Car insurance can prove to be costly for many British drivers and the announcement by Nationwide that they are dropping their pioneer “pay as you drive” scheme could mean less cheap options in the market.

According to the BBC, few people signed up for the scheme, however, UK biggest building society says that However, Norwich Union has claimed that car makers were partly to blame for their decision to drop the scheme because they had been slow to adopt the technology.

The pay as you go car insurance scheme meant that drivers had a black box installed in their car, which allowed their journeys to be monitored using satellite technology, so that the company could know where and when they were driving. The idea was to encourage drivers to use the roads at low-risk times and therefore qualify for lower premiums.

Statistics show that the average British driver pays an average annual car insurance premium of £497 and experts believe that there are still ways of cutting down on insurance costs for drivers.

Drivers are advised to avoid the temptation to pay for their car insurance on a monthly basis despite the fact that it may appears cheaper or more manageable because it is not. Uswitch.com says that drivers will be charged interest, typically around 24%, adding £50 to the average car insurance bill. Statistics also show that just over half of Britain's 26 million insured drivers are paying monthly, and cumulatively handing the insurance industry £624m in unnecessary payments.

Market experts believe that drivers can end up paying less by simply putting the bill on your credit card and taking two or three months to pay it off. However, spreading it over a period of 12 months will attract 24% interest.

Additionally, those who have built up a tidy no-claims bonus should not accept a renewal quote from their existing insurer. Industry sources argue that customer loyalty in the insurance business is worth almost nothing because giant insurance companies chase new customers by offering big discounts, often charging half the price they charge to existing customers for exactly the same cover.

They further recommend that policy holders apply to their existing insurers as a new customer in order to determine how much more they end up paying for the renewal as opposed to a new customer. However, this is not without its warning, drivers are urged to shop around using the insurance comparison sited with the understanding of the limitations of these websites, too as they don't all cover the same providers meaning they will have to shop around the shoparound sites too.

 It can be worth installing Thatcham-approved security measures such as vehicle tracking devices. The Thatcham Motor Insurance Repair Research Centre evaluates the effectiveness of car security products against the British insurance industry's criteria. Most insurers acknowledge the benefits of these devices and, in turn, offer discounts.

Around half of all insurers won't cover a significantly modified or customised car, and those that do charge extra. And, let's be honest, no-one over the age of 17-and-a-half thinks you look cool in it anyway.