Scottish areas dominate list of cheapest places to insure a car, with Manchester and Birmingham the most expensive

Scottish motorists pay significantly less than their English counterparts for car insurance, according to research published today.

Price comparison website moneysupermarket.com analysed almost 1m motor insurance quotes over 12 months and found that Scotland has seven of the 10 cheapest areas in the UK for car insurance.

Truro is named as the best place to live for the cheapest insurance quotes, while Penzance and Bury St Edmunds were the only only other places outside Scotland to make the list.

The research found that residents in parts of Birmingham and Manchester pay the most to insure their vehicle. Areas in both cities accounted for six of the 10 most expensive places to base your car, and motorists in Manchester could find their premiums around £500 or 126% more expensive than those in Scotland.

Liverpool, which previously had the dubious honour of being the worst place to base a car for insurance purposes, has just one area on the list.

Steve Sweeney, head of motor insurance at moneysupermarket.com, said: “

An array of factors can determine the price you will pay for car insurance, from crime and population levels in your area to where you park your vehicle. If your area is classified as ‘high risk’, insurers who don’t assess motor insurance on an individual basis may adopt a blanket approach and many motorists could find their insurance is quite high to compensate for this.

“If premium costs were evaluated on a case-by-case basis, many motorists would receive quotes at a better price to match their individual circumstances.”

10 cheapest areas: Average lowest quote, postcode and area

£356, TR1, Truro, Cornwall

£375, KY12, Dunfermline, Scotland

£380, KY6, Glenrothes, Scotland

£380, DD5, Dundee, Scotland

£381, AB15, Aberdeen, Scotland

£383, IP33, Bury St Edmunds, Suffolk

£383, FK3, Grangemouth, Scotland

£385, IV30, Elgin, Scotland

£386, TR18, Penzance, Cornwall

£386, DD2, Dundee, Scotland

10 most expensive areas: Average lowest quote, postcode and area

£873, M13, Ardwick/Longsight/Chorlton-on-Medlock, Manchester

£840, B10, Small Heath, Birmingham

£821, M8, Crumpsall/Cheetham Hill, Manchester

£820, L7, Edge Hill/Fairfield/Kensington, Liverpool

£819, BD8, Girlington/Manningham/Lower Grange, Bradford

£819, B11, Sparkhill/Tyseley, Birmingham

£814, B12, Balsall Heath, Birmingham

£810, B8, Washwood Heath/Ward End/Saltley, Birmingham

£809, E12, Manor Park, London

£805, BT12, Falls, Belfast

Source: moneysupermarket.com. Quotes based on a sample of 988,742, taken between September 2008 and August 2009.

Top tips for reducing the cost of car insurance

• Always shop around at renewal time. Don’t assume your current provider is giving you the best renewal quote. Look at several car insurance comparison sites such as Comparethemarket.com, moneysupermarket.com and the Guardian’s own to see what you can save.

• Buy online. Many car insurers offer discounts to customers that shop on the web.

• Reduce your mileage. When applying for insurance you have to estimate the number of miles you will do each year. If you aren’t travelling much you usually pay less.

• You’ll get a better deal if you can reduce risk of the car being damaged while you’re not using it. Keep the car off the road at night in a garage or on a drive to cut your premiums.

• Make sure you have an alarm and immobiliser.

• Pick a car with a smaller engine. The bigger and faster the vehicle the more it will cost to insure.

• Up the excess. Agreeing to pay a higher excess, such as £500 instead of £100, can reduce your premiums. Don’t forget you will need to pay this in the event of a claim, so be sure you can afford it.

• Add an older driver. Young men adding their mothers to their policies have seen big savings as a result. Don’t be tempted to put the policy in their name though. This is called fronting and could invalidate your insurance.

• Make sure you get adequate cover. As you look for the lowest price, don’t be tempted to scrap things you really need. Skipping extras you can’t do without – such as legal fees cover – will be a false economy if you need to claim.

The steep rise in insurance costs since 2007 has left homeowners unable to get cover or move house

Flood victims continue to face spiralling costs for home insurance as excesses for flood cover rise to levels that are making their properties virtually impossible to sell.

Many have invested thousands to protect their homes from flooding, but these efforts are rarely rewarded by insurers.

“People are coming to us with huge premiums and flood excesses of up to £30,000, which is as good as having no insurance at all and makes their property virtually worthless,” says Mary Dhonau, chief executive of the National Flood Forum, a charity that advises flood victims. “The problem has got steadily worse over the past year and we are now being overwhelmed by calls from homeowners who have spent a huge amount protecting their property, but are still being charged ridiculous premiums or refused cover altogether.”

Chris Wreghitt’s Axa home insurance premium leapt to more than three times what it had been when his Worcestershire property was flooded in 2007.

“Prior to the flood, I was paying just under £1,000 a year, and when I came to renew in 2008 they put the premium up to £1,638,” he says. “But this year they wanted to increase it to £3,747.”

There was a big excess too, though Wreghitt negotiated it down. “The first time I renewed, they wanted to impose a flood excess of £20,000, but I complained and they cut that to £10,000.”

However, according to Ray Boulger, senior technical manager with mortgage broker John Charcol, even a flood excess of £10,000 can present serious problems if you want to sell.

