Car insurance: your questions answered

We’ve answered common questions about car insurance and gathered up useful information to help you decide.

Why do I need car insurance?

All motorists are required, by law, to have at least third-party insurance to drive a car on the UK’s roads. Your car also needs to be insured if it is parked on the street or on your property.

Car insurance provides financial protection in the event you are involved in an accident and cause damage or injury to another person or their vehicle.

What types of car insurance are there?

There are three types of car insurance, offering different levels of cover.

Third-party 

Third party only (TPO) insurance is the minimum legal requirement and is the most basic level of cover. If you are at fault for an accident it will cover the damage you have caused to vehicles and property owned by third parties. 

A third party is someone not involved in taking out the insurance policy. You and your insurer are the first and second parties.

It will also pay out for personal injury.

Third party, fire and theft

Third party, fire and theft (TFTP) adds theft of your vehicle and fire damage to your car to the cover offered by third-party insurance.

Comprehensive

Comprehensive car insurance adds damage to your own car to third-party, fire and theft cover. It offers the most complete level of cover for you and your car.

Are all car insurance policies the same?

No. Depending on the provider, car insurance policies can vary in terms of what they offer as standard and what you need to pay extra for. For this reason you should always check carefully to see whether your policy includes the level of cover you require and that you’re not paying for extras you don’t need.

If you want additional cover such as breakdown cover, and it is not included as standard in your policy, check whether it is cheaper to add it to your insurance or pay for it separately.

How much is car insurance?

According to the Association of British Insurers, the average price paid for comprehensive car insurance in the first quarter of 2022 was £416. This is a 5% drop since quarter one of 2021.

Why is car insurance so expensive?

Car insurance premiums largely reflect what the insurance companies have to pay out in claims. 

How much you personally have to pay for car insurance will depend on how much of a risk the insurance companies think you are.

How is my car insurance premium worked out?

Insurers look at a number of factors to decide how much of a risk you and your car are. These include:

How can I make my premiums lower?

One of the easiest ways to reduce your car insurance premiums is to never accept your renewal quote.  Insurers usually offer their best deals to new customers and don’t reward loyalty. Always shop around and compare car insurance quotes to ensure you’re getting the best deal possible. 

Vary your details to see what difference it makes

There other ways you can try to lower your car insurance premiums and these include:

Or, if you have more than one car, look at multicar insurance.

Multicar insurance

Multicar insurance, where more than one vehicle is on the same policy, can sometimes work out cheaper than insuring your cars separately. So if you and your partner each have a car, or you live with friends who all drive separate cars, run some comparisons to see whether taking out multicar insurance will work out cheaper for you. 

Some insurers also offer multicar and bike insurance and multicar and van insurance.

Will passing an advanced driving course make my insurance cheaper?

Possibly. Some insurance companies will give discounts for passing certain advanced driving courses.

The course should be seen more as a way of improving your driving skills rather than as a way of getting cheaper insurance.

Can I put my insurance in someone else’s name to make it cheaper?

The main driver of the vehicle has to be the main driver listed on the policy. Claiming someone who is a lower risk is the main driver to get cheaper insurance is called fronting. It is illegal. 

Can I pay for car insurance in instalments?

Yes, you can choose to spread the cost of your insurance in monthly instalments over a year. However,  it will work out more expensive than paying in one go as interest is usually charged on top.

What is an insurance excess?

The excess is the part that you have to pay when you make an insurance claim. So if your excess is £500 and the claim is £2,000 your insurer will only pay out £1,500.

Types of excess

Paying a voluntary excess can bring down the cost of your insurance. It is worth trying a different excess when you compare Uswitch car insurance quotes, but make sure you would still be able to afford to pay it in the event of a claim.

Excess insurance

Excess insurance can be taken out to cover the amount of the excess should you have to make a claim.

What is a no claims bonus?

A no claims bonus – these days called a no claims discount – is a reward for not claiming on your car insurance. Each year you have not claimed will bring a discount on the next year’s premiums.

You can build up your bonus to get greater discounts. Most insurers will cap this at five years.

Protected no claims

You can pay extra to protect the years of no claims discount that you have built up. Insurers will let you have a limited number of claims in a set period and still let you keep the bonus.

But it is likely that your premiums will increase because you have made a claim.

Is it worth protecting my no claims bonus?

It depends. You need to work out how much it will cost you to protect it, how much discount your no claims bonus gives you and what bonus, if any, you would still have after a claim.

How much will I get for my car if it is written off or stolen?

In the event that your car is written off the insurance company will value your car at how much a like-for-like replacement would cost. 

If your car was new when you bought it and it is written off or stolen within 12 months, some – but not all – policies will give you the same amount as you paid for it.

If you want or need a particular value for your car you could take out agreed value insurance or consider guaranteed asset protection (GAP) insurance.

What is agreed value insurance?

This is a good option for owners of vehicles that are hard to value, such as rare or classic cars. The car’s value is set when taking out the policy.

What is GAP insurance?

GAP insurance covers the difference between what you paid for the car and its market value when it was written off or stolen. 

It is mainly taken out for new cars as that is when the rate of depreciation is greatest.

