Car insurance guide

Everything you need to know about car insurance, from choosing your level of cover to reducing your costs

What the law says

Whatever your feelings about car insurance, you don’t have a choice when it comes to getting your car insured. In order to reduce the number of uninsured vehicles on the road, the government introduced Continuous Insurance Enforcement in 2011.

According to the law, your car must be insured at all times. If not, you could face penalty fines and eventually vehicle seizure and criminal prosecution!

The only exception is if your car has a Statutory Off Road Notification (SORN), officially declaring it off the road.

If you’re wondering whether you need insurance as a learner driver, that depends. You’ll be covered by your instructor’s insurance during lessons, but if you’d like to practise outside of lessons, you’ll need insurance like everybody else.

Legally, you’re required to have third party car insurance, which is the minimum level of cover available. Bear in mind though that this doesn’t cover you as well as other insurance types. We’ll walk you through the options below.

What level of car insurance do I need?

There are three main levels of insurance to choose from. Balancing cost with the level of cover each insurance type offers will help you to find the best car insurance policy for you:

1. Third party only

This level of insurance is the minimum legally required. It covers you for injury caused to other people and damage caused to their property, but it doesn’t cover any injury or damage to yourself or your car.

So, for example, if you pulled out of a junction and hit another car, your insurance would pay to fix the other car, but not your own. It’s a popular option for young drivers looking for basic, cost-effective car insurance, but you could end up paying more in the long run if you’re involved in an accident.

2. Third party, fire and theft

This type of cover includes everything above, but it also covers your own vehicle in the case that it’s stolen or damaged by fire. Bear in mind that it still won’t cover your car if you damage it in an accident like the one described above.

3. Comprehensive

As the name suggests, this is the most comprehensive type of insurance available. Like ‘third party, fire and theft’, it covers you for injury caused to other cars and people, and damage caused to your own car in the event that it’s stolen or damaged by fire. However, it also covers you for damage to your own car.

This is a popular car insurance option because it offers you that extra peace of mind. However, if your car isn’t worth much, you might decide it’s not worth the extra money and opt for ‘third party’ instead.

Top tip:

Get quotes for all three insurance types. ‘Comprehensive’ is not always the most expensive.

Compare car insurance

Whichever level of cover you decide to go for, compare car insurance quotes and thoroughly check exactly what each one covers you for.

Things that are often excluded from standard cover include the cost of legal fees, a courtesy car and breakdown cover. Take a look at Go Compare car insurance or Compare the Market car insurance for an easy way to compare insurance quotes - or, just chat to the friendly insurance experts who'll try and find the best deal for you.

Top tip:

Optional extras like breakdown cover could be more cost-effective if you buy them as a separate policy.

Why is my car insurance so expensive?

Car insurance costs are based on risk. There are many factors that can increase your likelihood of making a claim and cause your premium (the price of your insurance) to go up, but one of the main factors is age.

If you’re a young driver between the ages of 17 and 25, you’re in the most at-risk group for insurers. This means you’ll face some of the highest premiums there are. Similarly, it costs more to insure a new driver.

However, there are companies that specialise in young driver insurance and new driver insurance, offering you a way to lower the cost of your premium.

Drivers between the ages of 35 and 65 tend to pay the lowest premiums as they are considered the least at-risk age group. So, if you’re a young driver, at least you have that to look forward to!

Of course, risk factors like age aren’t within your control, but there are other ways that you can lower your risk to insurers and so lower your car insurance costs. Stick with us and we’ll take a look at them.

Looking for lower premiums on your car insurance?

Take a look at these 10 key areas to find out how to lower the cost of your insurance.

1. Type of car

There are 50 insurance groups, and every car belongs to one. The lower the group number, the lower the insurance risk. Generally, smaller, cheaper, less powerful cars are in lower insurance groups. These cars usually offer lower insurance premiums for first-time drivers and are worth considering in order to cut your insurance costs down.

2. No claims

A no-claims bonus is a discount on your premium that grows for every year you don’t make a claim. Our tip is to start growing yours nice and early, so you can start saving as soon as possible. If you opt for hybrid learner insurance, you can start growing your no claims bonus while you learn.

3. Credit score

We know what you’re thinking - does your credit score affect car insurance?! Really?! So, look after your credit score just in case!

4. Where you keep your car

When you get a quote for car insurance, you’ll be asked where you park your car overnight. This is because how safe it is can affect the cost of your policy, especially if you live in a city. So, it goes without saying to park your car in a secure garage if you have one, to keep costs down.

5. Level of cover

We’ve already taken a look at the three main levels of cover, so you’ll know that the most basic levels are likely to be more cost effective. This bears a little more thought though - you might be paying less for your premium with ‘third party only’, but you’ll have to splash out if something happens to your car!

6. Voluntary excess

You might be able to pay a lower premium if you opt for a higher voluntary excess. This means that if you make a claim, you’ll be liable to pay a larger sum of money towards it. It’s a risk that you might be more willing to take if you live somewhere quiet where there’s less chance of any accidents.

7. Named driver

If you’re a young driver, sometimes adding an older, more experienced driver, like a parent, as a named driver to your policy can help to bring your premium down. Just make sure that you don’t add them as the main driver if you’re going to be the primary driver. That’s called ‘fronting’ and could lead to your policy being cancelled or worse still a claim being refused by the insurers.

8. Type of insurance

Black box insurance and dashcam insurance (also known as telematics insurance) are two types of policy that may help you save some money. That’s because they come with devices that allow you to prove you’re a safe driver, and they reward you for it!

9. Multi-car insurance

If you live in a household that owns more than one vehicle, you could get a discount by taking out a multi-car insurance policy. Similarly, you could get discounts by taking out different kinds of insurance policies with the same company, like home insurance.

