Car insurance in the United Kingdom

If you’re planning to drive in the UK, it’s essential you have the right insurance. Vehicle insurance is compulsory for drivers on the island and is one of a number of insurance policies you should take out when living in the UK.

To help you out, this guide explains everything you need to know, including information on the following:

An overview of UK car insurance

Insurance in the UK is compulsory. The law states that you must insure all vehicles if you drive them or keep them in public places to at least the level of third-party liability. This is unless they have been declared ‘off the road’, which can be done if the vehicle is not being used.

Car insurance is, therefore, big business in the UK. In fact, there were around £10 billion of premiums in 2018. This makes it one of the biggest motor insurance markets in the world and there are more car insurance providers in the UK than anywhere else in Europe. There are over 200 car insurance providers in the UK. Some of the biggest include:

• Aviva
• AXA
• Direct Line
• RAC

Because of this, it pays to shop around for insurance and make sure you get a deal that suits your needs.

UK car insurance typically covers the vehicle rather than the driver. This means that you aren’t automatically insured to drive other people’s cars. However, some comprehensive insurance policies permit this.

When you take out a car insurance policy in the UK, you specify who is on the policy. Couples can get insurance with both partner’s names on the policy if they both drive, while you can also add additional drivers.

As auto insurance in the UK applies to the vehicle, multiple vehicles requires separate insurance plans. However, many companies offer discounted rates for a second car.

The Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) both regulate car insurance companies in the UK. The UK Motor Insurance Database contains records of all insured vehicles. The police can spot-check vehicles to make sure that they have insurance.

See even more information in our guides to insurance in the UK and driving licenses in the UK.

Can you use car insurance from another country in the UK?

At present, you can use valid vehicle insurance from other EU countries in the UK. However, this may well change as a result of Brexit. Non-EU/EFTA nationals need to purchase a UK insurance policy to drive in the UK.

Types of car insurance in the UK

The three main types of car insurance in the UK are as follows.

Third-party liability

This is the minimum legal coverage. It covers all damage caused to third parties and their property. This includes all damage to other vehicles, injury to others and damage to property (e.g., buildings, lampposts) in incidents where you or another insured driver of your car is at fault.

Third-party, fire, and theft

This includes all standard third party liability coverage plus it also covers repair or replacement costs if your vehicle is stolen or damaged by fire.

Some policies also offer to cover damage caused by other accidental damage such as storm damage.

Fully comprehensive

The highest level of coverage which will also pay out for damage to your own car in incidents where you are at fault. Some policies also cover the owner of the policy to drive other vehicles.

Although this is the most extensive form of car insurance, most policies will have some exclusions – usually related to intentional damage – so it’s important to check that you have the right level of coverage before signing up.

Car insurance costs

Car insurance costs in the UK will depend on factors including:

• insurance type;
• vehicle value;
• driver age, history and profile;
• what you will use the vehicle for.

The average cost for car insurance in the UK in 2021 was £412 a year. This is among the highest in the EU.

You can look to lower your annual car insurance premiums by:

• reducing risks associated with your car – for example, fitting sensors or installing an alarm to reduce the risk of theft;
• taking out telematics (also known as ‘black box’) insurance that sees a device fixed to your car that tracks your driving habits. If you’re a safe driver, you could see reductions on future premiums;
• paying the annual amount upfront rather than in monthly installments;
• increasing your excess – this is the amount you will need to pay against any claim. For example, if you have an excess of £100 and the value of the claim is £500, the insurer will pay £400. All insurers have a compulsory excess but you can voluntarily increase this to bring down the premium;
• if you are a young or inexperienced driver, you can add drivers with a good driver profile to the insurance policy.

Additional forms of car insurance in the UK

You can purchase additional forms of car insurance in the UK to mitigate against further risks. These include:

• Breakdown insurance – covers costs of a roadside breakdown, such as repair, getting the car towed away, and sorting out replacement transport;
• Warranty – covers any mechanical faults with the car. This is often included with new cars, but some companies offer an additional warranty, such as MotorEasy.
• Legal insurance – covers legal expenses in the event of an incident that goes to court;
• No-claims protection – protects your no-claims bonus in the event of making a claim. You will usually need to wait until a minimum no-claims period has elapsed (e.g. 3 years);
• Personal accident insurance – covers any medical costs that would otherwise need to be met;
• Driving overseas – at present, UK insurance policies cover cars taken to EU countries but this may change. You can extend your policy to cover additional countries at the same level as your UK policy;
• Lost or stolen keys – covers the cost of replacements.

