Car insurance buying guide

Car insurance – we all wish we didn’t need to buy it, but unfortunately, if we want to be able to get from A to B by driving then we are legally required to have a sufficient policy in place.

Buying car insurance can be mind-boggling, stressful and tedious to say the least. In this car insurance buying guide, we'll try to cancel out the confusion and turn the often bumpy journey of buying car insurance into a smooth, comfortable ride.

What is car insurance?

In layman’s terms, car insurance is a policy which provides security against the damage or theft of a vehicle, whether in a road traffic accident (RTA) or a mindless act of vandalism.

It also protects you against the financial woes involved in a car crash, including bodily harm to yourself and others, and physical damage to the surrounding environment.

Why do I have to have car insurance?

Car insurance is a legal requirement.

Unlike lifephonetravel and various other types of cover, car insurance is required by law – and for good reason. If you are ever at fault for an accident which seriously damaged somebody else’s vehicle – or worse, severely injured them – it is unlikely that you’d have the cash on hand to cover the relevant costs. After all, you could be talking hundreds-of-thousands of pounds.

Don’t be tempted to go without it, even if it was just for a little while. In an attempt to clamp down on the number of uninsured vehicles on the road, the government introduced Continuous Insurance Enforcement in 2011. This basically means that if you own a car, it must be taxed and insured, unless it has been declared off the road through a Statutory Off Road Notice (SORN).

READ MORE: What does SORN mean?

Anyone who is caught driving without insurance will be issued with a fixed penalty notice and could eventually have their vehicle seized and destroyed.

Why is car insurance so expensive?

One of the main reasons why car insurance is so expensive is that motorists who drive without it push up the price for everyone else. Official figures put the total increase at around £256 million a year, or £15 on top of every premium.

Another reason for expensive insurance is down to fraudulent claims, which add to the financial burden by pushing up the premiums of honest customers by as much as £50 a year.

In 2018, it was revealed that there were a total of 469,000 fraudulent claims and applications made on car insurance with 1,300 fraudsters exposed every single day. One particular party was sentenced to 6 years in prison after fraudulently claiming £1.2 MILLION from insurance companies, costing honest drivers across the country potentially hundreds of pounds.

What types of car insurance policies are there for me?

Car insurance cover comes under 3 categories: Third party, Third Party Fire and Theft, and Fully Comprehensive. Let’s break these down for you:

Third-Party Insurance – This is the most basic level of cover that insurance companies can provide you with and is the minimum legal requirement in the UK. It essentially pays for any damage sustained by a third party, their vehicle and their property in an accident for which you were at fault. As an example, if you reverse into someone’s car, the policy would only cover the damage to their car. It would not, however, pay for any repairs to your own vehicle or the cost of personal injury to yourself (physiotherapy sessions, etc.)

Third-Party Fire and Theft Insurance – This is a slight step up from third party, covering everything mentioned above while also insuring you in case your car is stolen or damaged by fire. It will also cover you for any damage caused as a direct result of attempted theft, such as smashed windows or damaged locks.

Fully Comprehensive Insurance –  The best (and most popular) cover available, fully comprehensive car insurance covers you for all of the above and more – the main difference here is that it covers you and your car, as well as any third parties (even if you were at fault). Most drivers on UK roads today opt for “fully comp” cover. It is known to be the most expensive out of all three (although this isn’t always the case) but due to the extra cover and peace of mind it gives, it is the safer and possibly cheaper option in the long run.

Younger drivers often opt for third party to save money. It’s always worth checking the premiums for all levels of cover, though, because you may find that a fully comprehensive policy doesn’t actually cost you much more, in some circumstances, it can even work out cheaper.

This is because, historically, those who have opted to take out TPO (third party only) or TPFT (third party, fire and theft) cover have been more likely to make a claim. This pushes the price of cover up and, in some cases, can make it more expensive than the better, fully comprehensive car insurance available.

When shopping and comparing car insurance quotes, it’s also important to look at what extras you are covered for as well as the price as different insurance companies over different things under standard cover.

READ MORE: Car insurance extras worth having

While one insurer might include windscreen cover as standard, another might exclude it. Other common exclusions include legal expenses, a courtesy car and breakdown cover. You can buy these as add-ons to your policy, but some may include them.

It is also worth checking whether add-ons like breakdown cover are provided cheaper, or even for free, by your bank – if you pay for a packaged bank account, there is every chance that you already have a basic level of cover.

It is also possible to get car insurance add-ons like motor legal protection for free, which you can read more about right here.

Do I need to tell my insurance company everything?

Yes. As they say, “honesty is the best policy”.

You must provide your insurance company with the most up to date information about yourself. Even when the policy has started, any changes to your circumstances (e.g. job, address, estimated annual mileage) needs to be updated with your insurance company.

For example, if you get a new job, which causes you to move house and drive twice as far to work as you did previously, you’ll need to let them know as soon as possible.

