Car Insurance: What Is It & How to Get It Cheaper
Ellie Dyer-Brown, 8 months ago
5 min read
- Car ownership
- How to
FixMyCar explains everything you need to know about car insurance.
Car insurance isn’t a luxury; it’s a necessity required by law. Without it, all third-party compensation would need to be paid by the driver, which could be financially ruinous.
If you have questions about what car insurance is, how it works and why it can sometimes be expensive, this guide is for you.
Contents
What is voluntary excess on car insurance?
How to get cheaper car insurance
Can you drive a car without insurance?
Can two people insure the same car?
Can you insure a car you don't own?
What is car insurance?
As a driver, you probably already know that UK law requires you to have car insurance. It provides financial protection if you ever have an accident, but how far this protection extends depends on your cover type.
There are three types of car insurance:
Fully comprehensive
Third-party
Third-party, fire and theft
What is third-party car insurance?
Third-party car insurance provides the minimum legal cover required to drive on UK roads. It covers damage or injury to a third party - meaning another driver, passenger, property or vehicle - but doesn’t cover you for your injuries or any damage to your car if the accident is your fault.
What is third-party, fire and theft insurance?
Third-party, fire and theft is the second tier of insurance; it includes the same things as standard third-party insurance but also covers you if your car is damaged by fire or stolen.
What is comprehensive car insurance?
Fully comprehensive car insurance offers the highest level of cover. It is a step up from third-party, fire and theft because it also covers you as a driver and might pay out for damage to your vehicle.
Comprehensive insurance might include:
Accidental damage
Vandalism
Compensation for medical treatment
Compensation for legal expenses
Checking your policy details is essential because each one is slightly different. You can also get add-ons like breakdown cover and no-claims bonus protection.
As discussed in this guide, it's worth having breakdown cover, but you may get it cheaper by buying it separately from your insurance. It's worth shopping around.
Here are our top tips for avoiding a breakdown.
Does car insurance cover repairs?
Comprehensive car insurance should cover the cost of repairs after an accident. However, it does not cover repairs due to normal wear and tear.
What is voluntary excess on car insurance?
Voluntary excess is the amount you agree to pay towards an insurance claim. Increasing your voluntary excess may decrease the overall cost of the insurance policy. However, you should only agree to an amount you are confident you could pay.
Your insurer sets compulsory excess; there’s no way to alter it. Young or inexperienced drivers often have a higher compulsory excess because they are more at risk of an accident. Similarly, luxury and high-performance cars usually have a higher excess.
Here are the best cars for new drivers.
How does car insurance work?
All motorists pay for some form of financial protection. This money goes into a collective pot and is paid to those who make a valid claim after an accident. Let’s take a look at this process in more detail.
The claims process
If you’ve been involved in an accident - whether or not it was your fault - it’s important to report it. Follow the steps below.
Inform your insurer of what happened within 24 hours of the incident.
You must provide information about the other driver (name, contact details and registration number) and any passengers and witnesses.
The police will give you a crime reference number if they attend the incident; pass this on to your insurer.
Make notes about what happened and include photographic evidence of damage if possible.
Read your paperwork to determine whether you are entitled to legal cover, a replacement vehicle or personal accident cover.
After completing these steps, you’ll be asked to complete an accident report. Your insurer may also request that you attend an approved garage to assess the damage. The sooner you pay your excess, the sooner your claim can be processed.
Do I have to make a claim on my insurance?
It’s up to you whether you make a claim. You may choose not to if you can easily cover the cost of repairs or if repairing the vehicle would cost less than your excess.
However, you must inform your insurer of any accidents for notification purposes, even if you decide not to claim. Failure to do so could invalidate future claims.
Can I drive another car on my insurance?
In the UK, most insurance policies (especially third-party) tie you to a particular car, which means you can’t drive someone else’s vehicle without taking out another policy.
Some fully comprehensive policies may cover you if you have the owner’s permission. This typically only includes third-party cover, which doesn’t protect the car you’re driving. Every insurance policy is slightly different, so reading yours carefully before jumping into someone else’s car is important.
Why is car insurance so expensive?
You’ve probably noticed that car insurance is getting more expensive - we certainly have.
Analysis by EY showed that 2023 was a challenging year for insurers, who paid out £1.10 in operating costs and claims for every £1 received from insurance policies. Insurance fraud is on the rise, with criminals misleading companies into paying out on false claims, and uninsured drivers who get into accidents also drive up costs.
The cost of parts and materials has risen, and as cars become more advanced, repairs cost more, too. All these things have led to a spike in car insurance prices.
