Choosing the right car insurance policy

How to find a car insurance policy to suit your needs

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If you own and drive a car, you need motor insurance. It’s the law. But what sort of car insurance do you need?

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How do I choose the right car insurance policy

There are many varieties of car insurance to suit all sorts of lifestyles and vehicles, but in the end they do the same thing: protect your car and your wallet after in the event of an accident. Consider the following questions to help narrow down your options:

  • What type of policy and cover do you need? Different policy types, from fully comprehensive to third-party only, offer different levels of cover – and some come with the option to include extra features, often at an increased cost
  • How long will you need it? If you’re insuring your own car for regular use it makes sense to take out a year-long policy, for which you can pay monthly or annually. However this might not be the most economical option if you only need cover for a shorter time
  • How many cars/drivers are being insured? You can find car insurance policies that cover multiple drivers and multiple cars in different combinations
  • Where will you be driving? A standard car insurance policy will cover you for driving in the UK, but if you plan on taking a car abroad you’ll need extra cover
  • What will you be driving? Some car makes and models are more expensive to ensure, usually due to their higher performance or rareness of parts
  • Who will be driving? The car insurance premiums you’ll pay will also depend heavily on you and your driving history – younger drivers, or drivers with a history of convictions or claims, are likely to face steeper costs
  • How will you be driving? If you’re a young driver facing higher car insurance costs, you might be able to earn lower premiums by installing a telematics device. These monitor your driving, so careful drivers can show responsible habits on the road to their insurer
  • Why will you be driving? If you’re using the car for business you’ll need to take out a business car insurance policy as a standard one won’t offer the right cover
  • How much will you be driving? If you only drive a short distance every year you might be able to save on your premiums with a limited-mileage plan

Do I need car insurance?

You’re legally required to have at least third-party car insurance in place to drive on UK roads, as part of the continuous insurance enforcement rules that came into place in 2011 as part of the road safety act (2006).

If you’re suspected of keeping a vehicle without insurance, you’ll get an initial ‘insurance advisory letter’ – but if you ignore this you’ll likely face:

  • Your vehicle being clamped or possibly destroyed
  • A fixed fined of £100 – but if you pay it within 21 days it will go down to £50
  • A possible fine of up to £1,000 if you’re taken to court

The only exception is if you register your car as off the road by taking out a SORN (statutory off-road notice). This informs the motor insurance bureau that you aren’t using the car at all – therefore it won’t need to be insured, but you also won’t be able to drive it without taking out cover.

What car insurance policy type should I choose?

One of the first choices – and also usually one of the easiest – is deciding the overall level of cover you want for your car insurance policy. There are three options:

  • Third-party: Third-party only is the minimum level of cover available, and it’ll only cover you for the cost of damage you cause to another person, their car and their property. It won’t offer any protection for you or your own vehicle
  • Third-party, fire and theft: The next step up in terms of cover, third-party, fire and theft policies add protection for your own car should it be stolen or damaged by fire
  • Fully comprehensive: Fully comprehensive car insurance policies offer the highest level of protection for you and your vehicle, from all of the above as well as damage resulting from a range of other causes

Which car insurance policy type is the cheapest?

You might intuitively believe that third-party car insurance, which offers the least coverage of the three, would be the cheapest – but this isn’t the case.

It used to be, and as a result the highest-risk groups of drivers – young drivers, inexperienced drivers and those with past convictions or claims – all took out third-party cover in order to reduce their premiums.

Predictably, these drivers then made more claims on their third-party policies, driving up the price and reversing the order – so now third-party policies are the most expensive, while fully comprehensive policies are the least.

Does car insurance come with extra policy features?

Car insurance policies often come with extra features that can bolster your protection, such as breakdown cover or legal cover. While some of these may be included as standard, this is not always the case.

If you’re given the option of adding extras to your policy, it’ll cost more in premiums – so consider whether you really need them.

Can I get temporary car insurance?

If you own your car and use it regularly you’ll likely be looking for a policy that offers year-round coverage. However, a short-term or temporary car insurance policy might be the better option if you only need to use a car for things such as:

  • Learning to drive
  • Going on a short holiday or road trip
  • Delivering or collecting a car owned by another person
  • Borrowing or sharing a car for a short time
  • Using a courtesy car – though this may be provided as standard
  • Taking a car for a spin that you otherwise declare as SORN
  • Driving a car in an emergency

You’ll save having to pay for year-long cover if you don’t need it – many insurers offer policies lasting anywhere between a few hours to a few months.

Can I get car insurance for multiple cars or drivers?

Car insurance policies are often flexible, so you may be able to add multiple cars or drivers to one policy. This will likely increase your premiums, but you might get a discounted quote compared to the price of insuring each car or driver separately.

