What is car insurance and where can you get the best deals?
Car insurance is essential if you’re a driver and it’s a legal requirement to have at least third-party insurance. This means you’re covered if you have an accident and cause damage to other vehicles or property, or injure other people or animals.
What is car insurance?
Car insurance pays for damage or injury if you’re in an accident or, if you have comprehensive insurance, for repairing or replacing your own car if something else happens to it, which would be costly to pay for yourself.
It protects you against the risks involved in driving – if you crash you could damage your car or someone else’s, get injured or injure other people, or damage property, such as a wall at the boundary of a house. Your car could also be stolen, vandalised or catch fire.
You take out car insurance every year but can choose to pay for it monthly, although this usually costs more.
How does car insurance work?
You pay an annual or monthly premium to an insurer in return for financial protection if you need it. The money you and other drivers pay goes into a collective ‘pot’ of money, which the insurer then uses to pay any insurance claims.
There are three main types of car insurance:
- Third party – this only covers damage to vehicles or property belonging to other people or injury to others.
- Third party, fire and theft – as well as third-party property or injury, this also covers you if your car is stolen or damaged by fire but not if it’s in an accident or vandalised.
- Fully comprehensive – along with all of the above, you’re also covered if your car is damaged in an accident or you’re injured and it was your fault, or your car is vandalised. You’ll also be able to claim if it’s not possible to prove who was at fault. It can be cheaper than third-party-only cover so don’t assume you’ll pay more for this.
If you’re in an accident you should always let your insurer know, whether you intend to make a claim or not. You can claim on your own insurance if you have a fully comprehensive policy. Your insurer will try to get the money back from the other driver’s insurer if it was their fault, which means you wouldn’t lose your no-claims bonus (a discount you get on your insurance according to how many consecutive years you’ve had car insurance for and not made a claim).
If you only have third-party insurance, you’ll be able to claim for damage to your car through the other driver’s insurance if it was their fault. Otherwise, you’ll have to pay for the repairs yourself.
Car insurance pros and cons
- Car insurance covers the cost of repairing your car or other vehicles, medical expenses and damage to property if you’re in an accident or your car is stolen, vandalised or damaged by fire.
- Taking out third-party car insurance fulfils your legal obligation to do so as a driver.
- Even if your claim is paid in full, you still have to pay an amount towards it – known as the excess. This could be a few hundred pounds. Agreeing to pay an excess helps to keep the cost of your insurance down – the more you agree to pay the lower the premium. You can choose the voluntary excess you pay but the total payable may be more.
- Certain losses, such as hiring a car while yours is being repaired, loss of earnings and the excess, will be uninsured. You’ll be able to claim these back from the other driver’s insurance if they were at fault but will have to pay for them yourself it not.
Which car insurance comparison site can save you the most money?
We gathered car insurance quotes from the four biggest price comparison sites – Compare the Market, Confused.com, Go Compare and MoneySuperMarket – for three different scenarios to give you an idea of how much you might pay and how quotes differ.
The quotes in the table below are for comprehensive insurance, including windscreen and personal accident cover, for a single driver with a 10-year-old Toyota Prius worth £6,000 in a high-risk postcode using the car for social use only with annual mileage of 8,000.
We collected prices for a 17 year old, and a 35 year old and 60 year old with a 10-year no-claims bonus. We selected a voluntary excess of £250 but total excesses differ. The cheapest quote for each scenario is shown in bold.
Some comparison sites give you certain rewards when you take out car insurance through them. These are also included below.
Car insurance comparison site costs compared:
|Insurance comparison site||17 year old||35 year old||60 year old||Claimed renewal savings (a)||Comparison site rewards|
|Compare the Market||£3,372.81 (Co-op), total excess £700||£351.07 (1st Central), total excess £250||£303.29 (1st Central), total excess £250||£225.87||2 for 1 cinema tickets on Tuesdays and Wednesdays; discounts on takeaway food and eating out|
|Confused.com||£3,367.46 (Co-op), total excess £700||£345.52 (1st Central), total excess £250||£301.37 (1st Central), total excess £250||£241.78||Choice of free HelloFresh recipe box, 12 free car washes or £20 to spend at Halfords or Domino’s Pizza|
|GoCompare||£2,339.85 (Ticker), total excess £695||£370,30 (1st Central), total excess £250||£324.92 (Autonet), total excess £375||£240.64||Free £250 excess cover; car MOT for £10 if you take out car insurance by 15 June 2021 and have your MOT by 30 June 2021|
|MoneySuperMarket||£3,360.37 (Co-op), total excess £700||£363.74 (1st Central), total excess £250||£314.75 (Autonet), total excess £375||£235.93||£25 Amazon voucher if you take out an Ageas car insurance policy by 31 May 2021|
Notes: Quotes gathered on 13 May 2021 for a policy starting on 1 June 2021.
(a) Savings claimed by comparison sites for 50% or 51% of car insurance customers if they shop around using the comparison site versus their renewal quote.
As you can see, each comparison site gives very different quotes, even from the same insurer, so it’s a good idea to use two or three comparison sites to get the best price for your needs. The actual price you pay will depend on your specific circumstances, even if they are similar to the above.
For the quotes we gathered, there’s a particularly significant difference in price for the 17-year-old driver, with GoCompare offering a much cheaper quote than the rest but, as prices and what insurance providers are offering can change frequently, the comparison site that offers the best price for you can also change.
Car insurance FAQs:
How can you get the best car insurance quotes?
You should use two or three comparison sites to find the best quotes for you but make sure the policy suits your needs before you take it out rather than just going for the cheapest one.
The rewards offered by comparison sites can be tempting but you should still make sure you choose the insurance policy that’s best for you rather than choosing it because of the rewards you’ll get.
When you’re looking at prices, make sure you are comparing like for like – for example, how do the excesses compare and do policies include added benefits such as a courtesy car or personal accident cover? If certain add-ons are important to you make sure you include them in your search criteria at the outset if possible. Bear in mind that you can save money by removing add-ons or agreeing to pay a higher excess.
Some insurers, in particular Direct Line and Aviva, aren’t on comparison sites so it’s worth getting quotes from these directly.
Which comparison site works with the most car insurance providers?
At the time of writing in May 2021, Compare the Market works with the most car insurance providers at 140, while Confused.com works with 120, GoCompare with 113 and MoneySuperMarket with 104.
However, this can change and a comparison site working with more providers doesn’t necessarily mean it will give you a cheaper quote.
Can you drive another car on your insurance?
If you have a comprehensive insurance policy you may be covered to drive other cars with third-party cover only but check the small print to find out.
How can I check to see if my car is insured?
You can check whether your car is insured on the motor insurance database – a central record of all vehicles insured in the UK – at ownvehicle.askmid.com.
What is an insurance group?
Cars are put into 50 different groups that determine how expensive they are to insure, with group one being the cheapest. Factors that affect which group a car is in include how expensive it is, how powerful it is and how much parts for it cost.
How do you check what insurance group a car is?
Can you insure a car you don’t own?
You can insure a car you don’t own with the owner’s permission but you’ll need to tell the insurance company you’re not the owner or registered keeper of the car. This is likely to cost more than insuring your own car.