The firm, which recently revealed pricing for its public float, said the job losses would come across its commercial, risk and compliance and chief customer office divisions.
Direct Line, which was spun out of Royal Bank of Scotland, has started consultation with workers under threat of redundancy. It follows the announcement of cuts to senior management in September and October.
The company is trying to save £100m by the end of 2014. It has yet to finalise where £30m of these savings will come from.
Some £20m will come from slashing its marketing budget, with the other £50m coming from 891 call centre job losses and 70 senior management redundancies.
Chief executive of Direct Line Paul Geddes said: “These proposals are another important step on our journey to deliver on our cost saving target. They are essential to ensure we are as efficient and competitive as possible.”