Car insurance guide

Car insurance can be boring and time consuming. You’re probably tempted to go with the cheapest option. But the lowest price you’re quoted isn’t always the best deal. Spending a little more time researching it properly, can save you money and hassle in long run.

We’ve pulled together some handy car insurance tips and advice, covering all the basics and what to do to get a better deal.

What is car insurance – and do I need it?

Car insurance is a legal requirement that helps to protect you against the financial costs of car accidents, theft or damage. Every vehicle that’s driven or parked on public roads in the UK must be insured. You could face a hefty fine or even prosecution if your car isn’t covered. 

How does car insurance work?

There are different kinds of insurance – more about these later – but they all work on the same basic principle. You pay an insurer – either monthly or one-off annual payment – for a policy. Then, if you’re in an accident or your car is stolen, you can claim against the policy and the insurer will pay some of the costs for putting things right.

What are the benefits?

The level of protection you get depends on the kind of policy you take out. But generally, car insurance:

• Keeps you on the right side of the law. It's illegal to drive or keep a car on the road in the UK without some form of car insurance
• Protects you from paying huge costs if something goes wrong. Comprehensive insurance can cover the cost of repairing or replacing your car – and someone else's – if you're in an accident

Be aware of policy auto-renewals 

Your insurer should send you a notice when it’s time to renew your policy, with your current premium and what you’ll be charged for the coming year.  

If you don’t take any action, the policy will simply auto-renew with the new premium. It’s worth contacting your insurer and asking for a better quote. It could save you quite a lot of money over the year.

What are the different types of cover?

There are various options when it comes to types of car insurance. From cheaper, more basic policies, to comprehensive policies that offer more protection. 

Third party insurance

 This is the minimum – and often the cheapest – cover you can legally have in the UK. It covers you for:

• Injury to other people, including passengers
• Damage to other people's property
• Third party damage while you're towing a caravan or trailer – but not for any loss or damage to the vehicle you were towing, or your car

It will only cover damage to other cars; the cost of repairing your car would have to come from your own pocket.

Third party, fire and theft (TPFT)

A TPFT policy includes everything you get with third party insurance, plus cover for:

• fire damage
• theft
• any damage to your car from theft or attempted theft

If you're in an accident, it only covers the damage to other cars. So, you’d have to pay for the cost of any repairs to your own car yourself.

Fully comprehensive

This is the most popular type of car insurance as it gives you the highest level of cover. A fully comprehensive policy includes everything in TPFT, plus a range of additional features. They vary from insurer to insurer, but can include cover for things like:

• Accidental damage to your car
• Damage to other vehicles when you're at fault for an accident 
• Your personal belongings if they're stolen from your car 
• Fixing or replacing your windscreen
• A courtesy car 
• Your medical expenses, following an accident

Black box car insurance 

Also known as telematics insurance, this cover involves having an app or black box installed in your car to monitor the way you drive. 

It tracks things like your acceleration, speed and braking. And the safer you go, the lower the price of your cover. You still need one of the policies listed above but adding black box car insurance can help lower the cost of your premiums.

Multi-car insurance 

Multi-car insurance allows you to cover more than one car on the same policy. It could make it easier to manage your insurance – and adding more cars to a policy often comes with a multi-car discount.

Other policy options 

Some companies do ‘stripped down' policies. These tend to be cheaper, but they give you less protection. For example, they might reduce how much you can claim for your valuables. Or take off the windscreen cover completely. 

Always make sure you check exactly what you're covered for before you buy.

Young and new drivers 

It can be expensive for young or new drivers to get car insurance, as they’re considered ‘high risk’ by insurers. This is because, statistically, they’re more likely to be involved in an accident than older, more experienced drivers.

There are some things you can do as an inexperienced driver to cut down your insurance costs, including: 

• Choosing a car in a low insurance group
• Adding a low-risk second driver to your policy
• Increasing your voluntary excess
• Paying in one lump sum, rather than monthly

Explore more car insurance tips and advice for young drivers.

How do insurers work out what you pay?

A lot of factors come into play when insurers calculate the costs of your premiums and excess. Here are the most common things they consider.

Age and experience 

Generally speaking the younger and newer to driving you are, the more expensive your policy will be. This is especially true if you're under 25. 

