Car insurance guide

Everything you need to know about car insurance

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A guide to the complexities of car insurance – and all the information you need to get the right cover

Car driving at night through city

Do I need car insurance to drive?

It’s against the law to drive without car insurance. Before you can drive legally, you must first find a car insurance policy.

The government constantly compares driver and vehicle records with a list of insured drivers provided by insurance providers to check for any discrepancy. Unless your car has been declared off the road through a Statutory off Road Notice (SORN), it must be taxed and insured.

More than 6,500 people are prosecuted every month for keeping an uninsured vehicle. If you continue to disobey the law, you could face a heavy fine, and your vehicle could even be seized and destroyed.

Motorists who drive without car insurance push up the price for everyone else. Figures from the Motor Insurance Bureau put the total cost at about £256 million a year, or £15 on top of every premium.

How is the cost of car insurance calculated?

The price you pay for car insurance will be worked out based on many different factors. These will generally include:

  • Your age
  • Your occupation
  • Your driving record
  • Your postcode
  • The type of car you drive
  • Your car’s security
  • Your car’s mileage and your driving habits

Insurance is all about risk, so the riskier you are the more expensive the cover. Age is a key indicator of risk, as while only 7% of licence holders are under 25, drivers between the ages of 17 and 24 are involved in a quarter of all accidents involving a fatality or serious injury.

This higher level of risk is reflected in higher premiums, but younger drivers can still find ways to get a cheaper deal on car insurance.

The average cost of car insurance

According to MoneySuperMarket data correct as of August 2019

Some occupations and postcodes are riskier than others. If you live in a densely populated area with more road traffic, you can expect to pay a higher premium. If you live in an area with higher rates of vehicle crime, costs will also rise.

The type of car you drive is a factor. Insurers sort cars into 50 car insurance groups, with vehicles in the highest groups attracting the highest premiums. A car’s insurance group depends on factors including price, performance and the cost of repairs.

Insurers are forbidden by law from taking your gender into account when giving you a quote. However, car insurance for women still tends to be cheaper than car insurance for men. Women are more likely to drive a safer vehicle, to drive less and to drive more safely – and unlike your gender, these are allowed to be considered by insurers.

What types of car insurance are there?

There are three different levels of cover for car insurance. These are:

  • Third-party car insurance
  • Third-party, fire and theft car insurance
  • Comprehensive car insurance

Third-party car insurance is the most basic and the minimum legal requirement. It covers any damage sustained by a third party, their vehicle or their property if you are at fault. It does not pay for any repairs to your own vehicle.

Third-party, fire and theft car insurance is one step up, and also covers your own car in the event that your car is stolen or damaged by fire.

The highest of the three levels is fully comprehensive car insurance. You’re covered for all of the above, plus you and your car are insured against any injury or damage, even if it was your fault. Most drivers opt for comprehensive car insurance as it also works out as the cheapest.

What should I look out for when choosing car insurance?

Although there are three main types of car insurance, no two insurers will offer you the same deal. When comparing car insurance quotes it’s important to look at what you’re getting for your money.

For instance, some insurers include windscreen cover as standard, while others might require you to pay more for it as an optional extra. Other common exclusions include legal expenses, a courtesy car and breakdown cover. You’ll be able to buy these as add-ons to your policy. 

However, the cost of optional car insurance extras can soon mount up, so it’s important to make sure that you don’t pay for something that you don’t need. And remember that you should always compare prices for add-ons such as breakdown cover or European car insurance as you might be able to get a separate standalone policy for less.

What is a car insurance excess?

All car insurance policies carry an excess, which is the amount you have to pay yourself if you make a claim. So if you make a claim for £500 and you have an excess of £300, the insurer will only pay the remaining £200.

An excess comes in two parts: the compulsory excess and the voluntary excess. The compulsory excess is set by your insurer and can’t be changed, but you can choose the size of your voluntary excess – although it’s usually in a range set by your insurer.

If you choose a lower voluntary excess, you will have to contribute less if you make a claim. But with a higher voluntary excess, you may be able to negotiate lower premiums for your car insurance. However, when deciding on a voluntary excess, you should make sure you’ll be able to afford it in case you actually need to make a claim.

You can also purchase a separate excess insurance policy through our website, which ensures that you won’t be forced to face these sudden expenses.

How long does car insurance last?

