The cost of motoring is increasing exponentially, with over 65% of motorists admitting that they have been forced to alter their driving habits according to moneysupermarket.com.

One of the reasons for this has the increasing cost of insurance, with the AA reporting that the average car insurance premium had risen by over 40% in 2010 compared to 2009. The other major cause for the increasing motoring expenditure is fuel prices, which are reflecting the reducing raw oil supplies available.

However, this doesn’t mean the end of the road for drivers, as there are still a number of things which can be done to your annual motoring bill.

How to reduce your fuel bill

The Nissan Leaf was recently named the 2011 European Car of the Year. This is the first all electric vehicle which Nissan has put into mass production.

However, claims that this is the dawn of a new electric car era may be slightly optimistic. The Leaf may well reduce the average driver’s fuel bill by about $1,950 per year, but it will still take about four years to recover the additional cost of choosing the electric Leaf model over a far more practical Ford Focus in running cost savings.

The best tactic at the moment is therefore to ensure that you don’t travel in your car more than you have to, and remember that short little journeys to get the morning paper for example all add up in terms of fuel expenses. But for essential travel there are four things you can do to reduce the amount of fuel you consume while you are driving:

• Change gear earlier- Don’t let them engine rev too much by changing the gears earlier. If you own a petrol vehicle you should be aiming to change gear at about 2000 rpm, but with a diesel this will go up to about 2500rpm.
• Slow smoothly- If you have to stop or slow down you should plan ahead. Try to decelerate smoothly by releasing the accelerator, gently braking and if possible allow the car to roll while out of gear to a stand still. Avoiding heavy breaking is a great way of increasing fuel economy.
• Roll with it- If you can, keep you car rolling at a constant speed rather than stopping and starting. Tailgating your fellow motorists and constantly pressing your brake in response to them slowing up ahead is not only unsafe, stupid, petty, pathetic and childish, but also costs you money. Remember to keep your distance from vehicles ahead.
• Don’t waste your fuel- If you are unfortunate enough to get caught up in a traffic jam, remember that you can always switch off your engine. If it looks like you are going to be sat still for quite some time, this is a good option.

How to reduce your insurance bill

Other than information about you, the thing that has the single biggest influence on the car insurance premiums your offered is your choice of car. For example, driving around in a sporty vehicle with a massive 4 litre engine will obviously result in you being seen as a rather significant risk by insurance companies.

If you are not David Beckham, and car insurance premiums are still a concern for you, you should opt for a vehicle assigned to the lowest insurance group possible.

Car are allocated to a group numbered between one and twenty, with cars in insurance group twenty being the most expensive to insure. These are decided upon by the Association of British Insurers (ABI) who allocate cars to a specific insurance group based on an assessment of their overall performance (i.e. big/small engine), security features (i.e. alarm/immobiliser), brand reputation (people driving a BMW M3 may be statistically more likely to crash than someone in a Nissan Micra) and overall safety of the vehicle in terms of its NCAP rating. If you are unsure of the insurance group rating of the car you are looking at, just ask the car dealer.

Other than your choice of vehicle, there are four other things that can be done to lower the cost of insurance:

• Shop around- compare prices with as many difference car insurance companies as possible in order to give yourself the best chance of getting a cheap deal. The easiest way of doing this is by utilising a price comparison website, which will compare prices available through hundreds of different insurers in minutes.
• Increase your excess- Offering to pay a higher excess in the amount of an accident occurring will reduce your initial insurance premiums because insurers will obviously face a smaller expense in the event of a claim being made. However, be careful not to offer to pay more than you can afford.
• Get on your bike- Once again the message is reduce your mileage. The higher the miles allocation you set with your insurers is, the more of a risk you will be seen. You should therefore set your mileage count on the insurance policy as low as possible in order to make sure that you are not paying for miles that you are not going to be using. However, be careful not to exceed it as this will give the insurance company a great excuse to avoid paying out in the event of a claim being made.
• Watch where you park- parking in a secure location such as a locked garage will result in your vehicle being statistically less likely to be stolen or vandalised than one which is parked on a public road. Insurers recognise this in the form of cheaper premiums for motorists who park their vehicles in secure locations.

The basic message

Ignore those that say that the green revolution is upon us. Fuel simply isn’t expensive enough yet to force people into making too many compromises on their vehicle selection. However, selecting a petrol vehicle with a smaller engine which is in a lower insurance group can be hugely beneficial and should be considered by motorists worried about their expenditure.

Additionally, following the four insurance and four fuel saving tips provided in this article could end up saving you hundreds of dollars every single year. Make sure you are a smart driver by pay attention to this guidance.