What to look for when buying car insurance

Jump to
Price
Excess
Type of cover
Special policies
Breakdown cover
Courtesy cars
Medical expenses
Personal accident
Contents
Driving abroad
Business cover
Legal costs
Uninsured loss recovery
Loss of keys
No-claims bonus (NCB)
NCB protection
Named drivers
Claims process
Customer service
Admin fees and cancellation fees
Auto-renewal

There’s a whole load of stuff you need to look out for when you’re buying a car insurance policy.

Get it wrong, and you might end up not being covered for something important. Or you might be paying over the odds for cover you don’t need.

As ever, we’re here to help. Here are some of the big things to keep an eye out for when you’re looking for a policy.

Price

Price is usually the first thing you’ll look at. But make sure it’s not all you look at.

Car insurance companies often include free add-ons or extras to make their products more appealing. Start by looking at what’s included as standard (and what isn’t) to get a better idea of what you’re really paying for.

Remember, car insurers work out the amount you pay based on a whole load of information. Just because your friend got an amazing deal on their car insurance doesn’t mean you will too – even if you drive a similar car.

Excess

Excess is the amount you have to pay when you make a claim for damage to your car. Insurers use it to stop people claiming for every ding and dent. There are two types:

Compulsory excess. That’s set by your insurer (and it’s not up for negotiation).

Voluntary excess. This is an amount you can add on top if you want to bring down the cost of your insurance. (Just make sure you can definitely afford it if you need to claim.)

Some types of claims have a separate excess charge, like windscreen replacement and repair excesses. But these are usually lower than your accidental damage, fire and theft excess.

If you’re not sure you can pay your excess, you can get a separate insurance policy that pays out for your excess. Some types of legal cover let you do this, too.

Type of cover

Not all car insurance policies are created equal. There are different levels of cover. The main three are comprehensive, third-party fire and theft, and third-party.

Third-party. This means if you get into an accident (and it’s your fault), your car insurance company will pay for the other person’s car to be fixed. But it won’t cover damage to your car.

Third-party insurance also covers injuries to pedestrians or passengers.

It’s sometimes called “Third-party only” car insurance.

Third-party, fire and theft. The next level up is called ‘third party, fire and theft’. This is the same as third party insurance, but also covers you if your car is stolen or damaged in a fire.

Comprehensive. Then there’s “comprehensive” – or “fully comprehensive” – car insurance. These policies protect against damage to your car, even if it’s your fault.

But very few comprehensive policies cover you to drive other cars. That’s a popular myth that just won’t go away.

If you want to insure a car you don’t own, you’ll have to look at other options. Like temporary car insurance. (Sorry for the shameless plug.)

Remember, not all car insurance policies are created equal. Some comprehensive policies offer things that others don’t, so don’t assume you’re covered for everything just because the policy is comprehensive.

Special policies

Some insurers offer special policies to attract different kinds of drivers.

If you get a ‘black box’ or ‘telematics’ policy, your car gets fitted with a little device that keeps an eye on how safely you’re driving. If you’re a good driver, your price goes down.

Multi-car policies are for families with more than two cars at the same address.

Other kinds of special-use policies include learner driver insurance, for drivers with a provisional licence who want a bit of extra practice outside their lessons. Then there are young driver policies, for people who’ve recently passed their test.

Breakdown cover

Breakdown cover isn’t usually thrown in by car insurance companies, but a lot of them will let you add it to your policy.

And even if you do have breakdown cover, not all kinds of breakdown cover are the same.

There’s standard breakdown cover, which will help you out if you’re stuck by the side of the road. But then you can also get “at-home” breakdown cover, which comes to the rescue if your car won’t start in the morning.

Sometimes, it will only cover you to get your car towed to the garage (if you break down by the side of the road). Others will take you wherever you were going.

Before you add breakdown cover to your policy, it’s worth checking you don’t already have it. Some bank accounts have breakdown cover included as standard. (They’re usually called “packaged bank accounts”.)

If you drive a brand-new car, you might not need breakdown cover if it’s included in your car warranty.

Courtesy cars

A lot of insurance companies will give you a courtesy car if yours needs to go in for repairs. A lot of comprehensive policies have this as standard. (But make sure you double check.)

You tend to get a few different options with courtesy cars. Most insurers will give you a basic courtesy car, and then you can choose to pay more for an “enhanced” courtesy car. (Basically, one that’s more like yours.)

There also might be a time limit on how long you can hold on to the courtesy car. This changes from one insurance company to the next.

If your car’s a write-off, you might not be covered unless you have a “total loss courtesy car”.

Generally, if your car’s a write-off, you’ll get a payout for the value of the car, and then you won’t be allowed to keep the courtesy car anymore.

Medical expenses

Who pays if you get injured in a car accident and need to fork out for medical bills? It’s not always clear.

A lot of policies include some level of basic medical cover for anyone in your car while you’re driving.

As well as injuries, medical expenses cover you for stuff like broken glasses.

Personal accident

Some insurers will offer a personal injury benefit add-on that covers you for the really serious stuff, like losing an arm or leg, or even death.

Sometimes you need to have a medical exam before you can get a personal accident cover.

Contents

You can get comprehensive car insurance policies that cover your personal stuff, too. But there are usually exceptions, like cash and things you use for work.

You might also be able to claim if your car stereo or sat nav system is stolen, but this varies from policy to policy.

Contents cover is usually called “personal effects” in your policy documents. But we felt that phrase was a bit 18th-Century.

