Annual car insurance cover is a simple concept, but what if you decide to replace your car during the middle of your insurance policy?
If you’ve never replaced your car before, the process may seem confusing — do you transfer your existing cover to your new car or take out a new policy? Our guide outlines your options and can help you get the best deals on car insurance.
How to insure your new car
The important thing to know is that you MUST inform your insurer when you buy a new car — even if you have several months left on your policy it will not automatically cover your new vehicle. If you don’t tell your insurer you’re driving a different car you won’t be covered in the case of an accident, and you won’t be driving legally as your cover is not valid.
Once you have chosen your new car and have committed to buy it, you should call your insurer to change your policy. Bear in mind that your premium could go up or down, depending on the type of car you are buying and its value. For example if you currently have a small runaround and buy a powerful sports car or a 4×4 with a large engine, your insurer is likely to hike the cost to meet the added risk and expense of your new vehicle.
Your insurer may also charge an administration fee to make changes to your car insurance policy, usually costing from £15-£45. Once the change has been confirmed with your insurer, you should be covered to drive your new car immediately.
The alternative is to shop around to see if you can get a better deal by cancelling your current insurance policy. Your insurer is likely to ask for a cancellation fee of around £50, but you should be able to get a refund for any unused cover (or your upcoming payments will be written off if you pay monthly). However, it’s important to check your policy documents carefully before cancelling, as some insurers will only offer a partial refund.
Despite the cancellation costs, you might be able to save if you can find a cheap enough insurance policy for your new car. Start by shopping around on a comparison site like uSwitch, then see if your lowest quote would be more affordable once you’ve factored in your cancellation fee and any loss on your premium — it’s an extra bit of effort but you might be surprised at how much you could save by switching this way.
Buying a second car?
If you’re buying a second (or third, fourth, or fifth) car, you’ll have to have an insurance policy for each vehicle. Contact your current insurer to see if they offer special ‘multi-car’ policies or discounts, or take out a new policy — just make sure you shop around for the best price.
Even if you take out a separate insurance policy for your additional car, you must inform all insurers you hold policies with that you have a new vehicle — the insurer will base your premium on how many cars are in the household and may even reduce your premium based on the fact you may be driving the original car less.
Bringing your new car home
In all the excitement of buying a new car, don’t forget that you won’t necessarily be covered to drive your car to its new home.
If you’re buying a new car from a dealer it’s likely they will include a temporary car insurance policy in the sale. This will cover you for up to seven days until you have arranged your own policy.
If you buy a second hand car you will need to take out your new insurance policy (or amend your existing policy) before you can drive the car home. Don’t be tempted to drive the car home without adequate cover — it’s not just the risk of a crash you have to think about, you’re actually driving illegally if you don’t have insurance.
Alternatively, you may have minimal insurance cover to drive the vehicle home if you have ‘driving other cars’ permission on your current insurance policy. Check your policy carefully to see if this is included. Bear in mind that this will give you the minimum amount of cover to drive legally (third party), but if you get into an accident on the way home your insurer won’t pay out for any damage to your new car.
If you’ve just bought a new car or are on the lookout for a new vehicle, compare car insurance prices below:
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