ALMOST a fifth of drivers are keen to change cars over the next few months - and that means taking out new insurance.

Many say their prime motivation is saving money, so it will be welcome news that motor premiums are at a record low, at least for those willing to shop around.

According to Sainsbury's Bank, 18% of adults are likely to swap vehicles before the end of winter, up by nearly a third on six months ago, and many are looking to buy a cheaper or more fuel-efficient model.

With insurance a legal necessity, potential purchasers will be relieved to learn that the AA's latest Insurance Premium Index shows the biggest annual drop since the organisation began monitoring prices in 1994.

The AA says the typical cost of a fully comprehensive policy fell by more than 12% in the 12 months to the end of September, as providers competed to increase their market share.

Figures from MoneySupermarket.com, based on almost 34 million quotes run through its website, bear this out.

The comparison site says its average premium, across all policy types, is £394, 16% down on this time last year, when it stood at £457, and 38% lower than the second quarter of 2011, when it was £545.

Meanwhile, it reports that eight out of the 10 cheapest locations for cover are now in Scotland. Drivers in Perth get the best deal, with a typical annual premium of £232, followed by those in Dumfries (£233), Galashiels (£237), Inverness (£238), Kirkcaldy (£246), Falkirk and Stirling (£247), Exeter (£248), Kilmarnock (£258), Dundee (£261) and Truro (£262).

The bad news is that these price falls apply only to new policyholders and are not being reflected in the premiums quoted to existing ones at renewal time.

In fact, many loyal customers will have seen their costs increase year-on-year, as insurers reserve their best prices for newcomers, who they hope will be too lazy to look elsewhere in subsequent years, when they too suffer premium rises.

Scott Kelly, head of motor insurance at comparison site Gocompare.com, said: "While it is certainly good news that premiums are falling, it is worth remembering that these savings aren't just handed down to drivers - in most cases you have to go and find them by shopping around.

"There is no guarantee that your existing insurer will give you the best deal at renewal, and if you shop around you may well be able to find another insurer offering a better one.

"It's almost a year since the European Court of Justice ruling on gender equality came into effect and the industry has absorbed the impact of that along with Government initiatives to tackle whiplash.

"Now the actuaries have rebooted their spreadsheets and the dust has settled on a transformed car insurance marketplace, there are definitely some bargains to be had."

So, whether you are insuring a new vehicle or renewing cover on an existing one, it makes sense to get a range of quotes.

Increasing the voluntary excess - the amount of any claim paid by the policyholder on top of the compulsory excess applied by the insurer - can be another way to cut costs, but it is important not to raise it too much.

Sainsbury's Bank says over the past three years, 7.4 million insurance customers have opted for a higher voluntarily excess in a bid to save money.

However, a fifth of those subsequently involved in an incident admitted they hadn't considered how much extra this would cost them if they needed to claim, while more than a third conceded they had raised their excess so much it wasn't actually worth claiming.

Ben Tyte, Sainsbury's head of insurance, said: "Insurance is there to assist you when you need it most. If you're thinking about selecting a higher excess to reduce your monthly premium, be sure this won't cause you any financial difficulty when it comes to making a claim.

"If you later feel you can't justify a claim in relation to the excess, this could be an unnecessarily stressful and expensive experience."

Spending time, online or on the phone, to get a range of quotes from comparison services and individual providers that don't work with these services, and organising the right level of cover for your needs may be considerably more cost-effective in the long run than opting for a huge excess.

Meanwhile, drivers who cover low mileage every year are overpaying for their insurance, according to pay-as-you-drive insurer Coverbox. It allows drivers to declare and pay for a minimum annual mileage of 3000 miles compared with the normal 6000 miles upwards.

The insurer says: "Younger and older drivers, particularly students and the retired, do far fewer miles than they actually realise. We all seem to have it drilled into us that the average annual mileage is 12,000, so that's what we declare when taking out insurance, and we stick to that for fear of going over that figure, and our insurance being declared void because of incorrect declaration of information."