Understanding Car Insurance in UK: Types, Groups, Tips for Cutting Costs

Car Insurance in UK

Car owners in the United Kingdom are required to insure vehicles. Driving without insurance is counterfeit and has serious consequences.

What is car insurance?

Car insurance is a type of insurance protection, which is designed to protect the property interests of the insured associated with the costs of restoring a vehicle after an accident, breakdown or purchase of a new car after theft, compensation for damage caused to third parties during the operation of the car.

Car insurance is a rather expensive process. If you are a young and/or inexperienced driver or have had accidents in the past, the cost of insurance can be thousands of pounds.

The cost of most insurance policies is growing from year to year, and a downward trend is not expected.

The cost of insurance is an insurance premium calculated individually and based on certain factors and risks that insurance companies foresee for each applicant. The results of such calculations sometimes do not obey the rules of logic, and in order to find the cheapest option, you have to check many websites and carefully fill out the questionnaires, trying different answers.

A bit of history

Compulsory car insurance was first introduced in the UK under the Road Traffic Act of 1930. This guaranteed that all vehicle owners and drivers had to be insured against their liability for injury or death to third parties when their vehicle was used on a public road. Germany passed a similar law in 1939.

Car insurance groups explained

There are 50 car insurance groups in the UK. Every car belongs to one of them. They band cars from the cheapest to the most expensive to insure. The cheapest cars belong to group one, the most expensive cars belong to group 50. The more expensive your car, the higher the group it will be in.

What insurance group is my car?

Insurance grouping in the UK is decided by the group rating panel. It includes members of the Association of British Insurers and the Lloyds Market Association and supported by Thatcham Research. They decide which insurance group your car falls into based on the following factors:

  • New car values;
  • Performance;
  • Safety;
  • Parts prices;
  • Repair times;
  • Damage and parts costs;
  • Bumper compatibility;
  • Car security.

Take a look at a car insurance groups table:

Age group Car manufacturer and model
Under 25 Fiat Panda, Citroen C1, Peugeot 107, Skoda Citigo, Volkswagen Fox
25-29 Citroen C1, Ford Ka, Peugeot 107, Fiat 500, Mazda 2
30-39 Mazda MX-5, Volkswagen Up!, Citroen C1, Fiat 500, Hyundai I10
40-49 Mazda MX-5, Citroen C1, Hyundai I10, Volkswagen Up!, Fiat 500
50-64 Mazda MX-5, Peugeot 107, Fiat Panda, Citroen C1, Ford KA
65+ Mazda MX-5, Smart ForTwo, Mini One, Fiat 500, Ford KA

Types of auto insurance

In the UK, car insurance policies fall into three main categories:

Category # 1

The basic policy of compulsory insurance of motor third party liability (Third Party Insurance) provides the very minimum of protection. It will cover losses and/or compensation to road users who have suffered from the actions of the driver of the insured car. Such a policy does not cover the cost of repairing or replacing the insured vehicle. If the car is stolen or burned down, its owner will not be able to receive a refund from the insurance company. Nevertheless, under such a policy, passengers in an insured car can count on compensation if their driver made a mistake and created an emergency. Prices for Third-Party policies are generally lower than other types of policies. In this regard, this type of car insurance is most suitable for owners of old and inexpensive cars, as well as for novice drivers since for the latter the cost of an insurance policy is much higher than for experienced drivers.

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Category # 2

Compulsory third party fire and theft insurance policies are similar to the previous category. The main difference is that in the event of theft or fire, the cost of the car will be paid by the insurance company to the insured person, but in case of an accident or other damage to the car, the cost of the repair will not be reimbursed.

Category # 3

Fully Comprehensive Insurance provides comprehensive protection for the car owner. In the event of an accident, the insurance company will be obliged to pay compensation not only to all participants in the accident but also to compensate for the damage caused to the owner of the insured car in almost any incident: theft, arson, vandalism, broken windshield or other nuisance… Exceptions to the rules are prescribed in the insurance conditions. Such a policy is usually more expensive, but if you carefully search and compare the offers of various insurance companies, you can find a Fully Comprehensive policy is cheaper than the above-mentioned policies.

What is Policy Excess?

The Policy Excess is the amount the driver will have to pay in the event of an insurance claim.

For example, if the damage was £1,000 and the insurance deduction was set at £300, then the insured car owner will receive a payout of £700 from his/her insurance company.

If the repair was £700 and the insurance deduction was £500, then the car owner would have to pay their insurance company £500 for the re-pair.

The insurance deduction consists of two parts: compulsory, the amount is set by the insurance company, and voluntary, the amount of which can be chosen by the consumer when buying the policy. As a rule, the higher the voluntary deduction amount, the lower the cost of the insurance policy. But be careful: if the amount of the insurance deduction is too impressive, then in the event of an insured event, you risk not receiving anything or receiving very little compensation for the damaged car.

