How does car insurance work in the UK?
Car insurance provides financial protection against risks connected with using a vehicle. The exact protection depends on the policy you buy. The three main levels are third party, third party fire and theft, and comprehensive cover.
Your premium is the price you pay for the policy. The insurer calculates that price using information about you, the car and how it will be used. Two drivers buying the same model can therefore receive very different quotes.
Third party
The basic level of cover protects against liability for injury to other people and damage to their property, subject to the policy terms.
Third party, fire & theft
Adds protection relating to fire and theft of your own vehicle alongside third-party cover.
Comprehensive
Normally provides broader protection and may include damage to your own vehicle, but exact cover and exclusions vary between insurers.
Compare all suitable levels of cover. Do not automatically assume third-party insurance will cost less than comprehensive insurance.
Do you legally need car insurance in the UK?
If you drive a vehicle on UK roads or in public places, you normally need valid motor insurance providing at least the legally required third-party protection.
Vehicle insurance and vehicle tax are separate requirements. Having one does not automatically mean the other is in place.
The driver
Make sure you are properly covered to drive the vehicle. Never assume somebody else's policy automatically covers you.
The vehicle
Check that the policy details correctly identify the car and its use.
The information
Information supplied to the insurer should be accurate. Incorrect details can create serious problems if you need to claim.
If you are borrowing, collecting or test-driving a vehicle, confirm that valid insurance is actually in place before driving it.
The three main types of UK car insurance
The names of the three main cover levels sound simple, but the details inside individual policies can vary considerably. Always read what is actually included.
Third Party
Basic levelCovers your legal liability towards other people and their property according to the policy. It does not normally pay to repair your own car after an accident where you are responsible.
Third Party, Fire & Theft
Extra protectionIncludes third-party protection and normally adds cover if your own vehicle is stolen or damaged by fire, subject to policy conditions.
Comprehensive
Broadest main levelUsually includes third-party, fire and theft protection plus accidental damage to your own vehicle. Extras and exclusions still vary.
Is comprehensive insurance always best?
Comprehensive insurance provides the broadest of the three main levels of cover, but the word “comprehensive” does not mean every possible situation is automatically covered.
Policies can differ in areas such as courtesy cars, windscreen protection, personal belongings, driving abroad, legal assistance and replacement vehicle conditions.
Check what is included
- ✓Accidental damage
- ✓Fire and theft
- ✓Windscreen cover
- ✓Courtesy-car conditions
- ✓Personal belongings limits
Check what is not included
- ✓Policy exclusions
- ✓Excess amounts
- ✓Driver restrictions
- ✓Use restrictions
- ✓Optional extras
Is third-party insurance cheaper?
Not necessarily. It sounds logical that less cover should cost less, but insurance pricing is based on risk data rather than simply counting how many benefits a policy contains.
For that reason, comprehensive cover can sometimes produce a lower quote than third-party or third-party fire and theft cover for the same driver.
Run suitable quotes and compare the total price, excess and actual protection. The cheapest-sounding level of cover is not guaranteed to produce the cheapest premium.
What affects the cost of car insurance?
There is no single price for insuring a particular car. Insurers assess risk using information about the driver, vehicle, location and intended use.
Your age and experience
Newly qualified and younger drivers can face higher premiums because insurers have less driving history on which to assess them and may view the risk differently.
The car
Value, performance, repair cost, parts prices, security and claims experience can all affect how a vehicle is rated.
Your address
Insurers can consider claims and theft risk associated with where a vehicle is normally kept.
Your occupation
Occupation can be part of the risk assessment. Describe your job accurately rather than choosing an inaccurate description purely because it produces a lower quote.
Annual mileage
Expected mileage affects how much exposure the vehicle has to road risk. Give a realistic estimate.
Driving history
Claims, convictions and other driving-history information requested by the insurer can affect the quote.
Where the car is kept
Parking arrangements can form part of the insurer's assessment. State where the vehicle is genuinely kept overnight.
Modifications
Changes from standard specification may affect the insurer's willingness to cover the car or the price charged.
Cover and excess
The protection selected and the amount you agree to contribute towards claims can affect the premium.
How your choice of car affects insurance
This is especially important for first-time buyers. Two cars with similar purchase prices can produce very different insurance quotes.
Performance
More powerful or performance-focused cars may be rated differently because of their speed, value and claims profile.
Repair costs
Expensive body panels, lights, sensors and specialist components can increase the potential cost of an accident claim.
Security
Theft risk and factory security equipment can form part of how insurers assess the vehicle.
Start with our Best First Cars UK guide. It explains how to balance insurance, reliability, purchase price, fuel, servicing and repair costs rather than choosing a car on looks alone.
Car insurance groups explained
Insurance groups are often used as a quick way of comparing how cars may differ in insurance risk. Cars are generally placed into numbered groups, with lower groups often associated with vehicles that may be less expensive to insure.
But the group is only one part of the calculation. It does not tell you what your personal premium will be.
Lower group
Useful starting pointCan help first-car buyers create a shortlist, but you still need an actual quote.
Higher group
Potentially higher riskPerformance, vehicle value and repair costs can contribute to a higher rating.
