Everything you need to know about car insurance

Car insurance is something that all drivers in the UK must have in one form or another, however, for some, it can be a bit of a mystery. In this article, we explore everything to know about car insurance and answer the important questions about getting car insurance on your vehicle lease.

Car insurance is often something you don’t think too much about until you need to make a claim, and, although you’ll take out a policy to ensure you’re always covered, it’s common for people to not know all about auto insurance and how it works. Whether you want to learn more about car insurance in general or are planning to lease a vehicle and want to know where you stand, in this car insurance explained article we give you the need-to-know answers.

What is car insurance?

Car insurance covers your vehicle in case of emergencies, for instance, if your car is stolen, vandalised or you are in an accident. Car insurance is compulsory for all drivers in the UK. Your insurance policy protects not only your vehicle but other vehicles on the road too (known as third parties) and means that should something happen you’ll have financial protection. Equally, you can have peace of mind knowing that all other drivers on the road should also have this financial protection should they be at fault for an incident you are involved in.

In simple terms, car insurance policies mean that, should a car be damaged or be involved in an accident that causes someone to need to pay for repairs, the driver who is at fault will be able to pay for those repairs.

What are the different types of car insurance?

When taking out car insurance, there are three different types of auto insurance that you will most commonly find.

Third-Party Only (TPO)

Third-party cover is the minimum level of cover you must legally have on public roads in the UK. TPO will only cover damages to third parties who require a pay-out for damage caused in an accident where you are deemed at fault. If your vehicle is damaged by fire or stolen the policy will not cover that, nor will it offer a pay-out for any damages done to your vehicle.

Third-Party, Fire and Theft (TPFT)

Third-party, fire and theft is similar to TPO but it will also offer you cover if your car is damaged by fire or stolen.

Fully Comprehensive

Fully comprehensive car insurance is the most extensive type of insurance you can get and will offer everything that TPFT offers but also will mean that you are able to receive a pay-out for any damages done to your vehicle, whether in an accident, by fire or through theft.

Please note: When leasing a car with Carparison, you are required to take out a fully comprehensive insurance policy.

What is excess in car insurance?

Your car insurance excess is the amount you will have to pay towards any claim for repair to your vehicle. You’ll have to pay the excess where repairs are needed and your insurance provider will pay any additional charge. You should ensure this is an amount you would be able to cover should the worst happen.

Sometimes, you can choose to opt for a higher compulsory excess which can bring your insurance premium down but will mean, in the event of a claim, you’ll need to pay more.

What is a no claims discount or no claims bonus?

A no claims discount, also referred to as a no claim bonus, is a discount applied to your insurance premium (the amount you pay for insurance) which is based on your number of years of claim-free motoring. The discount will increase year-on-year with no claims and can usually be transferred to a new policy or a new vehicle.

What happens if I don’t have car insurance?

It is a legal requirement to have third-party only car insurance at a minimum, and without this, you could risk an unlimited fine, points on your licence or, for more serious offences, you could risk being disqualified from driving completely. Police are also able to seize and destroy the vehicle that is being driven uninsured in some cases

More about your car insurance policy

Do you have questions specific to your car insurance policy? Although insurance details change from person to person so you should always consult your insurance provider directly, we have taken a look at some of the most asked questions about personal policies

How is my car insurance price calculated?

Your car insurance premium is determined on a range of factors which include but aren’t limited to your location, your age, your occupation, the car you wish to insure and its car insurance group (see more below), your driving history and how you intend to use the vehicle. Every insurance provider will calculate your insurance price differently which is why you might find differences in premium prices between insurers and which is why it’s important to shop around when looking for cover.

What are the car insurance groups?

Car insurance groups are how vehicles are categorised and the group that your vehicle is in will inform your car insurance price. The higher risk a car is seen as, the higher the group. There are 50 total groups - cars in group one will be the cheapest to insure and cars in group 50 will be the most expensive. Taking the group that your desired vehicle is in into account when buying it can help you have an idea of the insurance price you may get.

How vehicles are placed into groups depends on a range of factors including the value when new, the cost of parts and repairs, level of performance, safety rating, security and more. At present, MG Motor cars tend to be the cheapest to insure so if you are looking to save money on your car insurance why not look at our MG Motor UK leases?

How can I reduce my car insurance cost?

If you are looking for a way to save some money on your car insurance, Emma from Bee Money Savvy explains that you should shop around:

“When looking to save money on car insurance it’s important to shop around. Insurer’s very rarely reward loyalty so never accept your existing insurer’s renewal quote. Instead visit a price comparison website to find the best quote and let your existing insurer know that you can get it cheaper elsewhere, it’s often the case they’ll offer you a better deal once they know that you’re thinking of leaving them.”

Finance blogger Lylia Rose also suggests you look for cashback offer:

“The best way to save money on car insurance is to firstly find the best quotes you can, using a comparison website and going direct, and then to check cashback websites to see if the companies with the best prices offer cashback. If they do then you should restart your quote using the link on the cashback site to save even more money on your car insurance!”