You’ll also need to inform your insurer of any modifications made to your vehicle. Any modification could affect your premium, even if it’s a minor tweak, such as a spoiler or tinted windows. If you keep quiet about any changes to your vehicle and subsequently made a claim, the insurer could refuse to pay up. Failure to tell the insurer of such changes is classed as insurance fraud.

Even adding plastic Christmas decorations or a sticker of your favourite football team has the potential to invalidate your car insurance should you need to make a claim, so think twice before jazzing up your car.

To point out, not all modified car policies will be more expensive. In fact, by adding security enhancing modifications like alarms, immobilisers or a dash cam to your vehicle, you are effectively making it less likely for your car to be stolen and, in turn, reducing the chances of you making a claim. This could therefore reduce your insurance premiums.

READ MORE: Get car insurance discounts with an insurance-approved dash cam

Another factor to keep on top of is whether or not you drive your car for business purposes. Even if you only use it to visit clients, a standard policy will usually only cover social, domestic and pleasure use.

If you drive to work*, you will usually have to say so by including cover for commuting to your policy when prompted. This is because those who use their car to drive to work not only tend to drive more frequently, but also during peak times when roads are busier, making them more likely to be involved in an accident. Failing to inform your provider of this could see any future claims turned down.

*Note: Even if you get the train or bus to work, you’ll often need cover for commuting if you’re driving to the bus/train station.

I can’t afford my policy payment all in one go, what are my options?

Most car insurance policies run for 12 months, and paying for the premium in one go can cause a dent in your finances. However, most insurers give you the option to pay in monthly instalments, so you can spread the cost over the year and make the payment more manageable.

It’s worth remembering though that, by paying in instalments, you will almost always be charged more as you’ll be required to pay interest on top (as you’re essentially borrowing from your insurer, paying them back in instalments every month) so it is worth paying upfront if possible.

What will I need when I apply for car insurance cover?

When applying for car insurance you will need to answer a number of questions, so it’s a good idea to have the information to hand. It’s also worth making sure that you have a fair amount of time set aside to ensure all of the information provided is correct and find the best possible quote.

The insurer will want to know all about you, your age, occupation, address and any previous motoring convictions (such as speeding or drink driving) as well as any recent accidents, if it was your fault or not. Non-fault accidents have less of an impact on premiums and any accident needs to be stated, usually for a minimum of 3 years – if unsure whether or not to mention your crash, ask your potential insurer.

You will also need to provide information about the age, make and model of the car, a rough idea of the annual mileage and where it is kept overnight.

You should give details of any modifications to the car and whether you intend to use the vehicle for business. You will also need a current and valid MOT certificate if your car is more than 3 years old.

What does No Claims Bonus mean?

No claims bonus (also known as no claims discount or NCB) plays a big part in bringing your car insurance costs down.

A NCB of five years or more, as an example, can entitle drivers to up to 60%-75% discount on car insurance premiums. However, a NCB has to be earned. In general, for every year that a driver has insurance on a car without making a claim, they will earn another year’s NCB up to a maximum of 5 years.

Some insurance companies offer further discounts for 6-8 years of claims-free driving, but as a general rule, the maximum figure is 5 years. Drivers can choose to protect their NCB for an added cost meaning that, in the event of an accident, the years of claim-free driving will not have gone to waste. You, of course, don’t have to take out a protected no claims discount; however, it can prove to be a very valuable asset if you want to receive a cheaper car insurance premium.

READ MORE: What is a no claims bonus?

In general, protecting your NCB means that you are allowed to make a certain number of claims within a year without jeopardizing your bonus – this number will vary from insurer-to-insurer. Even after protecting a NCB, your basic premium could still increase at renewal. This is because your next insurance quote will also take the number of claims you have made into consideration when calculating your premium – even if your NCB remains intact, the claim will still show on your record.

Remember, though, that you very rarely benefit from staying with the same insurer year-on-year. You can also usually transfer your NCB from one insurer to a new insurer, so there is nothing tying you into an insurance company.

How does multi-car insurance work?

Many households own more than one vehicle, in which case it might be worth considering a multi car insurance policy. You can usually insure up to five vehicles (depending on the insurer), and it cuts down on paperwork as well as premiums. People who insure multiple vehicles with the same company can often save 10% or more on the cost of their car insurance premiums.

You can take out a multi-car insurance policy at any time – the vehicles that you are planning to insure do not need renewing at the exact same time. When taking cover out on one vehicle, you can add a number of others to your policy – the cover on these vehicles will begin when their current policy expires, with premiums adjusted accordingly.

What is car insurance excess?

If you’re confused by the concept of car insurance excess then don’t worry, you aren’t the first and you certainly won’t be the last. All car insurance policies carry an excess, which is the amount you have to pay towards any claims. The excess usually comes in two parts: the compulsory excess, and the voluntary excess.

A typical compulsory excess fee is around £200, meaning if you were to put in a claim for £500, the insurer would pay only £300. It’s worth bearing the excess in mind before you put in a claim. If the damage is not serious, it might be better to pay the full cost out of your own pocket in order to protect your no claims bonus. Check the small print of the policy though because the excess does not always apply to minor claims, such as windscreen repair.