For example, if you’re teaching your child to drive when they have their provisional licence – they can insure themselves on an old banger and add you as a named driver. This could help them get a cheaper quote for their car insurance as the presence of an older and more experienced driver reassures the insurer that the child won’t be solely responsible for the car.

If your family has multiple drivers – your spouse and your children, for example – you might consider having multiple cars and drivers on one policy. Your provider could offer a lower price in exchange for taking all your cover out from them.

Can I get car insurance for driving abroad?

If you’ll be driving your car abroad, you’ll still need to be insured – but different countries will have different rules, and as a result of Britain leaving the European Union some of those rules have changed.

The UK will be in a transition period until December 31, 2020. During this time you’ll need to have a green card to prove your car insurance is valid to drive in the EU or the European economic area (EEA) – you can request this from your insurer. According to the association of British insurers, green cards will still be valid for travel in countries in the EEA in the event of a no-deal Brexit.

What if I’m driving outside of Europe?

If you’re travelling outside of the EU, EEA or Switzerland, you’ll need to pay an extra £5.50 for an international driving permit (IDP). You can get an IDP from the Post Office, the AA or the RAC – you’ll need to be a resident of the GB or Northern Ireland, aged 18 or over with a full licence.

What car insurance do I need if I have a special vehicle?

A standard car insurance policy covers most normal vehicles, but the chances are you’ll need a specialist policy if you own one of the following:

These cars can be difficult to insure for a variety of reasons. Replacement parts might be expensive or rare, and there may be more chance they’ll be involved in an accident (for example, high-performance sports cars). A specialist insurer will be able to offer a policy tailored to your specific needs.

You’ll pay a little more than usual for cover – but an alternative would be to declare your specialist vehicle off-road and take out short-term cover for when you need it.

Do I need car insurance to retrieve an impounded vehicle?

Car insurance policies don’t always cover the retrieval of an impounded car – so if your policy doesn’t have this included and your car is taken to an impound, you’ll need to take out further cover.

You’ll need to show proof of this cover when you go to get your car back, or you won’t be able to release the vehicle.

Do I need car insurance as a learner driver?

Even if you’re only learning to drive on a provisional licence, you’ll still need car insurance to be legal on UK roads.

As a learner driver, if you aren’t learning with a driving school (which will usually have its own insurance in place) then you might consider the following:

  • A short-term car insurance policy to cover you for the duration of your lessons
  • An annual policy with a parent or guardian listed as a named driver – which should bring your premiums down to an extent
  • Adding yourself as a named driver to a parent or guardian’s insurance policy – which will increase their premiums but may be cheaper than taking your own cover out

However you should always be honest about who’s doing the bulk of the driving when you take out cover – if the young driver is the main driver the insurance policy should reflect this.

Lying about it is known as fronting – when an older driver falsely declares themselves to be the main driver to get lower premiums when in fact the young driver is the primary user of the car. This is insurance fraud and can lead to a fine and criminal record.

Do I need to take out a new insurance policy when I get my full licence?

Once you’re a fully qualified driver you’ll be able to convert your existing annual policy, whether it’s your own or another on which you’re named.

However be prepared for a major hike in your premiums – young drivers have always faced higher car insurance costs, but there are a number of ways you can reduce those costs.

Should I take out a telematics car insurance policy?

One way to try and earn lower premiums as a young driver is by taking out a telematics policy. This involves having your driving habits monitored by your insurer through one of three types of technology:

  • A black box installed in your car that monitors your driving through GPS – the traditional form of telematics insurance
  • A plug-in device that works in much the same way, except it’s not a permanent installation and can be used in multiple vehicles
  • A telematics app installed on your smartphone that uses its GPS signal to monitor your driving

The device or app then measures when and where you drive, how fast, how long for and your general driving behaviour. If you demonstrate that you are sensible and safe on the road, you may be able to earn a future discount.

When would I need a business car insurance policy?

If you’re insuring a car that you drive for business purposes – whether it’s for a company or as part of your own business – you’ll need to take out a business car insurance policy. Standard car insurance only covers you for ‘social, domestic and personal’ use, so you won’t be insured to use your car for using your car during work hours (for example, meeting customers or clients).

However this is slightly different to commercial car insurance – this will be appropriate if you use your car for making deliveries or driving a taxi.

If you have a van that you use for business then a car insurance policy won’t cover you – so you’ll need to look at business van insurance.

Compare car insurance policies

Comparing car insurance policies with MoneySuperMarket is a quick and easy way to find the right cover for you. Just tell us a little about yourself, your driving history and the vehicle(s) and other drivers (if any) you want to insure, and we’ll search the market for a list of quotes tailored to your requirements.

You’ll be able to compare quotes by the overall monthly and annual cost of cover, the level of protection you’ll get and the excess you’ll need to pay to make a claim. Once you’ve found the deal you want, just click through to the provider to finalise your purchase.

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