A report by a car insurance company has displayed how motorists who pay their car insurance premiums on a monthly basis are worse off than those who pay up front.

Some insurers even add 40% onto the cost of car insurance for those paying monthly. As a result, such firms are taking profits from this practice, which adds around £200 onto the average yearly car insurance cost, which presently stands at £778.

Many drivers pay monthly because they cannot afford the one-off cost of 12 month's worth of cover and the recession has made this tactic more popular. However, the insurance group said that the 13.2 million driver's who pay monthly, could in fact save a fortune if they paid up front.

As a result, the organisation advised motorists on how to reduce their premiums, such as using a garage to store their vehicle, installing an alarm and not adding on any modifications.