Car insurance is full of jargon, and that jargon hides how it really works. Once you understand the few types of cover and what drives the price, you can choose the right policy and avoid paying more than you need to.
The main types of cover
Third party, or liability cover, is usually the legal minimum. It pays for damage or injury you cause to others, but not to your own car. Third party, fire and theft adds cover if your car is stolen or catches fire. Comprehensive is the fullest cover, paying for damage to your own car as well, even when a crash is your fault. Comprehensive is not always the most expensive, so it is always worth comparing.
Key terms explained
Premium is what you pay for the policy. Excess, or deductible, is the amount you pay yourself towards a claim before the insurer pays the rest, a higher excess usually means a lower premium. No claims discount, or bonus, is the reward you build up for years without claiming, and it can cut your premium significantly over time.
What affects your premium
Insurers price on risk. The car itself matters, its value, power and how expensive it is to repair. So does the driver, age and experience, claims and driving history, and where the car is kept. Your annual mileage and how you use the car play a part too. This is why a cheap car to buy can still be costly to insure, and why it pays to get a quote before you commit to a specific model.
How to pay less
You can often lower your premium by shopping around rather than auto renewing, choosing a sensibly higher excess, improving security, and building up a no claims record. Our guide on how to get cheaper car insurance goes deeper, and you can see typical costs with the car insurance estimator.
Check insurance before you buy the car
Insurance is a real running cost, so factor it in from the start, especially for a first or young driver, where it can be a large share of the budget. Include it in the full picture with the 5 year cost of ownership calculator.
