It is a requirement of the law that you must have basic motor insurance if you own or drive a motor vehicle. You can also choose to have a higher level of cover.
Motor insurance policies are designed to cover the replacement or repair of your vehicle, depending on the circumstances of an accident.
You can choose from three levels of cover:
- Third party - this is the minimum legal requirement and covers you if you injure a third party, including passengers or their property, but does not cover damage to your own vehicle.
- Third party, fire and theft - provides cover for third party injuries and liabilities, and also fire and theft to your own vehicle, but not accidental damage to your vehicle.
- Fully comprehensive - as well as the above, this type of policy will cover fire, theft and accidental damage to your vehicle.
You pay a premium for your motor insurance depending on factors that include the make and model of your car, the engine size, your age and your gender.
You will tend to get quoted lower premiums if you park your car in a garage overnight or if you have a clean driving licence.
Shop around when buying or renewing a motor insurance policy. There are lots of insurers out there. Use key policy information to see what is and what is not covered by a policy.
Always compare what is covered by a policy, not just the price. Some policies may be cheaper than others, but they may not provide you with the same level of cover.
Most policies have a standard excess charge which means that you agree to pay the first part of any claim, for example the first £50 or £100. If you agree to pay a higher excess you may be able to get a cheaper policy.
Depending on your claims history, the insurance company may offer you a "no claims bonus" - or discount. The offering of a "no claims bonus" will result from not having made any claims on your motor insurance policy for a number of years. The discount that may be offered can range from 20% to 65%, or higher, and the premium that you pay upon renewing the policy will reduce accordingly.
Some companies allow you to pay a sum to protect or guarantee this "no claims discount", which can mean a saving on your future premiums even if you have to make a claim.
Insurance fronting is when someone other than the main driver of a car is named as the policyholder. For example, a parent insuring a car and declaring themselves as the main driver when in fact the car is mostly driven by their son or daughter.
While it may be tempting to try to reduce the costs of insurance by doing this, it is illegal and could invalidate the policy. The insurance company can refuse to pay out on a claim, cancel the policy and even prosecute the policyholder or driver for fraud.