Can I drive another family member’s car or a friend’s car?

Some Fully Comprehensive policies allow the insured to drive someone else’s car, while others do not. This must be written in the insurance documents. There are policies that allow you to drive an insured car outside the UK. Some policies do not allow it but after the consumer pays an additional amount.

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How to choose an insurance policy?

There can be a large number of such differences, so before buying this or that insurance policy, carefully read the full insurance terms and conditions. If something remains unclear, then you’d better contact the support service of the insurance company and clarify everything before the time of buying the insurance policy.

Unfortunately, from year to year the cost of car insurance in the UK is increasing, and for many car owners, buying insurance is a heavy financial burden on the family budget.

Tips for cutting the cost of car insurance

Tip # 1

Do not think that the basic car insurance policy (Third Party) will automatically be the cheapest, as insurance does not cover the risk of damage to your own car. It also happens that a full auto insurance policy (Fully Comprehensive) will come out cheaper. Therefore, do not limit yourself to looking only for basic insurance, it is more suitable for drivers of old cheap cars.

Tip # 2

If you try to write your occupation differently in the insurance questionnaire, you can reduce the cost of insurance. Use as many synonyms as possible, as well as more general names for professions, for example, a store clerk might write sales assistant, salesperson, vendor or seller; workers can use the words factory worker or industrial worker. Builders can try options like a construction worker, joiner, bricklayer, etc. If you choose the right variant of the name of the profession, then the amount of the insurance policy can be significantly reduced. The most important thing is not to invent a profession that does not correspond to reality, otherwise, you risk that the policy will be invalidated.

Tip # 3

Try adding a co-driver to your insurance policy, preferably with a long driving experience and no penalty points. This can significantly reduce the cost of the policy. The main thing is not to declare an additional driver as the main driver, otherwise, it will be considered fraudulent, and there will be a risk of policy cancellation.

Tip # 4

Avoid modifications to your vehicle. Fitting alloy wheels, spoilers, manufacturer-installed engine modifications, tinting, etc., will probably improve the appearance and handling of the vehicle, but will likely increase the cost of insurance. If the changes were nevertheless made, then when filling out the questionnaire, it is important to declare them, otherwise, you risk canceling your insurance.

Tip # 5

The cost of the insurance policy can be reduced if you take a higher amount of insurance deduction (policy excess). But be careful: setting the deduction too high, in case of an insured event with your car, it will be unprofitable to collect money from the insurance company since if the deduction amount is too large, the amount of payment will be minimal. The main thing is to find a balance, think about the maximum amount you are ready to lose if an accident occurs through your fault.

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Tip # 6

Register on the electoral roll. For many insurance companies, checking your name on the voter list is an essential step in verifying your identity, if you are “on the list” the insurance company will most likely offer you better insurance terms.

Tip # 7

Take the Advanced Driving Course. Many insurance companies significantly reduce the cost of insurance for holders of such certificates.

Tip # 8

Consider offers from insurance companies that install special devices (Telematic or Black Box devices) that track your driving style.

Tip # 9

Search for insurance on aggregator sites that compare hundreds of different offers from insurance companies: confused.com, gocompare.com, comparethemarket.com, etc. You will need to fill out a questionnaire, and the site will automatically compare many options for you and choose the cheapest insurance.

Tip # 10

Such large insurance companies as Aviva, Direct Line, Zurich do not appear on price comparison sites, so it is always better to check their sites separately, as they may have better deals.

Tip # 11

If you find a better deal than your preferred insurance company offers, it’s worth bargaining for. For example, if the cost of re-insurance has increased, then you can call the customer service department and say that you are thinking of leaving them because of the high cost and that you have found a lower cost in another company. Very often, insurance companies reduce the price in such cases in order to retain the client.

Tip # 12

Use cashback sites: topcashback.co.uk and quidco.com. Through them, you can return part of the amount paid. When you have already found out which company can offer you the most favorable conditions, go to the website of this company through the cashback platform, and you can get a partial refund of the paid insurance amount.

Tip # 13

If there is a financial opportunity – pay for the policy for a year in advance in one payment. It will be cheaper than paying on a monthly basis. An alternative option is to apply for an interest-free credit card in advance, pay for the policy with this card and gradually pay with the bank that issued the interest-free loan. The main thing is not to forget and not be late with regular payments by credit card, otherwise, the penalties will outweigh the savings.

Tip # 14

You can also contact insurance brokers whose specialization is the search for the most favorable conditions for car insurance. Brokers have access to hundreds of different offers and will certainly be able to help you.

As you can see, there are many ways to cheap auto insurance. Of course, this process can result in a large waste of time, but most likely it will be worth it if as a result, you can still find a car insurance offer within the family budget.

Please note that this article does not constitute specific legal advice and is only advisory in nature. You can get accurate information in each specific case only at an individual consultation.

Category: General

Tags: driving, insurance, insurance groups