Other factors that affect the price of your cover include:
Your occupation
Your age
The value and age of your car
Your postcode
How long you’ve been driving
Your driving record
Where your vehicle is parked overnight
Annual mileage
Why is car insurance so expensive for young drivers?
Young drivers face a rough time of it. Driving lessons aren’t cheap, and once you pass your test, you get hit with insurance prices that easily reach over £1,000, even for third-party cover.
Statistically, young drivers are more likely to claim on their insurance, which is why their premiums cost more; they come with much higher claim risks. Unfortunately, these exorbitant prices don’t start to decrease until you reach 25 years old.
Find out how to save money as a learner driver.
How to get cheaper car insurance
You can do a few things to save money on your insurance.
Increase your excess
Agreeing to pay a higher voluntary excess often results in a lower policy cost.
Avoid auto-renewing
Insurers often use auto-renewals to increase the cost of your policy. Shopping around for the best deal is a good idea, as you’ll likely find a cheaper price elsewhere.
Add a named driver
Adding an experienced named driver to your policy will often lower the price because you are only partially responsible for the car.
Take out a telematics or ‘black box’ policy
Telematics hardware allows insurers to monitor your driving habits; better drivers get a cheaper premium.
Drive fewer miles
Lowering your total mileage decreases the chance of you being in a road accident.
Buy a sensible vehicle
Small cars with less power are cheaper to buy and insure, safer to drive and attract fewer thieves, leading to a lower insurance premium.
Here are the top ten cheapest small cars to maintain.
Pay annually
Insurers charge interest when you pay in monthly instalments, so it works out cheaper to pay annually, even though this means handing over a sizeable up-front sum.
Keep your car secure
Parking in a garage or off-road overnight could bring down the cost of your insurance. Likewise, extra security systems and immobilisers decrease the chance of your vehicle being stolen.
This guide discusses how to prevent catalytic converter theft, which is on the rise.
No claims discount
Most insurers offer a discount for drivers who don’t claim. The more years of no claims you have, the bigger the price deduction.
Can you drive a car without insurance?
It is against the law to drive a vehicle on a public road without at least third-party insurance.
Can you drive a SORN car to MOT without insurance?
There are no circumstances in which you can drive a vehicle without insurance, even if it is subject to a Statutory Off Road Notice (SORN).
Cars with SORN status can be driven to an MOT test centre but must have valid insurance. Otherwise, you could be prosecuted and receive a fixed penalty fine of up to £2,500, or your vehicle may even be confiscated.
Can you insure a car without MOT?
Many insurance policies won’t cover a vehicle without a valid MOT or road tax, making it difficult to insure a SORN car. The best option may be to buy temporary cover for this purpose.
Remember that an MOT is a legal requirement unless the vehicle is unused and has a SORN.
As discussed above, you can drive a SORN car to an MOT appointment if you have insurance, but you must book the test in advance. That way, if a police officer pulls you over, you have proof of why you are driving a SORN car.
This guide discusses common MOT fails & how to avoid them.
Can two people insure the same car?
When you buy car insurance, it covers you driving a particular vehicle, rather than the vehicle itself. This means two people can insure the same car.
There are two options:
The original driver could add a second person to their insurance policy as an additional or named driver.
The second driver could take out an entirely new policy.
The first option is often quicker and cheaper. However, if the named driver makes a claim, the original driver’s no-claims bonus will be affected. The second option protects each driver’s no-claims bonus.
Can you insure a car you don’t own?
It’s perfectly legal to insure a car you don’t own. However, when you take out an insurance policy, you must inform the provider that you are not the vehicle’s owner or registered keeper. This is known as non-owner car insurance.
How to check if a car is insured
It’s easy to find out if your car is insured. All you have to do is look it up on the Motor Insurance Database (MID), a national register of all the vehicles insured in the UK. It’s free to use; you only need your car’s registration number. You’ll have to declare that the vehicle is registered, owned or insured by you or your employer.
You can also use the MID to check the insurance status of a car you are permitted to drive, even if you’re not the owner.
Otherwise, there is a different tool on the MID site you can use to check the insurance status of someone else’s car, but there is a £10 fee, and you can only do this if the vehicle was in an accident you were involved in, or you’re representing someone who was involved.
How to check your car insurance expiry date
Most car insurance providers automatically renew your cover unless otherwise instructed, so you don’t need to worry about accidentally driving without insurance. They will also contact you before your renewal date.
However, you should note when your current policy expires to give yourself plenty of time to shop around. You can find out this information in a few ways.
Policy documents and your insurance certificate should include the expiry date. If you can’t find them, request new documents from your insurer. They may be online-only; in this case, you can access them by signing into your account. All your policy information, including the expiry date, will likely be accessible from this account.
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