Our guide reveals the facts behind 10 common misconceptions about car insurance
Car insurance can be confusing, and it’s made even more so by the myths circulating. You need to know the facts from the fiction or you could find yourself overpaying, or worse — without the cover you need to drive legally. Read on to find out the truth behind 10 common car insurance myths.
Myth 1: Third party cover is always cheaper than comprehensive
The truth: While it might seem logical that a lower level of cover would cost less, this is often not the case. Drivers who opt for a lower level of cover typically have a history of making more claims, which has driven up the cost of these policies.
For many drivers, comprehensive cover can cost the same or even less than third party only or third party, fire and theft cover — with the added bonus that your own vehicle will be covered for damage. You can read more about this in our guide.
Myth 2: My premium should go down or stay the same each year if I don’t claim
The truth: In an ideal world this would be the case — after all, you’re building up a no claims bonus every year you don’t claim. However, there are many external factors at play that affect the cost of insurance across the board. 2017 in particular has seen many changes that have driven up prices for most motorists.
It’s also worth bearing in mind that most insurers have a maximum no claims bonus, so you’ll stop building a discount after a set amount of years. Insurers will also take your age into account, so once you reach a certain age you will be considered a higher risk and might see your premiums rise. You might also notice your premium changes if you make any adjustments to your policy, such as changing your job or address.
Myth 3: No claims bonus protection will stop my premium increasing
The truth: Many people think paying extra to protect their no claims bonus will prevent their premium from increasing if they make a claim. But like many things relating to insurance, it’s not that simple.
While you won’t lose your no claims bonus if you make a claim and you’ve paid to protect it, your premium itself could still go up as your insurer might perceive you as a higher risk. As your no claims bonus is a discount applied to your premium, the amount you pay at renewal might still increase. And there’s a limit to the protection offered – if you make more than one claim in a year, you might find that your insurer removes a year or two’s bonus (but you’ll likely still be better off than if you had no protection and lost your whole discount). You can find out more in our no claims bonus guide.
Myth 4: I won’t have to pay excess if a claim wasn’t my fault
The truth: If you make a claim that wasn’t your fault (e.g. if a third party crashed into you at traffic lights), your insurer will usually waive your excess if it can prove you weren’t at fault and it’s able to claim its costs back from the third party. However, you’ll be responsible for paying your excess upfront even if you’re later entitled to a refund, so make sure you select a policy with an excess you can afford. You can read more about car insurance policy excesses and how they work here.
Myth 5: Comprehensive cover allows me to drive any car
The truth: It’s a common misconception that having comprehensive cover on your own vehicle automatically covers you for third party liability when driving someone else’s car. In fact, this used to be a standard feature of comprehensive policies, but it’s now offered by fewer insurers.
Some comprehensive policies do include this, but it’s important to check your documents rather than assuming you can drive another car. Look out for ‘driving other cars’ (DOC) cover in your policy — and bear in mind that even if you have this included you will only be covered for third party liability so won’t be covered for any damage to the car you’re borrowing. Read our guide to find out more.
Myth 6: Young drivers should get insurance in a parent’s name
The truth: Many parents want to help their children out financially, and might consider taking out insurance in their name or putting themselves as the main driver to cut the cost of their child’s insurance policy.
But while it might seem like a legitimate loophole, putting insurance in someone else’s name to get cheaper cover is known as fronting and is a form of insurance fraud. Fronting is illegal and has serious consequences, including penalty points, disqualification, and fines of up to £5,000 if the case is taken to court. You can find out more in our guide to fronting.
Myth 7: Black box policies have a curfew
The truth: Most black box or telematics policies no longer have set curfews. While this was a feature in most early black box policies, insurers have moved on and most now base premiums on driving behaviour such as mileage, speed, braking and accelerating.
While driving at night may affect your driving score on some policies, there are now very few black box policies that restrict the times of day you can drive. This is far from the only misconception about black box policies — in fact, we’ve rounded up some myths specifically about the technology here.
Myth 8: I don’t need to insure my car if I don’t drive it
The truth: Since Continuous Insurance Enforcement (CIE) came into effect in the UK in 2011, all cars must be insured unless they have been declared off-road with a Statutory Off-Road Notice, known as a SORN. You can only SORN a car if it’s kept off the road on private property — for example on a drive or in a garage. If it’s kept on a road but never used, you still have to make sure it’s covered for at least third party liability. You can read more about SORN requirements in this guide.
Myth 9: Paying monthly is a cheap way spread the cost of cover
The truth: While it might seem sensible to spread the cost of insurance with monthly payments, it almost always costs more in the long-run.
Most insurers will charge an upfront deposit as well as interest, making your premium cost much more over the year. While it can be difficult to find money for a year’s cover upfront, paying in one go usually works out much cheaper. Our guide to annual and monthly payments explains more.
Myth 10: It’s best to let my policy automatically renew each year
The truth: There are no prizes for staying loyal when it comes to car insurance, as you can often find a cheaper deal by shopping around. While you might be tempted by the convenience of letting your insurance policy renew, it could be costing you dearly.
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