“Any lender would be nervous if the flood excess was above £5,000, and it could be very difficult for a potential buyer to get a mortgage,” he says. “This could make the property difficult to sell or it would have to be sold at a significantly lower price.”

A spokeswoman for Axa said the company now imposed a maximum flood excess of £10,000, adding: “Mr Wreghitt initially took out his home insurance policy at a considerably discounted introductory price. Following the floods of 2007, the premium was up-weighted to reflect the risk of future flooding, as well as the very substantial six-figure claim that had been settled.

“In 2009, the premium was re-assessed to bring it in line with our normal pricing criteria and the value of his home and contents.”

By 2008 559,000 homes in England and Wales were at serious risk of flooding, according to the Environment Agency, up from 517,000 in 2006. This increase looks set to continue as the agency’s techniques for predicting which areas will flood improve.

“Our mapping processes for identifying flood risk are getting better and more properties are being designated as at risk of flooding,” said a spokesman for the Environment Agency.

Since the floods in 2007, the Environment Agency has invested heavily in flood defences and has set up an early warning service which uses text messages to give those at risk advance notice of an impending flood. But the agency is disappointed that these steps, and those taken by customers, are rarely reflected in lower insurance charges.

“Only a handful of insurers are rewarding people who make their properties safer or sign up to our flood warning service with lower premiums and lower excesses,” the spokesman for the Environment Agency said. “We would urge insurers to take account of floodproofing work and people signing up to our warning service.”

Pensioner Sue Jenkins Clarke thought she would have no problem selling her Cheltenham home after she borrowed £25,0000 to have the garden flat “tanked” to protect it from flooding (the foundations are made waterproof so that moisture cannot rise from the water table), after water had seeped through the floor during the floods of 2007. But in September, a few days before contracts were due to be exchanged, her buyers pulled out.

“They said it was because they couldn’t get contents insurance from anyone because of the flooding,” she says. “I couldn’t understand it because I still had contents cover and the money I had spent meant the water seepage problem couldn’t happen again.”

When Jenkins Clarke checked with her insurer, they told her they were happy to continue providing cover, but would take the same view as other companies when it came to a new owner.

“It seemed illogical that I could get cover but my buyer couldn’t,” she says. “It felt as if there was no way to get out of here and I began to feel angry.”

Fortunately, the National Flood Forum was able to point Jenkins Clarke to a specialist broker who could arrange the necessary cover, but she has yet to find a buyer.

Insurance broker Neil Cook, of Kay International, which specialises in flood insurance, says it can be worth looking beyond the big-name firms when it comes to flood cover.

“Some big insurers had their fingers burnt in 2007 and have become extremely cautious,” he says. “But specialist brokers use smaller underwriters that were not so severely affected and are still willing to look at individual cases and levels of risk rather than imposing a blanket policy.”

In 2002 the insurance industry agreed with the government to continue providing cover to existing customers whose homes were designated at significant risk of flooding and, crucially for people selling their homes, in 2008 this commitment was extended to cover new owners of affected properties. So Jenkins Clarke’s insurer, for example, should have covered the new buyer. However, there are no limits on the premiums or excesses that can be asked of a potential buyer, as Michael McDonald discovered when he came to sell a cottage which had been affected by flooding last January.

When McDonald’s wife inherited the Lancashire property in March, there appeared to be no problems with the insurance. Aviva, the insurer, had only increased the premium from £696 a year to £840 after the flood claim, and the Environment Agency had told McDonald the flood was a one-off occurrence.

But last month, just days before completion, the buyer for the cottage threatened to pull out because Aviva wanted to increase the annual premium to £2,800 and impose a flood excess of £8,500.

“The buyer said these charges were like taking out a second mortgage and he couldn’t afford them,” says McDonald. “I told him I’d find him cheaper insurance and tried the internet comparison sites, but they all rejected the property because it had been flooded.”

Kay International came to McDonald’s rescue. “They managed to get the new owner a home insurance premium of just £750 a year with an excess of £2,500,” he says.

An Aviva spokeswoman said: “The property flooded in January 2008 and we paid out £52,000 in claims costs. The property has had a sizeable flood claim and therefore in our view, is at very high risk of flooding. Only a very small percentage of our customers who have been flooded will receive an increased excess, however it is likely that customers who have made a large flood claim will attract an increased excess.”

Malcolm Tarling, of the Association of British Insurers, says anyone having problems getting flood cover should use a broker to help them get the best deal. But he insists that insurers have good reasons for exercising caution when it comes to flood insurance.

“The average flood claim in some parts of the country can be up to £45,000 and in the summer of 2007 insurers paid out £3bn, the equivalent of four years’ claims, in a period of just six weeks,” he says.

“In addition, there is scientific evidence that severe weather incidents are becoming more likely and more severe, and insurers have to take this into account.”

What to do if you have been flooded

• Use a broker to find the best insurance deal – the National Flood Forum • Do not cancel your insurance policy until you have another in place

• Sign up for the Environment Agency early free flood warning service

• Tell your insurer about any steps you have taken to protect your home from flooding and ask for a reduction in premium or excess

• If you think your insurer is breaking the agreement between industry and government, contact the Association of British Insurers or the Financial Services Ombudsman