If you own a vehicle you are legally obliged to have motor insurance.
Even if you do not use your vehicle you are still required to insure it, unless you officially declare it off the road.
Motor insurance covers:
Types of motor insurance
There are three main types of motor insurance:
- third party
this is the minimum cover required by law in the UK. It covers you against costs that arise as a result of injuries you cause to other people and damage to their vehicles
- third party fire and theft
basic third party cover with added protection against your vehicle being damaged, stolen or destroyed in a fire
this is the highest level of cover available. It protects against:
- injuries to other people and damage to their vehicles
- your vehicle being damaged, stolen or destroyed in a fire
- medical expenses and accidental damage
- the cost of replacing your vehicle's contents
Third party and comprehensive policies cover you regardless of who is at fault (you or the other driver).
Third party policies do not cover costs that arise as a result of damage to your own vehicle – for this you need comprehensive motor insurance.
Guaranteed asset protection (GAP) policies can be bought in addition to, but are not a substitute for, your motor insurance policy. GAP insurance protects against your vehicle decreasing in value and covers any outstanding finance debts if your vehicle is written off or stolen.
ABI members transacting motor insurance business and the motor syndicates of the Lloyd’s Market Association (LMA) have made a recommendation to their members concerning the use of policyholders’ private vehicles on the business of their employer, such as Government Departments, local authorities and voluntary organisations. The recommendations, when adopted by the insurer, allow a policyholder with motor insurance that includes use for personal business to use his or her own vehicle for the business of their employer. They also provide that the receipt of a mileage allowance will not constitute use for "hire or reward". This is to ensure that individuals in receipt of such an allowance continue to be covered under their insurance policy, notwithstanding any general exclusion of hire and reward use. Please note that adoption of these recommendations is voluntary and entirely at the discretion of each individual member. It is important that policyholders check with their insurer that they are properly covered for the use of their vehicle.
The cost of motor insurance varies significantly from driver to driver. It is worth shopping around to find the best deal for you. A number of factors affect the price of your premium including:
- your age
- your occupation
- your insurance claims history
- the type of vehicle you drive
- where you store your vehicle at night
- if your vehicle is fitted with an alarm or immobiliser
- fraudulent claims made by other motorists
Gender and the cost of insurance
Insurers can no longer consider gender when calculating insurance premiums, under a ruling by the European Court of Justice which came into force on 21 December 2012. This may affect the cost of your premium when you go to renew your motor insurance. For example, a young woman may pay more for motor insurance in 2013 (compared with how much she was paying in 2012) because her risk is shared with the risk of young male drivers who are more likely to have an accident.
It is important to consider other factors as well as cost when buying motor insurance – never buy a premium based on price alone.
- what type of policy best suits you
- do you need to include any named drivers on your policy?
- will you need extra cover if you take your vehicle abroad?
- will your policy cover you if you rent a car or other vehicle?
For advice on reducing the price of your premium go to our tips on cutting the cost of motor insurance.
To find out more about motor insurance take a look at our guide: Driving with confidence – making sense of car insurance (pdf 452kB).