With the current financial climate meaning that we are all trying to tighten our belts, it is not surprising that many of us are looking at our motoring expenses in a bid to save money. However, whilst it is sensible to try to use our cars less and alter our driving habits to save fuel, it is alarming to hear that many drivers would consider lying to their insurance companies in an effort to reduce their premiums.

In a survey carried out by gocompare.com, 28% of the 1500 drivers surveyed said that they would lie about the mileage done, 22% would lie about where they keep their car overnight, and 10% would lie about the value of their car and its use for business purposes. It would seem that these motorists do not realise that they are committing fraud and that their lies could end up costing them dearly.

Insurance companies are perfectly entitled to cancel cover if they discover they have been lied to, meaning that you could be prosecuted and face a bill of thousands of pounds, especially if you injure someone in an accident. Getting insurance in future will also be difficult and costly since the very few companies which will consider taking a “tainted” individual’s business charge highly.

It is perhaps indicative of this climate that the AA is reporting a huge increase in the number of insurance claims being refused in the last six months.

Motorists are also cutting down on extras such as the provision of a courtesy car or breakdown cover. In many instances, the amount saved is negligible (about £23 for the basic breakdown package) compared to the potential savings to be made in an emergency. Motorists are advised to use a price comparison website to make sure they are getting the best possible value for their money.

As things stand at the moment there are over a hundred pieces of legislation governing discrimination, including 52 statutory instruments, 35 acts, 16 European directives and 13 codes of practice. You might therefore think that the proposed Equality Bill due to come before Parliament this year is good news.

The ABI (Association of British Insurers), however, is not so sure. It has concerns that insurance premiums could rocket for the average motorist if companies are no longer allowed to use age as a determining factor in assessing risk. As we all know, the cost of insurance for the young motorist or the older driver is considerable but this can be rationalised by the fact that these two age groups are more likely to cost the insurer more. For instance the average level of a claim made by a driver over the age of 80 is 50% higher than for a driver under the age of 60.

No-one likes to hear of genuine discrimination and drivers being refused insurance on grounds of age, but according to the ABI in their report "Age and Insurance: Helping older customers find the cover they need”, 99% of older drivers are able to find motor insurance. The Association also fears that removing age as a means of assessing risk may lead to insurance companies introducing medicals for drivers wishing to take out a policy.

Travel insurance is another area likely to be affected by the Equality Bill with the average claim for a traveller over 65 being three and a half times that of a traveller under the age of 50.

Sainsbury’s Car Insurance has just released research claiming that the average car insurance premium went down overall during the last six months of 2008.

In June 2008, the average premium stood at £514.16, whereas by December 2008 that figure had come down to £498.22, representing a drop of 3.1%.

But don’t get too excited, because Sainsbury’s has also predicted that this figure is likely to go up again soon. One reason for this is that personal injury claims during 2008 went up 22%, which led to an extra £6 billion payout during the year for insurance companies.

On top of that, the terrible conditions seen across the UK recently led to £63 million in claims in just seven days. Between Monday 2nd February and Sunday 8th February, Sainsbury’s estimates that there were 45,000 claims, which is 45% up on the same week in 2008.

As well as this, some age groups are not benefitting from the cheaper premiums that the rest of the population has been enjoying, with the under-25 age group seeing a 2.2% rise and the over-65s seeing a 2.6% rise over the same period. Co-Operative Insurance also released figures that seemed to confirm this, although it claimed that during 2008 young drivers saw a massive 11.5% rise in their premiums: in other words, four times the rate of inflation.

But for those who have seen a reduction in their premiums, the manager of Sainsbury’s Car Insurance, Joanne Mallon, said that they “should be aware that paying a lower premium does not mean they have to forfeit good cover”, and that they should continue to shop around for the best deals available.

In the current economic climate we are all searching for ways of saving money, and cutting down on motoring costs is something which many of us are looking at. A recent survey carried out by LV= has revealed that almost one in five of us has either downsized or sold one of the household’s cars in a bid to tighten our belts.

The average saving is in the region of £390, with the majority doing it to save fuel (61%), whilst roughly a third see savings in insurance premiums and road tax as a good enough reason to take the plunge. It seems that in times of recession our green conscience takes second place to our bank balance with only a sixth of us doing this for environmental reasons.

Sales of new cars have also been hit dramatically by the economic situation, with new car registrations having fallen by 600 a week when comparing figures for Nov 2008 with Nov 2007. The motor industry is in dire straits with production down by a third and the government considering an aid package.

John O’Roarke of LV= understands completely why motorists are downsizing or buying second-hand cars rather than new ones. He points out that apart from buying a house, the purchase of a car is normally the biggest expenditure people will face. He gave the following tips to help reduce insurance premiums:

• Buy a popular make of car as they are cheaper to repair which will be reflected in the premium.
• Go for a smaller engine.
• Steer clear of cars which have been modified or imported.
• Compare premiums on the Internet.
• Review your policy and make sure you are not paying for anything you don’t need.
• Make sure your insurance company knows if you are a low mileage driver or if your car is kept garaged overnight or on a driveway as this could reduce your premium.