Everything you need to know about car insurance

We’ve all heard of car insurance—it’s a universal necessity for anyone who drives. But let’s be honest: it’s still a bit of a mystery for many, especially when leasing a car.

I know what you’re thinking: “Car insurance? Everyone knows about that. Why dedicate a whole blog to it?”

You’re not wrong—most people have heard of car insurance. Yet, plenty are left scratching their heads when it comes to how it actually works.

Car insurance is often shoved to the back of your mind, dismissed until the day you actually need it. And when that day comes, it’s usually a whirlwind of panic, paperwork, and figuring out how to make a claim.

Many people ask, “How do car insurance groups work?” or, “How does insurance work when leasing a car?”

Let’s dive in and untangle some of the common (but oh-so-important) questions about car insurance.

What is car insurance?

Car insurance is your safety net for life’s little (and not-so-little) road mishaps. Whether your car is stolen, vandalised, or involved in an accident, car insurance is there to help.

In the UK, it’s the law—every driver needs car insurance.

It doesn’t just protect you and your pride and joy, but also covers other vehicles (known as “third parties”—a fancy term for other people’s cars and property).

Here’s the deal: if something happens and someone needs to pay for repairs, the at-fault driver’s insurance steps in to cover the costs. It’s financial protection for all, meaning fewer sleepless nights worrying about hefty bills.

In short, car insurance is like having a responsible friend who always has your back (and your wallet).

What are the different types of car insurance?

When taking out car insurance, you will hear a couple of names chucked around. Think of them as the Bronze, Silver, and Gold of road protection.

Enter, Third-party only (TPO), Third-party, Fire & Theft (TPFT) and Fully Comprehensive.

Third-party only (TPO)

This is the “just enough to get by” option. TPO is the minimum cover you need to legally hit the roads in the UK.

It protects other people and their property if you’re at fault in an accident.

But here’s the kicker: it won’t pay for repairs to your car, nor will it save the day if your car gets nicked or bursts into flames.

In short, it’s like bringing an umbrella that only works for your mates when it rains.

Third-party, Fire and Theft (TPFT)

TPFT is TPO’s slightly more helpful cousin. It does everything TPO does but adds a little extra: if your car is stolen or damaged by fire, you’re covered.

Think of it as having a basic insurance policy with a couple of bonus features—like getting free biscuits with your tea.

Fully Comprehensive

Now we’re talking. This is the deluxe package. Fully comprehensive insurance doesn’t just protect third parties; it’s got you covered too.

Whether your car’s damaged in an accident, stolen, or set ablaze, you’re in safe hands.

Sure, it costs a bit more, but it’s worth it when life decides to throw a curveball.

And if you’re leasing a car with Carparison, fully comprehensive insurance is a must. It’s all about keeping your car properly protected, so you can enjoy the ride with complete peace of mind.

What is excess in car insurance?

Think of car insurance excess as your share of the bill when something goes wrong. It’s the amount you pay towards any claim for repairs to your car.

You cover the excess first, and your insurer takes care of the rest.

Here’s the thing—you should choose an excess you can realistically afford. You don’t want to be caught off guard if the worst happens!

Fancy lowering your insurance premium? You can opt for a higher excess, but just remember, if you make a claim, you’ll have to pay more out of pocket. It’s a bit of a balancing act.

What is a no claims discount or no claims bonus?

A no claims discount (aka no claims bonus) is like a loyalty card for careful drivers. The more years you drive without making a claim, the bigger the discount on your insurance premium.

It grows year by year, and the best part? You can usually take it with you to a new policy or car. 

It’s basically your reward for being a road angel.

What happens if I don’t have car insurance?

Legally, you must have at least Third-Party Only car insurance. 

Drive without it, and you’re playing with fire—risking an unlimited fine, points on your license, or, in more serious cases, even a driving ban.

Oh, and the police? They’re not messing around. They can seize and, in some cases, destroy uninsured vehicles.

Not exactly the best way to say goodbye to your car.

How is my car insurance price calculated?

Ah, the million-pound question (well, hopefully not literally). Your insurance price is based on several factors, including:

• Your age (yep, they’ll ask)
• Where you live
• Your occupation
• The car you want to insure (and its insurance group—more on that below)
• Your driving history
• How you’ll use the car

Every insurer does the maths a little differently, which is why quotes can vary. 

Moral of the story? Always shop around to find the best deal.

What are car insurance groups?

Car insurance groups are like a ranking system for cars, with 50 groups in total. The higher the group, the higher the insurance cost. Cars in Group 1 are the cheapest to insure, while Group 50 will cost you a pretty penny.

How are cars sorted into these groups? It’s based on factors like:

• The car’s value when new
• Cost of parts and repairs
• Performance (speed demons cost more to insure)
• Safety and security features

If keeping costs low is a priority, check the group your car belongs to before buying.

How can I reduce my car insurance cost?

We all love a good deal, and saving on car insurance is no exception. Luckily, there are some straightforward ways to bring that price down.

Step 1: Shop Around
Don’t just stick with your current insurer—they might be secretly counting on your loyalty (and your laziness).

Emma from Bee Money Savvy puts it perfectly:

“When looking to save money on car insurance, it’s important to shop around. 

"Insurers very rarely reward loyalty, so never accept your existing insurer’s renewal quote. Visit a price comparison website to find the best quote and let your existing insurer know you can get it cheaper elsewhere. 

"They’ll often offer a better deal once they know you’re thinking of leaving them.”

