Cheap car insurance: Strategies for lower premiums 2025
4 Jun 2025
4
Minutes
Katrin Straub
CEO at nextsure
The costs of car insurance are rising, but with the right knowledge, you can save significantly. Discover practical tips and expert insights to keep your car insurance premium affordable while still ensuring optimal coverage. This guide shows you how to do it.
The topic in brief and concise terms
An annual payment method and realistic mileage figures can reduce your insurance premium by up to fifteen percent.
Comparing providers and adjusting comprehensive cover and excess can offer savings potential of often several hundred euros.
The no-claims discount class, type class, and regional class are key factors that significantly influence your car insurance premium and can be optimized.
Quick Facts: Immediate Measures for Affordable Car Insurance
Small adjustments can have a big impact on making your car insurance premium more affordable. Paying annually can save you up to five per cent. Also, check your annual mileage; often, drivers pay for overestimated kilometres. Reducing from twenty thousand to fifteen thousand kilometres can noticeably lower the premium. Choosing to have repairs carried out exclusively at certain garages can reduce the premium by up to twelve per cent.
Many policyholders underestimate the savings potential by adjusting who is allowed to drive the car. Limit the number of drivers to a minimum to lower costs. Agreeing on an excess, such as one hundred and fifty euros for third party, fire and theft, and three hundred euros for comprehensive coverage, also positively affects the premium. These initial steps are quickly implemented and form the basis for further optimisations.
Practical Guide: Actively Reduce Contributions through Choice of Tariff and Vehicle
The choice of the right policy and vehicle significantly affects how affordable your car insurance will be. Compare offers from different insurers, as price differences can amount to several hundred euros per year. Switching from fully comprehensive to third-party, fire, and theft insurance can be worthwhile for older vehicles, for example from the age of five years, as fully comprehensive often only covers the current market value. When buying a car, look for a low insurance group; vehicles in low insurance groups (e.g., insurance group 10 in liability) are often cheaper to insure.
Annual mileage is another important factor. Calculate realistically; reducing it by five thousand kilometres can already mean a savings of ten to fifteen percent. Consider whether a telematics policy is suitable for you. In this case, your driving behaviour is analysed, and safe driving can be rewarded with discounts of up to thirty percent. Do not underestimate the impact of the registration district, known as the regional class. Moving to a district with a lower claims record can reduce your premium. The following points will help you optimise your policy:
Choose annual payment instead of monthly or quarterly (up to five percent savings).
Adjust deductible (e.g., three hundred euros in fully comprehensive instead of one hundred and fifty euros).
Restrict the circle of drivers (each additional driver can increase the premium by five to ten percent).
Accept repair shop commitments (up to twelve percent discount possible).
Provide a realistic mileage and adjust if necessary (driving five thousand kilometres less can bring ten percent savings).
Check telematics policies (up to thirty percent discount for safe driving).
These practical approaches allow you to make your car insurance affordable without forgoing necessary cover. The next step is to make optimal use of the no-claims discount class.
Optimize no-claims bonus class: Save in the long run
Your no-claims discount class (SF-class) is one of the most important levers for affordable car insurance. Each accident-free year leads to a better classification and thus to a higher discount. Beginners often start in SF-class 0, which involves high premiums; after one accident-free year, there is classification into SF-class one-half or one. After thirty-five accident-free years, many policyholders reach the highest SF-class (e.g., SF 35), which can lower the premium rate to about twenty percent of the base rate.
There are ways to positively influence the SF-class. Transferring the SF-class from another person (e.g., parents or grandparents) is possible under certain conditions, but often only as many years as the recipient has held the driving licence themselves. A discount protection can be worthwhile: it prevents a downgrade after the first claim but costs extra. Paying for small damages yourself, up to around five hundred euros, might be cheaper in the long run than being downgraded in the SF-class. Consider these aspects regarding the SF-class:
Check the possibility of an SF-class transfer, especially for beginners.
Consider discount protection if you have many accident-free years (often from SF-class 4).
Calculate for minor damages whether self-payment is cheaper than claiming insurance and a subsequent downgrade.
Report changes to your driving habits (e.g., fewer drivers) to potentially improve your classification.
The SF-class is a dynamic factor that significantly determines your premium. Next, we will look at the legal foundations and expert tips.
Expert Knowledge: Understanding Legal Aspects and Contract Details
To make your car insurance affordable and legally sound, understanding the legal framework is important. The Compulsory Insurance Act (PflVG) stipulates in § 1 the motor vehicle liability insurance for every vehicle owner. The minimum coverage amounts are specified in § 4 PflVG, for example, seven and a half million euros for personal injury. Violation of the insurance obligation can be punished under § 6 PflVG with fines of up to one hundred eighty daily rates or imprisonment for up to one year.
The Insurance Contract Act (VVG) regulates the rights and obligations of insurers and policyholders. Particularly relevant for cost savings is § 40 VVG: If the insurer increases the premium without improving the scope of benefits accordingly, you have a special right of termination within one month. Pay attention to the pre-contractual duty of disclosure according to § 19 VVG: Incorrect or incomplete information can lead to the insurer's exemption from performance or contract adjustment. Our expert tip: Annually review your insurance policy for optimization potential, especially before the main due date (usually the first of January). A switch is often possible until the thirtieth of November. Loss of function, damage or destruction of electronic components of your vehicle are covered by the car insurance for electric cars. The settlement of damages should occur within four to six weeks. This knowledge helps you to avoid pitfalls and optimize your car insurance.
