According to the latest AA British insurance premium index, if you shop around at renewal time you can save up to 33% on your car insurance costs. The index data also showed that those who insure their cars for third party theft and fire damage have the most to gain by switching to a new insurer at renewal time.

Cut What You Don't Need

When you're renewing your motor insurance, look out for ways in which you can save by cutting out cover that you don't need.

- Don't add drivers to your policy unless they drive your car regularly. It's cheaper to add an additional driver for a day or a weekend if it's a one-off occasion. (On the other hand, if you're a married man, adding your wife to your policy could actually help reduce your costs, as single men are often viewed as riskier drivers.)

- Don't add your children to your policy unless it's really necessary. Naming a teen driver will really push the costs up. Similarly, if your children are named, don't forget to remove them when they leave home.

- A higher excess will help you save on premiums, and if you're a careful driver this can be particularly helpful. Don't forget though, that if you're in an accident that's your fault, you'll have to pay the excess before you can make a claim.

Other Ways to Save

There are several other ways to save on your car insurance, some of which don't directly depend on your policy's terms and conditions.

- Preserve your no claims bonus and save up to 70% on your premium after five years if you remain accident-free. Most people find that their premiums rise sharply after the first renewal period following the loss of their no-claims bonus, so hold onto it for as long as possible.

- Make your car more secure. Install anti-theft devices and use your garage. You'll pay lower premiums on a car that's less likely to be stolen.

- Insure multiple cars, or your car and home, with the same company, if you can get a discount that makes it worthwhile.

- Take an advanced driving course to improve your level of risk. Don't forget, however, to include the costs of the course when you're calculating how much you can save.

- Pay your premiums annually. The average company charges a 15% APR for monthly premiums.

Watch Out for Hidden Costs

In some cases, the insurance companies that offer the cheapest cover make up for their prices in other ways. Some companies charge annual percentage rates for monthly insurance installments of close to 40%. Others make up the losses on their competitively-priced premiums by charging an additional fee each time you travel out of the country in your car.

In other words, don't believe the hype and do your homework before you take out a policy.