Car Insurance

Levels of cover

UK law requires every driver to hold at least third-party motor insurance, which covers injury to other people and damage to their property but not to your own vehicle. Beyond this legal minimum, insurers offer wider levels of cover that trade a higher premium for more protection.

Choosing the right level is a balance between cost and the protection you want. It is worth comparing what each level actually includes rather than assuming a more expensive policy is always better value for how you use your car.

• Third-party only — the legal minimum; covers other people and their property, not your own car
• Third-party, fire and theft — adds cover if your car is stolen or damaged by fire
• Comprehensive — also covers damage to your own vehicle, sometimes with extras such as a courtesy car

What affects your premium

Insurers set premiums using their assessment of risk. Factors commonly include the make and value of the car, where it is kept, your age and driving history, how many miles you drive and what you use the car for. A no-claims discount, built up over years without a claim, can reduce the cost.

• The car itself — value, engine size and insurance group
• The driver — age, licence, claims and any driving convictions
• Use and mileage — commuting, business use or occasional driving
• Your voluntary excess and any no-claims discount

Keeping your cover valid

When you take out or renew a policy you have a legal duty to take reasonable care not to give the insurer wrong or misleading information. Getting details wrong — even innocently — can leave you underinsured or a claim refused, so check that the car, the drivers and the way the car is used are all recorded correctly.

No-claims discount and driving uninsured

A no-claims discount rewards each year you drive without making a claim and can build up to a substantial reduction over several years. You can often pay to “protect” it, which lets you make a set number of claims without losing the discount — though this protects the discount, not the overall price, which can still rise. Your no-claims record does not transfer automatically, so keep proof of it when you switch insurer.

Driving without at least valid third-party insurance is a criminal offence. The police can issue a fixed penalty of £300 and six penalty points, and can seize the vehicle. If the case goes to court you could face an unlimited fine and disqualification. Under continuous insurance enforcement you can also be penalised for keeping an uninsured vehicle even if you are not driving it, unless it is formally declared off the road with a SORN.