Further savings potential: From type class to payment method
Besides the factors already mentioned, there are further ways to reduce the cost of your car insurance. The type class of your vehicle plays a crucial role. It reflects the claims and accident record of a particular car model. Models with a low type class (e.g., 10-15 in liability) are generally cheaper to insure than vehicles with a high type class (e.g., over 20). You can find information about the type class of your desired vehicle online at the Gesamtverband der Deutschen Versicherungswirtschaft (GDV).
The regional class, which reflects the claims record of your registration area, also affects the premium. In rural areas with fewer accidents, premiums are often lower than in large cities. The GDV publishes the latest regional classes annually for all 413 registration districts. Another factor is the choice of parking space: A car parked in a garage at night is often cheaper to insure than one parked on the street, as the risk of theft and vandalism is lower; discounts of up to five percent are possible here. Our expert tip: Use comparison portals to get an initial overview of the market, but also obtain direct offers from insurers to find the most cost-effective car insurance for you. Remember, the cheapest price is not always the best choice; the scope of coverage must be right. An annual review of your insurance costs is advisable.
Changing insurance and special cancellation rights: Seize opportunities
Switching car insurance can offer significant savings potential, often several hundred euros per year. The most common cancellation date is the thirtieth of November, as most contracts expire at the end of the year. However, there are situations that allow a special termination right outside of this period. This includes a premium increase by the insurer without improved benefits (§ 40 VVG). After a regulated claim, both you and the insurer have the right to cancel the contract within a month.
Another opportunity for special termination exists when changing vehicles. If you buy and register a new car, you can cancel your existing insurance and take out a new, potentially cheaper car insurance. Our expert tip: Compare not only prices but also benefits such as cover amounts, discount protection, or foreign damage protection. A careful examination of the contract terms is essential to be well insured in the event of a claim. nextsure is happy to assist you in analyzing your existing contracts and searching for optimal and affordable car insurance.
The following situations often allow for cancellation outside the regular deadline:
Premium increase without benefit adjustment (within one month after receiving the notification).
After completion of claims processing (within one month).
Sale or deregistration of the vehicle (insurance transfers to the buyer or ends with deregistration).
Change in type class or regional class, if this leads to a premium increase.
Use these opportunities to keep your car insurance affordable. Individual advice can be very helpful in this regard.
Conclusion: Your strategy for consistently affordable car insurance
Finding and maintaining affordable car insurance requires a combination of knowledge, regular reviews, and conscious decisions. Start with simple adjustments such as annual payments and a realistic assessment of your mileage, which can already save you up to fifteen percent. Use comparison tools and check policy details like workshop ties and excess to save an additional ten to twenty percent. Optimising your no-claims discount through accident-free driving or transferring a no-claims class can reduce your premium by more than fifty percent in the long term.
Understand the significance of vehicle type and regional classifications, and consider these factors when purchasing a car or relocating. The most important thing is to stay proactive: Review your contract annually, use your special right of termination for premium increases, and don't hesitate to compare offers. A careful selection not only ensures you have affordable car insurance but also the appropriate coverage for your needs. Remember, nextsure offers you comprehensive advice and helps you find the optimal insurance solution.
Request an individual risk analysis now: Have your insurance situation examined free of charge and receive concrete suggestions for optimisation.
More useful links
Kraftfahrt-Bundesamt provides detailed statistics on the vehicle fleet in Germany.
Statistisches Bundesamt offers comprehensive information on traffic accidents in Germany.
Gesamtverband der Deutschen Versicherungswirtschaft explains the significance and calculation of the vehicle insurance type classes.
Gesamtverband der Deutschen Versicherungswirtschaft shows the current regional classes for vehicle insurance, broken down by federal state.
Deutsche Bundesbank publishes statistics on national producer and consumer prices.
FAQ
What does the term "cheap car insurance" mean in detail?
An affordable car insurance means getting the lowest possible premium while ensuring adequate and necessary coverage. It's not just about the price, but about the optimal cost-performance ratio, which is achieved through comparing tariffs, adjusting contract features, and using discounts.
How often should I review my car insurance to keep it affordable?
It is advisable to review your car insurance at least once a year, ideally a few weeks before the main due date (often the first of January, with a typical cancellation deadline of the thirtieth of November). It is also worthwhile to conduct a review if there are changes in your life circumstances (e.g., moving house, new car, reduced mileage).
What documents do I need for a car insurance comparison?
For an accurate comparison, you will generally need your vehicle registration document (Zulassungsbescheinigung Teil I) with details of the manufacturer (HSN) and type key number (TSN), your current insurance policy (for determining the no-claims class), information on annual mileage, the circle of drivers, and the parking place of the vehicle.
Is the cheapest car insurance always the best choice?
Not necessarily. The cheapest car insurance may have performance limitations that can become costly in the event of a claim (e.g., low coverage amounts, no choice of workshop, exclusion of gross negligence). Pay attention to a balanced ratio of price and performance that meets your individual needs. For example, a <a href="/solutions/subsolutions/kfz-versicherung-vollkasko">fully comprehensive insurance</a> is often advisable for new cars.
Can I lose my no-claims discount?
Yes, after an at-fault accident, you are usually downgraded to a worse no-claims class, which leads to higher premiums. The exact downgrading depends on the insurer and the number of claims. A no-claims discount protection can prevent downgrading after the first claim, but it is chargeable.
What is the difference between type class and regional class?
The type class assesses the risk of damage for a specific vehicle model (e.g., VW Golf). The regional class evaluates the damage risk in your registration district (e.g., Berlin vs. rural area). Both classes influence the amount of your insurance premium. Lower classes generally mean more affordable premiums. The <a href="/blog/was-bedeutet-beitragssatz-bei-kfz-versicherung">contribution rate</a> is partly determined by these factors.