10. One-day car insurance

If you only drive rarely, consider getting short-term cover on a friend or family member’s car instead of buying your own. Getting one-day insurance or another temporary insurance policy every once in a while could be more cost effective than forking out for a full year’s insurance.

How do you get insurance on a car?

You can apply for insurance from an insurer, a broker or using a car insurance comparison site. It’s best to compare car insurance quotes from a few different providers to get the best price and cover, so if you do go directly to the insurer, make sure you contact a few.

An online car insurance comparison site is a great way to get an idea of the kinds of deals that are available, as you’ll be able to browse hundreds of insurance policies. Take a look at Go Compare car insurance and Compare the Market car insurance to compare insurance from lots of providers like Admiral, Direct Line and Aviva.

In order to get your car insurance quote, you’ll need to fill in a few details about yourself and the car:

Policy holder details

As a young or new driver, you might not be able to afford your own car. If the vehicle belongs to your parents or another family member, for example, you’ll be asked to disclose this.

About you

Next, you’ll need to tell the insurance company a little bit about yourself. Here, you’ll be able to enter your date of birth, your marital status, your occupation and where you live. You might be wondering why they need to know all of this information, but your personal details allow the insurance company to calculate a quote based on your location and your lifestyle.

The insurance company will also need to know where your vehicle is kept overnight. Here, you can inform the insurance company whether it’s kept in a locked garage, on the driveway or on a public road. You need to be honest when filling in this information, as entering it incorrectly could invalidate your insurance.

Your licence

The section about your licence will be where you state how long you’ve held a driving licence for and whether you’re a provisional licence or full licence holder. You will also need to state whether your licence is for manual or automatic transmission.

Claims and convictions

You will need to disclose whether you have had any motor accidents, claims, convictions or fixed penalty points in the past 5 years. This includes any accidents where you were deemed not to be at fault.

You will also be asked whether you have any unspent non-motoring convictions. Failure to disclose any of this information could invalidate your car insurance.

Additional drivers

If you’re the main driver on your car insurance policy, you’ll be given the option to add any additional drivers. This could be your parents, siblings or anyone else who will be driving your vehicle.

Adding additional drivers on to your policy will not necessarily make your premium cheaper. Any difference in price will depend on the age and experience of the driver, as well as whether they have any motoring convictions or penalty points.

Annual mileage

To retrieve your quote, you’ll need to enter an estimate of your average annual mileage. This number varies from driver to driver. To calculate your own you’ll need to consider how far you travel, on average, on a weekly basis, before calculating the estimate for a year.

If this changes at any point during the year (if, for example, you get a new job), simply phone your insurance company to adjust your quote.

Classes of car insurance

In addition to levels of car insurance cover, there’s also different classes of insurance which depend on what you use your vehicle for. These are:

  • Social, domestic and pleasure - The vehicle is used solely for social, domestic and pleasure. You are covered to use your car for day-to-say activities like shopping, but you cannot use your car to commute or for business.

  • Social, domestic, pleasure and commuting - You can use your vehicle as above, as well as to commute to a single place of work.

  • Business use - If you need to drive for business purposes, you will need to get insured under business use. There are three classes on business use: Class 1, Class and Class 3. The terms of each class will depend on your insurance provider, so make sure you check which one you require.

Your excess

Finally, you’ll need to choose the amount of excess you will pay if you make a claim. Excess is a sum of money that you pay your car insurance provider to go towards the cost of making a claim.

Excess is split into two parts. First, there’s the compulsory excess which depends on your age, your car and the type of claim. There’s also the voluntary excess which you set and agree to pay if you make a claim. This is usually between £250 and £750, and the higher the excess you choose, the lower your premium. Remember, though, that if you do make a claim, you’ll have to shell out more for choosing a higher excess.

Make sure that you’re open and honest answering these questions or you may be committing a form of insurance fraud, which is a criminal offence. It’s also important to let your insurer know if any of this information changes during the time that you’re covered. Otherwise, you risk your policy being invalidated which means the insurer won’t pay out in the event of a claim.

If you’ve grown your no claims bonus, you can easily carry it over to a new insurer. You may just need to send them proof of your no claims history.

Don’t forget that if you’re buying a new car, your insurance will need to start immediately due to Continuous Insurance Enforcement. You can arrange your car insurance beforehand and schedule it to start on the day that the car changes hands.

What to do if you need to make a claim

First things first, if you are involved in an accident, don’t panic! The process of making a claim isn’t as stressful as you might think.

Make sure you take photos of the damage caused to your car and anyone else’s at the scene of the accident. With a dashcam policy, your dashcam will have also recorded the incident which will provide useful information.

Then, contact your insurer as soon as you’re able to, describing what happened in as much detail as possible. They’ll handle it from there!

How to insure a learner driver

If you’re looking for the most cost-effective way to insure a learner driver, it will vary depending on the driver’s individual needs.

If you’re a learner driver and you’re only planning on driving occasionally, short-term learner driver insurance will probably offer you the best value. You can get insured on someone else’s car for just weeks or months at a time. This way, you only pay for what you need.

If you have your own car and you know that you’ll want a standard insurance policy once you pass, hybrid insurance might be the most cost effective in the long run. This type of insurance covers you while you’re learning and once you pass. This allows you to start growing your no-claims bonus on your provisional licence, and you also avoid any price increases when you receive your full driver’s licence.

Bear in mind that your learner insurance will only be valid if you’re displaying your L plates and being supervised by a driver who is over 21, qualified to drive the type of car you want to learn in, and has had their full driving licence for 3 years. Some insurers may also add other criteria, such as imposing restrictions on when you’re able to drive. This may enable you to get lower insurance premiums.