Lisa, from Lisa’s Notebook, also offered some advice on this, saying:

“If you want to save money on your car insurance, there are lots of easy ways to do it. Did you know, statistics show more claims are made on third party insurance, so this can cost more than fully comprehensive? Or, if you choose an insurer who offers a telemetric monitoring device for your car to track careful driving, you’ll attract lower premiums? But my top tip is, don’t auto-renew. Call your insurer and ask what they can offer you, or tell them the package they need to beat to keep your custom. I do this every time and I’ve saved between £30 and £70 on my annual premiums.”

Can I drive overseas with my car insurance

Whether you are able to drive abroad will depend on your car insurance policy. The fastest way to find out whether you can is to check your policy documents or contact the provider to enquire. You should be aware though, that even if your cover does include driving abroad you might not receive the same level of cover or your cover may be limited to a certain length of time.

There are additional considerations beyond insurance when driving your lease car abroad as you may need to contact your funder to request applicable documentation.

Can I drive other vehicles with my car insurance?

Sometimes, you might need to drive someone else’s car, whether in an emergency or just to help out. Whether you will be able to will depend on the details of your policy. Contrary to popular belief, even if you have comprehensive car insurance you might not be covered for driving other cars (referred to in short as DOC).

When you take out your policy, it’s wise to read it thoroughly and make note of whether DOC is included, or whether you will be classed as an uninsured driver if you get behind someone else’s wheel.

What happens when I make a car insurance claim?

Once you report an accident to your insurer, you’ll be asked whether you’d like to make a claim or not. As well as damages to the car, you can also claim for medical costs that could have incurred, money loss if a car is

written off or theft. If you wish to make a claim, you’ll have to fill in a claim form and submit this along with any evidence you may have (see more on that below).

The insurance claim assessor will then assess your claim and tell you the options you have moving forward. In the instance you don’t agree with the solutions they offer, you are able to appeal to your insurer or take it further and appeal with the Financial Ombudsman Service

What should I do in the event of an accident?

In the event of an accident that you are involved with, after calling the emergency services, if necessary, you should do two things:

1. Record as much information about the incident as possible
2. Call your insurance company

By recording the incident as much as possible you’ll have evidence that you can use with your insurance claim. This type of information can include taking photographs of the scene, downloading dashcam footage and writing down information about those involved and any witnesses present. Not only can this be useful later down the line, but when you are in shock you might be more likely to forget details so this can help you in that situation also.

Then, when it is safe to do so you should call your insurance company in order to report the incident. It will depend on the nature of the accident (for example, who was at fault) as to what the outcome is, which is why it’s useful to familiarise yourself with your policy when you take it out.

Car insurance and vehicle leasing

When leasing a vehicle rather than purchasing it, there are naturally questions that come up surrounding car insurance and any potential differences that can arise. Just like with any other car, you’ll need to be fully insured to drive your vehicle lease in the UK, however, there are a few small differences you may notice.

Does car leasing include insurance?

When leasing a vehicle from Carparison, whether you’re looking for Vauxhall leasing or an electric car lease you’ll need to independently organise fully comprehensive cover or your vehicle. This will allow you to go with your preferred insurance company, utilise any no claims discounts you may have or renewal options.

When do I have to insure my lease vehicle?

You’ll have to arrange the comprehensive insurance cover before we deliver your new lease car. Any car that isn’t parked on private land needs to be insured legally and so your insurance should be in place by the time we come to deliver the vehicle.

Does leasing a car increase your insurance?

Regarding car insurance, one thing that can affect the premium is the price of the vehicle, and therefore if you are leasing a new vehicle you may find the price higher than on an older model. You may also want to consider and purchase additional insurance options such as GAP insurance that aren’t required but suggested.

What is GAP insurance, and do I need it on my vehicle lease?

Guaranteed Asset Protection, more commonly referred to as GAP insurance, can be added to your comprehensive insurance policy and would help you recoup any losses you may have. When leasing a new car, during the length of your lease your car depreciates in value and, if you are involved in an accident, a standard policy may only pay-out to the value of the vehicle at the time of the accident, rather than the value that it was when you leased it. GAP insurance cover will bridge the gap between those two figures.

You do not need to have GAP insurance when taking out a vehicle lease, however, due to the depreciation a new car experiences within the early years of its life it is recommended. 

Can I have a private registration plate on my lease vehicle?

If you have a private registration plate you’d like to use on a leased vehicle, you are able to use it but there are some steps you need to take first. Firstly, you should reach out to your lease funder to discuss this change as they will be the registered keeper of the car.

Once you have done that, you’ll need to take the steps you would when transferring a plate to any vehicle including filling out your V750 and contacting the DVLA. It will then need to be removed again at the end of your lease term.

Now, with your car insurance worries sorted, all you need to do is find the car lease deal to suit you. And, for more tips, guides, and advice, visit our blog.