And you usually won’t be covered if you left your door or boot unlocked, or your window open. 🔐

Driving abroad 🌍

The good news is you’re automatically covered to drive in the EU – at least for the rest of 2020.

The bad news is this may only be at third party level, even if you have comprehensive insurance.

Some insurers will offer comprehensive cover for driving abroad, but usually only for a certain amount of time.

Outside the EU, you’ll need a “Green Card”. Ask your insurance company if they’ll give you one.

Even if you’re covered to drive in a certain area, there might be specific countries that aren’t included. Check your policy documents, and keep an eye out for any Brexit-related updates. 👀

Business cover 👔

Most car insurance policies don’t cover you for business use. So if you’re planning to use your car for work, you need to make sure you get the right cover.

Your bog standard policy covers you for what’s known as “Social, domestic or pleasure” driving. Which basically means you’re not covered for anything business-y.

Then you can get “Social, domestic or pleasure plus commuting”, which is a kind of bare minimum business insurance. It’s usually cheaper than proper business cover.

Beyond that, there are different “classes” of business car insurance:

Class 1. This means you’re covered for the commute, and to drive to and from client meetings. It doesn’t tend to cover making deliveries.

Class 2. With class 2 insurance, you can add a named driver. But they usually have to work for the same business as you. Like class 1, it doesn’t usually cover you to make deliveries.

Class 3. This is designed for people who do a lot of driving for work, like salespeople. But it still doesn’t usually cover delivery drivers or taxi drivers.

If you need to drive for work, be really careful to get the right kind of cover. And if you do start using your car for work stuff, make sure you tell your insurer. Otherwise you could void your policy. 🚫

Uninsured loss recovery

Legal costs cover you if you’re at fault and you get sued. But if you’re not at fault and you need to sue someone else – or if you run into any other costs because of the incident – you need “uninsured loss recovery”.

‘Uninsured losses’ are all those little things that cost you time and money that aren’t covered by your policy. Like getting your excess back from the other person’s insurer (if you weren’t at fault), or the earnings you lose out on because you got injured in a crash.

If it’s not your fault, you can use uninsured loss recovery to claim on things like phone bills, travel costs and excess (from the third party) – basically any cost you run into because of a claim that isn’t covered by your car insurance.

Less positively, these types of policies tend to be full of small print. Read the documents carefully to make sure they’re worth it.

It’s usually listed as “uninsured loss recovery and legal expenses” in your policy docs.

Loss of keys 🔑

Some policies cover you if you lose your keys. But there are usually a lot of exceptions to this.

What it usually means is that, essentially, if the loss of your keys means your car is more likely to get nicked, your insurer will pay out for you to change the locks.

It’s all about what insurance companies call “the reasonable expectation” that the person who has your keys knows where you live and can find your car.

Which means you’re probably not covered if you drop your keys down a drain or something.

Insurance companies cover lost keys so they can avoid the (much more expensive) payout they’d have to make if your car was stolen.

There are usually loads of other exceptions, too. You might not get a payout if you leave your keys in your car, or if someone you live with takes them without your permission.

No-claims bonus

Plenty of insurers will offer you a lower price for your car insurance if you go a certain amount of time without claiming. This is called a no-claims bonus, or no-claims discount.

Insurers like it because it makes customers think twice before claiming and gives them a reason to stick with one insurer. Drivers like it because if they don’t claim, they get rewarded with cheaper car insurance. 💰

The size of the discount and the amount of time you need to stay claim-free can vary quite a bit. And each time you make a claim, your bonus discount will shrink.

You'll often need to send your insurer proof of your no-claims bonus when you buy the policy.

No-claims bonus protection

On top of the no-claims bonus, you can get the option of protecting it. That means you pay more to keep your no-claims bonus, even if you do have to make a claim.

But even if you have no-claims bonus protection, there’s still a limit to how many claims you can make.

For example, you might only be able to make two claims over a three-year period. Any more than that and the protection no longer counts.

And bear in mind that your price can still go up because you made a claim, even if you have no-claims bonus protection.

Named drivers

A named driver – or an additional driver – is someone else who’s insured to drive your car, but isn’t the main driver or policyholder.

If you put a named driver on your policy, they’ll usually have all the same protections you do.

If you’re the popular type, it’s worth knowing that some insurers let you add as many as four named drivers.

Sticking a named driver on your policy after you’ve already taken out the policy will usually come with a small fee.

Just bear in mind that the person who drives a car the most has to be the “main driver”. Lying about this to get cheaper car insurance is a kind of fraud called “fronting”. 🙅‍♀️

Claims process

Nobody wants to make a claim, but these things happen. So it’s worth picking an insurance company that makes it easy.

It’s worth checking out their claims process and whether you can make a do it over the phone, online or by post. It’s also worth taking a look at any reviews the company has.

Customer service

Which? did a big survey about customer service in car insurance. They found out it was one of the biggest reasons people switch their insurance company.

There’s a lot that goes into good customer service. And with insurance being pretty infamous for the endless call centre queues and impenetrable legal wording, it’s worth giving it some thought before you buy.

Admin fees and cancellation fees

If you need to update the details on your policy, or cancel your car insurance altogether, you usually end up having to pay admin fees.

These fees vary. A lot. So double-check what you’ll have to pay for before you buy a policy.

Auto-renewal

A lot of policies “auto-renew” after a year. Usually at a higher price.

If you don’t want your car insurance to automatically roll over into next year, make sure you tell your insurance company.

If your policy doesn’t auto-renew, you’ll need to get a new policy before your current one runs out. ⏱

Updated on 4th March 2020

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