Your quote
The number that mattersYour individual quote combines the vehicle with your own circumstances.
Always quote the exact vehicle. A supposedly sensible low-group car can still be expensive for an individual driver.
What does excess mean on car insurance?
The excess is the amount you may have to contribute towards a claim. When comparing policies, look beyond the headline premium and check the total excess that could apply.
Compulsory excess
This is set by the insurer. The amount can vary depending on the policy, vehicle and driver.
Voluntary excess
This is an additional amount you agree to contribute. Choosing a larger voluntary excess can sometimes reduce the premium, but it increases what you may need to pay following a claim.
A cheaper annual premium is not much help if the total excess leaves you unable to make a claim when you need to.
How does black-box car insurance work?
Black-box or telematics insurance uses driving information as part of the policy. Depending on the insurer, data may come from a fitted device, plug-in device, smartphone app or technology already built into the vehicle.
The information considered can vary, which is why you should read the individual policy rather than assuming every black-box product works in the same way.
Driving behaviour
Some policies may assess aspects of how the car is driven, such as speed, braking or acceleration.
When you drive
Some products may consider journey times or have policy conditions connected with when the vehicle is used.
Mileage
Distance travelled can form part of telematics-based policies, especially products designed around limited mileage.
Telematics can be worth comparing for a new driver, but understand exactly what is monitored, whether restrictions apply and what happens if the policy's conditions are not followed.
Car insurance for newly qualified drivers
Insurance can be one of the hardest costs for a newly qualified driver to budget for. This is why the insurance quote should be checked before choosing the first car, not after.
1. Shortlist cars
Choose several sensible cars rather than becoming fixed on one particular model.
2. Compare quotes
Check what the different cars actually cost to insure using accurate details.
3. Compare total cost
Add purchase price, insurance, fuel, tax where applicable and likely maintenance.
4. Inspect the car
Only then decide whether the individual used car is worth buying.
Read our Learning to Drive in the UK guide for the full journey from provisional licence and lessons through the theory test, practical test and getting on the road after passing.
Adding a named driver — and why fronting is different
A policy can allow additional named drivers to use the vehicle. For example, a new driver may legitimately have a parent added if that parent genuinely drives the car.
That is different from giving false information about who is actually the main driver simply to obtain a cheaper premium.
Legitimate named driver
The policy correctly identifies the person who mainly uses the vehicle and any genuine additional drivers.
Fronting
Fronting generally describes falsely presenting somebody else as the main driver when another person actually uses the car most. Giving false information can invalidate cover and create serious consequences.
Never change factual information purely to force a cheaper quote. Tell the insurer who genuinely owns, keeps and mainly drives the vehicle when those questions are asked.
Do modifications affect car insurance?
They can. A modification changes the vehicle from its standard specification and may affect value, performance, theft risk, repair cost or how an insurer assesses it.
Performance changes
Engine tuning, remapping and similar changes can affect performance and may need to be declared.
Suspension and wheels
Lowering, non-standard wheels and suspension changes may alter the car from factory specification.
Cosmetic changes
Do not assume a change is irrelevant simply because it does not make the car faster. Ask the insurer when unsure.
Find out exactly what has been changed before purchasing and check whether your chosen insurer will cover those modifications.
Annual mileage and how you use the car
Insurers ask how far you expect to drive and what the car will be used for because different patterns of use can create different levels of exposure.
Social use
Policies may describe social, domestic and pleasure use in different ways. Check the exact wording.
Commuting
If you use the car to travel to work, make sure the policy provides the type of use you require.
Business use
Driving connected with work beyond normal commuting can require different cover. Tell the insurer how the car will actually be used.
Use previous mileage, expected commuting distance and regular journeys to make a realistic estimate rather than choosing an artificially low figure.
Car insurance extras — which ones should you check?
The headline policy price does not always include every feature you want. Some benefits may be optional extras, while others may already be included.
Breakdown cover
Check whether you already have breakdown protection elsewhere before paying for duplicate cover.
Legal expenses
Understand what the legal cover actually provides and any limits or conditions.
Courtesy car
Check when a courtesy vehicle is supplied. Conditions can differ depending on whether your car is repairable, stolen or written off.
Windscreen cover
Look at the excess and whether repairs and replacements are treated differently.
Protected no-claims discount
Understand what protection means. Protecting a discount does not necessarily mean the overall premium can never rise after a claim.
Personal accident cover
Check the amount of cover, who qualifies and the circumstances in which it applies.
How to compare car insurance quotes properly
The lowest number on the screen does not necessarily represent the best deal. Compare like with like.
1. Check cover
Make sure each quote provides the protection you actually need.
2. Check excess
Compare compulsory and voluntary excess, not just the annual premium.
3. Check extras
Look for differences in breakdown, windscreen, courtesy-car and legal cover.
4. Check conditions
Understand restrictions, telematics requirements, mileage and vehicle-use conditions.
Paying slightly more for a policy with an affordable excess and the protection you need can be better value than buying the cheapest headline quote.
Should you automatically renew your car insurance?
Renewal is a good time to check whether the policy still suits your circumstances and whether other insurers offer suitable alternatives.
