pays to drive safely and within the speed limit.

Women are generally charged less than men because statistics show they are involved in fewer accidents, and middle-aged drivers pay less than younger ones for the same reason.

Those living in areas with high crime rates can expect to pay more, as can those in certain professions.

Army officers, sales directors and engineers are likely to have considerably higher premiums than nannies and dental hygienists, for instance, as they tend to have more speeding convictions.

Moneysupermarket.com's Peter Gerrard explains: "As a reflection on their adrenaline fuelled and active profession, army officers are most likely to be caught hurtling down the motorway.

"For them, two speeding convictions could raise their premium by a third."

An at-fault accident, meanwhile, could add almost two-thirds to your premium, with bus conductors and GPs most likely to crash, according to Moneysupermarket.com.

Your choice of car is important too, particularly if you are very young.

Two-thirds of 17 to 21-year-old males drive cars with engines over 1250cc or with modifications, adding significantly to their costs.

Hayley Parsons, of Gocompare.com, points out: "The car you drive has a dramatic impact on your premium - not just the value of the car, but the performance and engine size.

"Vehicles with larger engines and body modifications are more expensive to insure."

Don't choose your policy purely on the basis of cost, though. There is no point having the cheapest one available, if the excess is so high it isn't worth claiming when something goes wrong.

You will pay far less for third-party cover than comprehensive protection.

But if you need to claim for something that isn't covered, you could be left thousands of pounds out of pocket.

CASE STUDY

JAMES BONNYMAN was amazed how much he saved by shopping around for car cover.

The 29-year-old retail manager from Keith, Banffshire, says: "I checked different companies and Tesco was cheapest. There was nearly a pounds 270 difference from my old premium."

James, who drives a Seat Ibiza, has stayed with Tesco ever since.

He explains: "When my renewal comes up I go online and check, but I've found it really difficult to find anything comparable.

"I've protected my no-claims discount, gone for the courtesy car and put my parents on the policy and it's still cheaper."

He is pleased with the service too. "I've had two collisions in the last couple of years - I hit a deer and before that a badger - but there was never any problem with the claims."

THE COST OF YOUR CAR INSURANCE

Quotes for a man, aged 30*

Provider Premium

Esure pounds 305.67

Kwik-Fit Insurance pounds 317.20

Post Office pounds 327.00

Sainsbury's Bank pounds 331.58

Halifax pounds 332.42

Worst 5 prices (average) pounds 825.30

Max saving with best price pounds 519.63

Quotes for a woman, aged 40*

Provider Premium