Your job

The more time you spend on the road, the more expensive your policy may be. Make sure you're as accurate as you can be when you describe your job, because some very similar roles have different pricing.

Your car

As you'd expect, some cars are more expensive to insure than others. Insurers work out the cost by putting cars into groups from 1 to 50. A car in group 1 will be cheaper to insure than a car in group 50. To do it, they look at things like:

• How much it's worth – driving an expensive car will always increase your insurance costs
• How fast and powerful it is – the larger the engine the higher the grouping
• How likely it is to get stolen

To find out more, take a look at our guide to car insurance groups.

The way you use your car

The more miles you cover and the more often you use your car, the more your insurance policy is likely to cost. So, if you drive to work every day, you'll could pay more than someone who just uses their car at the weekend. 

Your address and post code

If you live in a postcode where there's a lot of car crime, it'll push the cost of your cover up. The same applies if you live in a built-up area, like a town or city, where there's a higher risk of accidents.

Your no claims discount 

If you have points on your licence or you've made claims in the past, it could have a big impact on what you pay. Even if the accidents weren't your fault. The more years you're claim free, the cheaper your insurance will be because of your no claims discount (also known as no claims bonus). 

Read our guide to your no claims discount for more details.

Your voluntary excess 

This is the amount you choose pay towards any repairs when you make a claim (as opposed to the compulsory excess, set by your insurer). If you opt to pay a higher voluntary excess, you could pay less for your car insurance. Just make sure you don't set it so high you can't afford to make a claim. 

You can find out more in our guide to car insurance excess.

How much detail should I give my insurer? 

It’s important to give your insurance company as much information as possible when you apply for a policy. If you're not sure whether they need to know something, it's best to tell them – just to be on the safe side. And keep them updated on any relevant changes to your circumstances. 

Lying to your insurance company is fraud. And if your insurer discovers that you withheld or missed information out, they could cancel your policy when you try to make a claim.

What happens if my car insurance is invalidated? 

It could cost you a lot of money and get you into trouble with the law. For starters, your insurer could charge you the correct price in a lump sum and refuse to pay your claim. It also means you were uninsured when the incident happened, and you could face prosecution for fraud or driving without insurance. 

If any of these things happen, you'll need to declare it on any future car insurance applications. This will make it harder and more expensive to find cover. You could even end up being blacklisted by every mainstream insurer. 

Are car insurance prices affected by gender?

In 2012, the Gender Directive came into force in the EU, meaning UK insurers could no longer use gender to decide on insurance prices. 

How does claiming on car insurance work?

Thinking about accidents, theft and damage is never pleasant, but it’s a good idea to be prepared in case something does go wrong. 

If your car is involved in an accident 

• Stop at the scene of the accident
• Make sure you and your passengers are safe and out of danger
• Dial 999 if you need emergency help 
• Do not admit blame or liability for the accident 

Try to make a note of as many details as you can at the scene, including time, location and contact details for any other drivers involved. Check out our guide on what to do if you have an accident for more information. 

Letting your insurer know 

Tell your insurance company about the accident as soon as you can, even if you don’t want to make a claim. Your policy booklet should have information on how to contact your insurer – or have a look on their website. 

If possible, have your policy number and any details of the incident handy when you contact them. If you want to make a claim, your insurer will be able to:

• Register your claim and give you a claim number 
• Talk you through the process, including confirming what you’re covered for
• Let you know what the next steps are and get the ball rolling for you

A few things to remember 

Car insurance is a legal requirement

All cars that are driven or parked on a public road in the UK must be insured.

Choosing your cover

Make sure your cover is right for your situation and your budget. Weigh up short-term financial gains against long-term protection and savings. 

Ask questions and be detailed 

If there's anything you're unclear on, speak to your insurance provider about it. Make sure you give them as much information as possible when you apply and keep them informed of any changes.

Explore our car insurance 

Shopping for car insurance? Have a look at our policy options and customise your cover with a range of optional extras

 

More useful guides 

We’ve got a host of handy guides on topics related to cars, covering everything from over 50s car insurance to driving in Europe.

 

Got any questions? 

Have a browse of our FAQ section or get in touch with our team, who will be more than happy to help.