Check your details
Make sure address, occupation, mileage, vehicle details, modifications and other relevant information remain accurate.
Review the cover
Your needs may have changed since the policy started. Check the excess and optional benefits again.
Compare alternatives
Do not assume your existing provider will always remain the best choice for your circumstances.
What should you do after an accident?
Safety comes first. Stop where required, check whether anybody is injured and follow the legal requirements that apply to the incident.
When safe, gather useful information and follow your insurer's reporting instructions.
Record details
Note relevant vehicle, driver, location and incident information while it is fresh.
Take photographs
If it is safe to do so, photographs of vehicle damage and the scene can help document what happened.
Contact your insurer
Follow the reporting requirements and timescales in your policy, even if you are unsure whether you intend to claim.
On fast or busy roads, personal safety is more important than taking photographs or inspecting vehicle damage.
Check insurance before buying a used car
Insurance belongs near the beginning of the car-buying process, not at the end.
A car can look affordable in an advert but become completely unsuitable once insurance, fuel and likely maintenance are added.
Before viewing
- ✓Research the model.
- ✓Check likely insurance.
- ✓Check MOT history.
- ✓Plan your total budget.
Before buying
- ✓Quote the exact vehicle.
- ✓Inspect its condition.
- ✓Review service history.
- ✓Take a proper test drive.
Before driving away
- ✓Confirm insurance is active.
- ✓Complete required ownership steps.
- ✓Arrange vehicle tax where required.
- ✓Keep purchase records.
Continue with our Used Car Buying Guides for MOT-history checks, vehicle inspection, test-drive advice and the warning signs that can help you avoid buying somebody else's problems.
Car insurance mistakes to avoid
Buying the car first
Never assume a car will be affordable to insure just because it has a small engine or low purchase price.
Looking only at premium
Check excess, cover, restrictions and extras as well as the annual price.
Giving inaccurate information
Incorrect information about drivers, mileage, occupation, vehicle use or modifications can cause major problems.
Choosing excessive voluntary excess
A lower premium is not worthwhile if you could not afford the excess after an accident.
Ignoring modifications
Find out what your insurer considers a modification and tell them about relevant changes.
Assuming all policies are equal
Two comprehensive policies can have different excesses, benefits, exclusions and conditions.
Car Insurance FAQs
These are some of the most common questions UK drivers ask when comparing car insurance.
What are the main types of car insurance in the UK?
The three main levels are third party, third party fire and theft, and comprehensive insurance. Individual policies can differ, so always check the exact protection, excess, exclusions and optional extras.
Is comprehensive car insurance always more expensive?
No. Comprehensive insurance can sometimes produce a cheaper quote than lower levels of cover. Compare suitable policies rather than assuming third-party cover will cost less.
What is a car insurance excess?
The excess is the amount you may need to contribute towards a claim. A policy can contain compulsory excess set by the insurer and voluntary excess chosen by you.
What affects the price of car insurance?
Factors can include the driver, vehicle, address, occupation, annual mileage, driving and claims history, where the car is kept, modifications, vehicle use, cover level and excess.
Should I get an insurance quote before buying a car?
Yes. This is particularly important for first-time buyers. A car with a low purchase price can still be expensive to own if the insurance premium is high.
What is black-box car insurance?
Black-box or telematics insurance uses driving information as part of the policy. Exactly what is monitored and how the information is used varies between insurers, so read the policy conditions carefully.
Continue Your New Driver Journey
Insurance makes more sense when you look at it as part of the complete cost of learning, buying and owning your first car.
Learning to Drive in the UK
Understand the provisional licence, lessons, theory test, practical test, typical costs and what happens after you pass.
Learning to Drive Guide →Best First Cars
Compare sensible first-car choices with insurance, reliability, running costs, ease of driving and repair costs in mind.
Best First Cars UK →Buying a Used Car
Check MOT history, service records, mechanical condition and test-drive warning signs before spending your money.
Used Car Buying Guides →What Every Driver Should Remember About Car Insurance
Before Buying a Policy
- ✓Compare more than the headline price.
- ✓Check compulsory and voluntary excess.
- ✓Understand what the policy covers.
- ✓Check restrictions and exclusions.
- ✓Give accurate information.
For New Drivers
- ✓Quote before buying the car.
- ✓Compare several suitable models.
- ✓Consider telematics where appropriate.
- ✓Do not use fronting to reduce cost.
- ✓Budget for the whole cost of ownership.
Good Car Insurance Is About More Than Finding the Cheapest Quote
Car insurance can feel complicated because there is no single price or policy that is best for every driver. Your vehicle, age, experience, location, mileage and many other factors can change the quote.
The best approach is simple: give accurate information, compare suitable policies, understand the excess and check what you are actually buying before paying.
For a new driver, do this before choosing the car. A vehicle that costs slightly more to buy but is much cheaper to insure and maintain may be the better first-car decision overall.
If you are still working towards your licence, start with Learning to Drive in the UK. If you are choosing your first vehicle, read Best First Cars UK. And before handing over money for a used vehicle, work through our Used Car Buying Guides.