Car insurance - your frequently asked questions (FAQs)
We answer your most common questions about car insurance, explaining what legal cover and a no-claims bonus is, and whether you can drive another car using your policy...
Car insurance is an essential part of buying and running a car. It gives you and other road users protection in case of an accident, and is a legal requirement. It can also be very confusing, and we receive plenty of questions asking for clarification on the finer points of choosing the right car insurance policy.
Here, we've collated some of the most commonly asked questions regarding car insurance, and provided our answers.
Is fully comprehensive insurance cover better than third party, fire and theft?
On the whole, yes. A third-party insurance policy does not cover you if your car is stolen, meaning that you’d have to pay for a new set of wheels out of your own pocket. Third-party cover is a legal minimum, while a third-party, fire and theft policy provides a slightly higher level of cover as its also includes theft and damage caused to your car as a result of theft or fire.
If you can afford to, we’d recommend choosing a fully comprehensive insurance policy, as it gives you much greater protection, covers you for injuries to other people and passengers and damage to property. Your car is also insured against fire, theft and accidental damage. A comprehensive policy will also usually cover some of your personal items up to a certain limit, such as a portable sat-nav.
What is a multi-car policy?
You’ve probably heard the term ‘multi-car’ used in various car insurance adverts. This type of 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, too, as the policy holders receive a discount on their premium depending on how many vehicles they insure.
Each person in a multi-car policy keeps their own no-claims bonus, and if one person has to make a claim, then it’s only their no-claims bonus that will be affected. It’s worth remembering, though, that this type of policy isn’t always the cheapest, so it’s worth shopping around and comparing prices.
Can I drive someone else’s car on my insurance policy?
It’s a common assumption that if you have a fully comprehensive policy, you can drive someone else’s car on a third party basis as long as you have their permission. Increasingly, however, comprehensive policies do not offer this without a significant catch: you’ll have to pay extra for it.
Driving other cars should only be done in an emergency, and not if you’re under 25. If you do want to drive other cars, then you’ll usually have to ask your insurer and you’ll have to pay for it, too. If you are under 25 and want to drive another car, your best bet is to take out temporary insurance cover, or get added as a named driver on the owner’s policy.
If you do want to drive other cars formally, then expect to be asked for your occupation, as insurers reserve the right to refuse you cover if they deem your job to be too risky. Some insurers even state that the car you want to drive cannot be owned by your partner - which means you won’t be covered to drive their car.
It’s also worth noting that if you’re found to be driving someone else’s car without insurance you could face up to eight penalty points on your licence, and your insurance premiums will increase substantially.
What is the ‘total excess’?
This is the amount you pay if you need to make a claim. The total excess consists of two parts, the ‘voluntary excess’ – which is the amount you choose to pay towards any claim – and the compulsory excess, which is an amount specified by your insurance company.
If you’re looking for an easy way to lower the cost of your car insurance premiums, then choosing a higher voluntary excess is a quick option. However, you must ensure it remains affordable, otherwise you won’t be able to make a claim at all.
Do penalty points affect insurance?
If you do have penalty points on your driving licence, then there will be consequences for your car insurance. When taking out a new policy, it’s important to be honest with the insurer. You can expect your insurance premium to increase, and you may have to renew your insurance if you receive points while already covered. Some insurers also charge more for covering drivers convicted of specific offences, for example speeding or drink driving.
What is temporary one day car insurance?
Temporary car insurance is designed for people who need to cover their car for between 1-28 days. So, if you’re hiring a van to move house, or driving another car, then this flexible cover is ideal. If you’re a young driver it’s worth shopping around, because some insurers will not offer temporary cover to drivers under 21.
What is a no-claims bonus?
Amounting a substantial no-claims bonus over a number of years is one of the most effective ways of cutting the cost of your car insurance. A no-claims bonus does exactly what it says on the tin - it’s a bonus (or, in reality, a discount on your insurance when it comes to renewing) for every year you go without making a claim on your insurance. If you have five years of no-claims bonus or more, then you’re likely to save a significant amount on your next policy.
If you have a significant no-claims bonus and you make a claim, you likely won’t lose all of it. The amount of your no-claims bonus which will be deducted varies between providers, and there is no industry standard.
Some insurers will offer to protect your no-claims bonus for an extra fee, meaning that even if you make a claim your discount won’t be affected. However, the cost-effectiveness of this is undecided. According to comparison website Moneysupermarket.com, the longer you go without making a claim, the less financial sense it makes to protect your no-claims bonus.
What is legal cover and why do I need it?
Legal cover is one of the most common add-ons to be offered as part of your car insurance. 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. Legal cover can be used to recover fees and charges that aren’t covered by your normal car insurance policy, if you’re involved in an accident that isn’t your fault.
So if your car is being repaired and you need a hire car, for example, legal cover would help to recoup those costs. In addition, legal cover can be used to recover any excess you have to pay, and to recover damages for any injury you sustain in the accident, or a loss of earnings as a result of the accident. Perhaps most importantly, though, legal cover also gives you protection against having to pay legal costs yourself.
Why is car insurance so expensive for young drivers?
Insurance costs are usually higher for young drivers, which often includes those drivers who have just passed their driving test. The cost to insure younger drivers is considerably higher because insurance companies consider them to be a greater risk. Young drivers under the age of 25 are significantly more likely to be involved in an accident than drivers over this age, which is why your car insurance premiums drop significantly once you’re older.
One of the ways in which young drivers can reduce their premiums is to take extra driving qualifications such as Pass Plus, which aim to teach new drivers more skills including driving at night, driving on the motorway and driving in adverse conditions. Read our full guide to Pass Plus here.
Other ways of lowering the cost of car insurance include adding a more experienced named driver to your policy, such as a parent or guardian.
Where can I compare car insurance policies?
These days, there are plenty of price comparison websites which allow you to compare the prices and terms of different insurance policies from some of the biggest insurance providers. It’s worth remembering, though, that a few insurers are not listed on those websites. We would recommend shopping around to make sure you get the best deal.
Click through to the next page for page 6 of our complete car insurance guide