Used Car Retailer of the Year 2023

020 8969 5511
Open Today: 10am - 7pm *

What Is Car Insurance

| In Motoring Advice

What is car insurance?

Every motorist is required by law to have insurance for their vehicle. Insurance provides cover for you and the named drivers in the event of any driving-related damage or injury. The only exception would be if the vehicle is registered as off the road with a Statutory Off Road Notice (SORN).

Finding the perfect car insurance policy has never been any easier, with plenty of competitive insurance providers you can save hundreds of pounds by simply shopping around. 

Here’s a run down on car insurance in the UK and what to expect to guarantee you’re not paying more than you have to for insurance.

Types of car insurance in the UK

Third-party only

Third-party insurance or TPO (third-party only) is the most basic form of insurance you can get but still offers you the legal minimum level of car insurance to allow you to drive on British roads.

With this type of insurance, if an accident is your fault, any costs relating to the other person’s car or medical treatment will be covered.

What isn’t covered, however, is any damage to your own car or any medical costs for yourself – these will have to be paid out from your own pocket.

If you are worried about theft, most insurance companies also offer third-party, fire and theft insurance cover where you can claim for replacing your car if it’s stolen, any damage relating to an attempted theft and for fire damage.

As the insurance only covers the minimum, annual premiums tend to be cheaper than more comprehensive cover. This makes it popular with people who own cheaper cars where the cost of car repair or replacement might be less than comprehensive insurance.

However, a potential downside to third-party insurance is that not all policy providers allow you to build up a no claims discount with third-party only insurance, which could cost you more in the long run.

Fully comprehensive

Comprehensive insurance provides you with the highest level of cover, with the key difference from third-party insurance being that you’re also covered for any damage or injury from an accident even when it’s your fault.

Unsurprisingly, this means it is usually the most expensive insurance cover too.

New car owners usually opt for this cover because it guarantees the protection of an expensive investment.

Some insurance companies offer cheaper policies that offer less protection, known as ‘stripped down’ policies. For example, windscreen cover or the cover of personal effects may not be included in your cover. It’s important to check your policy documents to make sure you’re receiving the cover you want.

What is a no claims bonus?

A no claims bonus (NCB), or no-claims discount, is the number of years in which you haven’t made a claim on your car insurance policy.

The amount that it’s worth varies depending on insurer, but the more years you have the bigger a discount you can expect. Although, many insurers will only use a maximum of five years when working out a discount.

Claiming on your policy where your insurer pays out will generally affect your no claims bonus, but if you’re involved in an incident that is not your fault, your insurer may be able to reclaim the cost from the other car’s insurer.

What is a multi-car policy?

Multi-car policy allows motorists with two or more cars who live at the same address to cover their cars on the same policy, rather than paying for two individual policies. This is often cheaper as the policy holders can receive a discount on their premium depending on how many vehicles they insure.

Individual drivers on multi car policy can keep their own no-claims bonus, so if one person makes a claim, then they will be the only one affected.

What’s an excess?

The excess is the amount you have to pay each time you make a claim against your insurance. The amount of excess is agreed when you take out the policy.

Most insurance providers have a minimum level of excess (this is known as the compulsory excess), which you can then voluntarily increase.

Choosing a higher voluntary excess is a quick way to lower the cost of your car insurance premiums. However, it’s important you don’t agree to an excess that you cannot afford, otherwise you won’t be able to make a claim at all.

What is a legal cover?

In addition to your car insurance, it’s advisable you obtain legal cover. The cost of legal cover can be as little as £20 on top of an annual premium, and in some cases will be included for free. The legal cover can be used to recover fees and charges.

It also allows you to have access to a legal helpline, which could be a valuable source of advice.

5 Day Insurance

Once you find the perfect car at Cargiant, you don’t need to rush into finding an insurance policy to drive off in your car with. Our HPI drive away insurance will allow you to drive away the same day and have 5 days to shop around for the best long-term policy.

Ask our expert team for more details.

Contact us today.