You are able to choose the level of your voluntary excess, usually starting at £50 or £100. This is not an alternative to compulsory excess and must be paid on top. If you are prepared to agree to a higher voluntary excess, you might be able to negotiate a lower premium. Remember though that you must pay the excess in the event of a claim, so make sure it is something within your budget.

READ MORE: A complete guide to insurance excess

What is named driver insurance?

Named drivers on your insurance policy can often bring down premiums if, for example, you are a young driver. It is quite common for young or newly-passed drivers to add a more experienced driver, such as one of their parents, onto the policy to bring down the premium because this increased level of experience will make them statistically less likely to make a claim.

The named driver does not have to drive the car often (in fact, they don’t have to drive the car at all), but the insurer’s assumption that a more experienced driver will be taking the wheel from time-to-time is enough for them to offer an often significantly reduced insurance premium.

One rule to remember is that you should never put forward an additional driver as the main driver. For example, if your mum or dad rarely drives your car then they should under no circumstances be listed as its main driver, even if you name yourself as the named driver. This practice is known as car insurance fronting and is a form of insurance fraud which can not only invalidate your cover, but also make it difficult for everyone involved to find cover in the future. The person may even end up being prosecuted.

What is black box insurance?

If you are struggling with high premiums, you might want to consider telematics insurance. This type of policy can seem confusing at a glance, but it simply means that the insurer will use a satellite tracking device (or ‘black box’) fitted in your car to monitor various driving performance metrics.

These usually include your speed, acceleration, braking and cornering, while some insurers will also take into account the time of day that you travel. For example, if you drive late at night or during rush hour, there is a chance that your insurer could see you as a higher risk.

Some insurers will fit the device for you, but you might be sent the unit through the post with easy-to-follow instructions on how to get it installed and working. Some black box car insurance policies are even traceable via a mobile phone app, however the discounts provided by these do not tend to be as significant.

READ MORE: Black box car insurance: the pros and cons

There are various specialist black box insurers available, while you can also get a telematics policy with most big-brand providers. All insurers offer different policies that work in slightly different ways, but one thing they all have in common is that they reward careful drivers.

So, if you drive few miles or are prepared to avoid driving at night or during the rush hour, you might save money with black box insurance. Some telematics firms claim they can cut your car insurance bill by as much as 50%, which is why it is such a popular choice for young or infrequent drivers.

What can make my policy expensive?

Insurance is all about risk. The more likely you are deemed to place a claim, the more expensive your cover may be – remember, contrary to popular belief, insurance companies do not want you to make a claim. There are a number of factors insurers will look at before they quote a premium for car insurance cover, but your age is one of the key indicators of risk. There are a few reasons for this, but they can all be whittled down to one key factor: older, more experienced motorists tend to have fewer accidents than younger drivers.

Insurance quotes are also determined by occupations and postcodes. For example, if you live in an area which has a high crime rate then your insurer will deem your car as high risk to theft or vandalism.

READ MORE: How your job can affect the cost of car insurance

The type of car you drive can also affect your premium. Insurers put cars into 50 car insurance groups, with vehicles in the highest groups attracting the highest premiums. A car’s insurance group depends on a number of factors, including price, performance, the cost of its parts if it needed to be repaired and the typical repair times. As you might expect, a high-performance car is more expensive to insure than a smaller vehicle or family car. This is because, naturally, high-performance cars are more likely to be driven faster and therefore more likely to cause damage.

Are there ways of reducing my car insurance premiums?

Nobody wants to pay more than they have to for anything, let alone something as expensive as car insurance.

Despite this, many of us aren’t fully aware of the methods available to cut down the cost of our policies. A high percentage of us may stay with the same insurer for loyalty, or convenience, yet paying over the odds for the privilege. Loyalty rarely pays, so it is always advisable to shop around if you want to try and save on your annual premium.

READ MORE: 10 tips and tricks for cutting costs on your car insurance

Limiting the number of claims you make on the policy will cut the cost of your insurance. Granted, this cannot be helped if you have an accident - however, it may work out cost effective in the long run for you to have the vehicle repaired without claiming on your insurance. This way, you will save making a claim and prevent your next policy renewal from being too expensive.

You could also try limiting your mileage. Instead of over estimating how many miles you think you may do a year, try to work out mileage based on daily commuting as well as more routine trips you make. Think too about the security of your vehicle. Have you got an approved, fitted alarm and immobiliser? Also, if your car is kept in a locked garage overnight, it will cost less to insure than a vehicle that is parked on the street, for example.

Another tried and tested method of bringing the cost of your insurance policy down is to consider some kind of advanced driving course if one is available to you. Courses like this can reduce the likelihood of an accident by 25%, while it can also lead to a discount on your car insurance with a valid certificate.

Get cheap cover with Bobatoo today

At Bobatoo, we try our best to save UK drivers money on their premiums, as we understand how inconvenient paying for car cover can be.

To get a reasonably-priced car insurance policy, visit our main car insurance page here.