Car Insurance

We know car insurance can be confusing, whether you're new to driving or have spent years behind the wheel. So we've put together this guide to help you get to grips with it: what it is, how it works and what to do to get a better deal.

What is car insurance?

Car insurance is a legal requirement, every vehicle that is driven or parked on public roads in the UK must be insured and you could face a hefty fine or prosecution if you don't arrange cover. 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 in one go – for a policy, then if you are 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?

It depends on the kind of policy you take out. But broadly speaking, 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 – comprehensive insurance can cover the cost of repairing your car – and someone else's – if you're in an accident.

What are the different types of cover?

There are three main types on the market at the moment.

1. Third party

Third party insurance 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.

This only covers damage to other cars, not to your own, so the cost of repairs would have to come from your own pocket. Sainsbury's Bank doesn't offer this type of insurance, but we do offer the more inclusive policies below.

2. Third party, fire and theft (TPFT)

This includes everything you get with third party insurance, plus cover for:

• Fire damage
• Theft
• Any damage to your car from theft or attempted theft.

But if you're in an accident, it only covers the damage to other cars, not to your own car so any repairs would have to come from your own pocket.

3. Comprehensive

This is the most popular type of insurance as it gives you the highest level of cover and includes everything in TPFT, plus a range of additional features. It varies from insurer to insurer, but it can include cover for things like:

• Your valuables (sometimes called personal effects) if they're stolen from your car
• Accidental damage
• Damage to your windscreen
• Your medical expenses.
• Damage to other vehicles when you're at fault for an accident

How do insurers work out what you pay?

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

1. Your age and driving experience

Generally speaking, the younger and less experienced you are, the more expensive your policy will be. This is especially true if you're under 25. It's because statistics show that younger, less experienced drivers are more likely to be in an accident, so insurers see you as more of a risk.

2. Your job

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

3. 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 usually 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.

If you'd like to find out more, take a look at our guide to car insurance groups.

4. 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 pay more than someone who leaves their car parked at home from Monday to Friday.

5. Your address and postcode

If you live in a postcode where there's a lot of car crime, it'll push the cost of your cover up. Ditto if you live in a built up area where there's an increased risk of accidents.

6. Your no claims discount

If you have points on your licence or you've made claims in the past, it'll 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 to find out more.

7. Your voluntary excess

This is the amount you pay towards any repairs when you make a claim. If you choose to pay a higher voluntary excess, this may reduce your premium and you’ll pay less for your 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.

Why do I need to tell the whole truth?

Because lying to your insurance company is fraud and it could cost you a lot more in the long run if you miss something out. If you lied or withheld a piece of information when you applied, your insurer can cancel your policy and charge you the correct price in a lump sum. They could refuse to pay your claim, meaning you were uninsured when the incident happened. And you could face prosecution for driving without insurance.

If any of these things happen, you'll need to declare it on any applications for car insurance you make in the future. This will make it harder and more expensive to find cover.

You could end up being blacklisted by every mainstream insurer. So if you're not sure whether your insurer needs to know something, it's best to tell them just to be on the safe side.

Are prices affected by gender?

No – in 2012, the Gender Directive came into force in the European Union. So insurance companies can't use gender to decide on insurance prices.

So what do I need to remember?

We hope this has made it easier to understand car insurance, but what are the main points to remember?

1. It's a legal requirement – all cars that are driven or parked on a public road in the UK must be insured
2. Choosing your cover – make sure your cover is right for your situation and your budget
3. Ask questions – if there's anything you're not sure about, speak to your insurer.

What else do I need to remember?

We hope this guide has made it easier to understand car insurance excess, but what are the main points to remember?

1. You're in control – choose a voluntary excess that suits your budget.
2. Weigh up the costs – remember, the higher the excess, the more your repairs could cost.
3. Ask questions – if there's anything you're not sure about, speak to your insurer or broker