Martin Lewis, the Money Saving Expert, couldn’t agree more:

“To maximise your savings, it is important to shop around and NOT auto-renew with your current insurer until you have checked elsewhere”

Step 2: Look for Cashback Offers
Lylia Rose , a finance blogger, suggests getting a little extra bang for your buck:

“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”

Step 3: Don’t Auto-Renew
Lisa from Lisa’s Notebook offers a simple yet effective tip:

“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.”

Step 4: Consider Other Tricks
Lisa also shares a couple of lesser-known tricks:

• Fully comprehensive insurance can sometimes be cheaper than third-party. Yep, you read that right!
• Opt for a telematics device (aka a black box) to reward careful driving with lower premiums.

Can I drive overseas with my car insurance?

Dreaming of a road trip abroad? 

Before you hit the motorway (or autobahn), check your car insurance policy. Some policies include driving abroad, while others don’t.

Even if your insurance covers you, the level of cover might not be the same. Plus, it could be limited to a certain time frame.

If you’re leasing a car, there’s an extra step—contact your funder to get the necessary documentation. It’s worth the hassle to avoid any hiccups while cruising along scenic European roads.

Can I drive other vehicles with my car insurance?

Picture this: your car isn’t around, but your friend says, “Hey, take mine!” Sounds simple, right? But before you grab their keys, let’s talk insurance.

Whether you’re covered to drive someone else’s car depends entirely on your policy.

A common myth is that having comprehensive insurance automatically means you can drive other cars (aka DOC).

Spoiler alert: it doesn’t always work like that.

So, before you end up unwittingly breaking the law, take a close look at your policy. Does it specifically mention DOC?

If not, driving someone else’s car could land you in hot water as an uninsured driver. And trust me, that’s a headache you don’t want.

What happens when I make a car insurance claim?

If the worst happens, here’s the drill:

1. Report the Incident – Call your insurer, or log into the app, and let them know what’s happened. You’ll be asked if you want to make a claim
2. What Can You Claim For? – It’s not just car damage. You can also claim for medical expenses, loss of money (if the car is written off), or theft
3. Filing the Claim – To proceed, you’ll need to fill out a claim form and submit any supporting evidence—think photos, receipts, or police reports

Once submitted, the insurance claim assessor takes over. They’ll review your claim and outline your options.

Not happy with their decision? You’ve got the right to appeal either directly with your insurer or, if needed, with the Financial Ombudsman Service.

Remember, the more evidence you can provide, the smoother the claims process will be. It’s like building your case for a detective, but with less drama.

What should I do in the event of an accident?

Accidents happen, and while they’re never fun, knowing what to do can make the situation a lot easier to handle. Here’s what you need to do:

1. Call the emergency services, if needed – Your safety (and that of others) comes first
2. Record all the details – The more information you can gather, the smoother your insurance claim will be
3. Call your insurance company, or log into the app – This will start your claim process

Here’s what to note down:

• Take clear photos of the scene, including vehicle positions and damage
• Save dashcam footage, if available
• Write down key details about those involved (names, contact information, and registration numbers)
• Jot down witness details, if there are any

It’s easy to forget the little details when you’re in shock, so documenting everything immediately is key.

When it’s safe to do so, contact your insurance company (or use their app if they have one) to report the incident. The outcome will depend on the circumstances, such as who’s at fault, so it’s always a good idea to be familiar with your policy beforehand.

FAQs: Car Insurance for Vehicle Leasing

Leasing a car instead of buying one naturally raises a few questions about how car insurance might differ. While you’ll still need full insurance to drive legally in the UK, there are some unique aspects to consider when insuring a leased vehicle.

Let’s clear up some of the most common queries and put your mind at ease!

Does car leasing include insurance?

Short answer? Nope, but that’s not a bad thing.  

When leasing a car with Carparison—whether it’s a Vauxhall or an electric dream machine—you’ll need to arrange your own fully comprehensive cover.

Why? So you can pick your preferred insurer, bag any no-claims discounts you’ve been building up, and dodge being tied into anything less than perfect.  

It’s like planning your own party. Why let someone else pick the playlist?

When do I have to insure my lease vehicle?

Before your shiny new car rolls up to your driveway, it needs to be insured. Fully comprehensive cover isn’t just a nice-to-have; it’s the law for cars not parked on private land.

Think of it like ordering a pizza. You wouldn’t have it delivered without sorting the payment first, right?  

So, get your insurance sorted before delivery day. Your future self (and your lease company) will thank you.

Does leasing a car increase your insurance?

Here’s the tea: leasing a car can nudge your premiums up, but not always. It largely depends on the car.  

Leasing makes it easy to grab that brand-new or luxury model you’ve always wanted, which means the car’s value might be higher than if you were buying second-hand.  

Naturally, that can mean a pricier policy.

You might also want to look at optional extras, like GAP insurance—kind of like upgrading your meal deal to include crisps and a chocolate bar. Not essential, but very much worth it.

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

Let’s break this down. GAP (Guaranteed Asset Protection) insurance is the unsung hero of car leasing.

Picture this: you’re in an accident, and your insurer only pays out the car’s value at the time of the crash (not what it was worth when you got it).  

Depreciation strikes again. GAP insurance swoops in to bridge the, well, gap between those two amounts.

Do you need it? No.  

But is it highly recommended, especially for shiny new cars that lose value quicker than a phone battery on 1%? Absolutely.

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

Yes, your personalised plate can totally come along for the ride—though there’s a bit of admin involved.

First, check with your lease funder, as they’re the car’s registered keeper. Once they’re on board, you’ll need to:

1. Fill out a V750 form.
2. Contact the DVLA (and maybe make a cup of tea, because paperwork).
3. Remove the plate before returning the car at the end of the lease.

So, it’s doable—but maybe keep it stress-free and reserve the plate for your forever car?