I don’t agree with my insurer’s valuation. What can I do?

You don’t have to accept the initial offer. Gather evidence of what similar cars have sold for.

There is also the option of the Financial Ombudsman Service. This is a free service that settles disputes between consumers and businesses.

Insuring cars with modifications

Modifications need to be declared when you take out your insurance. They fall into two categories:

Generally, modifications make insurance more expensive, unless you are adding something like parking sensors.

I use my car for work. Do I need different insurance?

Standard car insurance policies cover what is called social, domestic and pleasure, so not work. If you drive to a single place of work, or to the station every day to get the train to work, that is commuting and needs additional insurance cover.

If you use your car at work, for example driving to clients or even just visiting different offices, you will need business car insurance. You will need to tell your insurer what you do and how you use your car.

If you have a company car, business use is likely to be included in the insurance.

I don’t use my car for work. Why does my job affect my premium?

Insurers consider some occupations riskier than others based on the history of claims that they have received, so construction workers will likely pay more than personal assistants because they tend to drive more often.

Why is insurance for young drivers so expensive?

Drivers aged between 17 and 24 are three times more likely than drivers from any other age group to injure somebody in a car accident.

Young drivers also tend to carry young passengers. If a young person is seriously injured and needs life-time care they will need it for longer than an older person, which will cost insurers more. 

Reducing the cost of insurance for young drivers

There are a number of ways to reduce the cost of insurance for younger drivers, including:

Black box insurance

Policies that use black boxes to track the driver’s speed and driving style can be a good option for younger drivers.

Adding named drivers

Adding a parent or other older driver to the policy can bring down the cost of insurance for younger drivers.

Insurance for learner drivers

Those learning to drive can be insured in a number of ways:

I’ve had a minor accident. Do I have to tell my insurance company?

Even if you don’t intend to go through your insurance company to claim, you have to let them know if you have an accident or any damage is done to your car. 

You will keep your no claims bonus as you haven’t claimed, but as you have had an accident it is likely to affect your premium.

My car is being repaired. Will the courtesy car be the same size?

If your car is at an approved repair place you may get a courtesy car. These tend to be small cars with adverts for the repair place plastered all over them.

If you need a bigger car, consider taking out hire car insurance as part of your policy or find an insurer that will guarantee a similar-sized vehicle. 

What is knock for knock?

If you have comprehensive car insurance and are involved in an accident your insurer may decide to pay your insured losses and not go through the other party’s insurer. The insurer for the other party does the same thing. This is regardless of who was responsible for the accident.

Am I insured if I take my car abroad?

UK car insurance automatically gives third-party cover for travel to the EU for short periods. However, you will need to carry a ‘green card’ to drive in the EU until August 2021 - after this point, a green card will no longer be required. 

Travel to non-EU countries may require extra insurance and a green card.

What is a green card?

A green card is a document that proves you have the necessary car insurance for the country you are visiting. It was traditionally printed on green card.

Can I drive other people’s cars?

Comprehensive insurance may mean that you have third-party insurance when you drive a different vehicle. However, this has become increasingly less common so you will need to check your policy. 

If your policy does not cover you, temporary car insurance could be what you are looking for or you could be added as a named driver to someone else’s policy.

Temporary car insurance

Temporary car insurance lets you get cover for a short time, if that’s all you need. You pick how long you need the insurance for. Most insurers offer temporary insurance for up to a month. Some offer up to three months.

This may well work out a better deal than being added as a named driver on someone else’s insurance.

Adding another driver to a policy

Insurers will let you add people who drive the vehicle occasionally as named drivers.

Can I amend my policy during the year?

Yes, changing details such as your occupation or address is known as a mid-term adjustment. Insurers are allowed to charge a reasonable amount for administrative changes. 

Depending on what you change, it may also affect the cost of your policy. 

Getting points on your licence

Getting points on your licence isn’t going to be looked on favourably by your insurer and your premium is likely to rise. Most points stay on your licence for four years from the date of the offence, although they are only active for the first three.

Why are some insurance claims rejected?

Common reasons for claims being rejected are:

What is the Motor Insurance Database?

This is a central record of all insured vehicles in the UK. It is held by the Motor Insurers Bureau (MIB) and flags up vehicles registered with the DVLA that do not have insurance.

It is how the police and the DVLA know that your vehicle does not have insurance.

Penalties for driving without insurance

If you are caught driving without insurance the police can give you six points and a £300 fine. If the case goes to court the fine can be unlimited and you may also get disqualified from driving.

The police can also seize, and in some cases destroy, a vehicle that is being driven uninsured.

Do I need insurance for a car that never goes on the road?

No, but you will need to make a Statutory Off Road Notification – known as a SORN. If you don’t, you will automatically be fined £80 and you will also be fined for having an uninsured vehicle..

What is continuous insurance enforcement?

This is the legal requirement for vehicles to always be insured. It was brought in in 2011 to stop people falsely claiming that their vehicle wasn’t insured because they weren’t using it.

Penalties for not having insurance

The MIB regularly checks its database of insured vehicles against the DVLA’s records. If a car is thought not to have insurance the registered keeper will initially be sent an insurance advisory letter.

If matters are not resolved you risk:

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