Standard car insurance policies last for 12 months. You can pay for a year’s worth of car insurance up front – but if this expense is too much, most insurers also give you the option to pay in monthly instalments.

If you choose to spread out the cost of car insurance over the year, you’ll be charged interest and will end up paying more overall.

You can also find short-term car insurance, which runs for less than a full year. Some policies will allow you to insure a car for as little as one or two days. This can be useful if you want to briefly borrow someone else’s car. Make sure your car is insured at all times unless it’s been officially taken off the road, or you’ll be breaking the law

What is specialist car insurance?

Mainstream insurers cover a wide range of motorists and vehicles, but in some situations you might need a specialist car insurance policy. 

Specialist providers might be able to help if you’re looking for classic car insurance, if you want to find insurance for a modified car, or if you’d like to insure an imported car.

Policies are also available for drivers with specialist requirements: new drivers and those who need learner driver car insurance.

If you drive your car for business – even if you only use it to visit clients – you may also need specialist insurance. A standard policy will usually only cover social, domestic and recreational use, but you can also compare dedicated business car insurance policies.  

What is multi-car insurance?

If you live in a household with more than one vehicle, it might be worth considering a multi car insurance policy. You can usually insure up to five vehicles, and cut down on paperwork as well as premiums. You can often increase your savings with every car you add to the policy. 

How can I get cheap car insurance?

There are several things you can do to keep the price of car insurance down. Most importantly, you should shop around using MoneySuperMarket’s price comparison tool. Some other tips for paying less for car insurance:

  • Don’t auto-renew: Don’t let your car insurance auto-renew as there will almost certainly be a cheaper option available elsewhere
  • Limit your claims: If you can afford to pay for damage yourself, consider doing so. That way, you’ll be less risky for your insurer, and you’ll get to keep your no-claims bonus
  • Improve your security: If your car is parked off the street – for instance, in a garage on or a driveway – you’ll be able to pay less for car insurance. It also helps to have an alarm or an immobiliser fitted
  • Add a named driver: If you’re a younger motorist, you could add a named driver – an older and more experienced driver of the same car – to reduce costs. The main driver of the car must always be the person indicated as the main driver on the policy, or you’ll be breaking the law

Can I get cheaper insurance if I drive safely?

A major factor affecting the price of car insurance is your record as a driver. Insurers reward careful drivers, and one of the best ways to cut the cost of motor insurance is to build up no-claims discount. There are significant savings available if you can build up several years without making a claim.

Another way to get cheaper insurance for good driving is with telematics insurance, or ‘black box’ insurance. With telematics, your insurer issues you with a device that records when, where and how you drive, or sends you a mobile phone app which does the same. If you limit your mileage and drive safely, your lower risk profile will be rewarded with lower premiums.

How do I apply for car insurance?

You can apply for car insurance directly from the insurer, through a broker or with the help of a comparison site.

If you contact an insurer directly, the firm will only give you details of its own cover so you won’t be able to assess whether or not it’s a good deal. Car insurance brokers can search the market to find a better deal for their clients – but some brokers select from a limited number of insurers, and some insurers will not sell through brokers.

An online car insurance comparison site such as MoneySuperMarket is a quick and easy way to compare hundreds of insurance policies, whether you want mainstream cover or a specialist policy.

What information do I need to apply for car insurance?

When you apply for car insurance you’ll need to answer a range of questions, so it’s a good idea to have the information to hand. The insurer will want to know your age, occupation, address and any previous motoring convictions. You’ll also need to provide the age, make and model of the car, a rough idea of its annual mileage, and where it’s kept overnight. You should give details of any modifications to the car and whether you intend to use the vehicle for business.

If you’re switching insurers and you want to keep your no claims discount, you might need to send proof of your claims history. If your car is more than three years old, you will also need a valid MOT certificate.

Insurance fraud is a criminal offence, so it’s important to be open and honest with your answers. Failure to disclose any relevant information could invalidate your policy. You should also inform your insurer if anything changes during the policy term.

When is the best time to renew my car insurance?

You need to buy car insurance every 12 months. Most insurers will let you auto-renew your policy, but this is not considered a good idea as your premiums will often go up.

However, if you like your insurer, the best time to renew your car insurance is eight days before it is due to finish. The average consumer could save almost 15% by being prepared in this way – but some drivers will see far larger savings.

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