Car insurance bonuses and penalties in the UK

The UK operates a ‘no-claims’ discount system, which allows people who haven’t claimed on their insurance in a number of years to obtain a substantial discount.

Each insurance company operates its own no-claims scheme, but it’s usually possible to get discounts of 50-80% on your annual premiums for long periods without making a claim (e.g. 10+ years).

Most companies will add on a percentage discount for each claim-free year, for example you’ll get 30% discount after the first year and this will then rise by 5% each year until you reach the maximum.

It is often possible to transfer no-claims periods to other companies if you switch insurer. However, insurers are not obliged to do this so check before signing up if this is something you want to consider. Most companies will omit any claims where the policy-holder is not at fault, for example theft or accidental fire damage.

Companies reward no-claims periods, but they also penalize drivers with a poor driving record. Expect to pay a higher premium if you:

• have been involved in any road accidents that were your fault;
• have points on your driving license for things such as speeding or drink-driving;
• are a young or inexperienced driver.

Car insurance companies in the UK

There are over 200 car insurance providers to choose from in the UK. This is why it pays to shop around. Some of the biggest and most well-known companies include:

• Admiral
• Aviva
• AXA
• Churchill
• Direct Line
• RAC
• Saga

In addition to these, there are also companies such as Tempcover that offer temporary car insurance. Policies start from a single hour, which could give you some much-needed cover at short notice. You can find out more information on individual companies by checking out our UK business directory.

Compare policies using a comparison website such as Confused.com, Go Compare, and MoneySuperMarket. You can also check reviews of different companies on the Which? website.

Choosing car insurance in the UK

You can take a number of different factors into account beyond the premium costs when shopping for car insurance in the UK. These might include:

• No-claims bonus – what discounts are offered and what is the policy around transferring bonuses from elsewhere?;
• Policy coverage – what is excluded from standard coverage, can this be added on if necessary and at what cost?;
• Excess/deductible options – what is the mandatory excess and what are the options for choosing to increase it?;
• Company reputation – how does the company perform in reviews and what is the customer feedback like?;
• Claims process – how straightforward is it, what is involved and what do the reviews say about how it works in practice?;
• Roadside assistance – does the company offer a good breakdown assistance policy?

Applying for car insurance in the UK

To take out car insurance in the UK, you will typically need to provide:

• the car registration number;
• your address;
• driving license information;
• other personal details (age, driving history, etc.);
• information on what you’ll use the car for (business, leisure, etc.)

Most insurance companies nowadays allow you to take out a policy and provide supporting documentation online. Each company will have its own specific applications procedure which will be detailed on its website.

Once you are insured, you should receive:

• your insurance policy;
• EU accident statement form, to use in the event of an accident (this may change after the UK leaves the EU. Your insurer may issue you with another type of report form after Brexit);
• insurance green card, which is needed if you drive in any country not part of the European Green Card system. After Brexit, UK drivers may need a valid green card if they drive their car to EU countries.

Making a car insurance claim in the UK

If you need to make a claim to your insurer, you should do the following. In the event of an accident, make sure that you:

• contact the police if the accident is serious or anyone is injured;
• exchange contact details with any other parties and witnesses;
• get the relevant information from the other driver, especially car registration number and insurance policy number
• take photographs of the damage if you can;
• fill in your EU accident report form and insurance claim form as soon as you have time;
• submit your claim to your insurance company either online or over the phone. Each company will have different exact procedures which they should inform you of when you take out a policy.

Car insurance claims in the UK can usually be made up to three years after the incident, although this can vary between providers. Check your claims policy for details.

Canceling a contract or changing provider

You can cancel your car insurance contract with one provider and switch to another at any time. All insurers should by law offer a 14-day cooling off period after you sign up, where you can cancel and get a full refund on any amount paid.

However, if you cancel after this period, you may be liable for to pay fees. If you’ve signed up for a year-long contract, which is the standard, you can usually annul the contract if you want to terminate it or switch provider part-way through.

The good news is you won’t be charged for the full year and can usually get a refund if you’ve paid annually upfront, but insurance companies usually charge cancellation fees and sometimes additional admin fees. These should be explained to you when you sign up.

Many UK car insurance policies include an auto-renewal clause, meaning that you will automatically be signed up for an additional period if you don’t inform the company otherwise before it runs out. Beware of this and shop around for cheaper deals well in advance of the expiry date on your policy.

Making a complaint about a UK car insurance company

If you feel you have been unfairly treated by a UK car insurance company and want to complain, you should follow these steps:

• write a letter of complaint to your insurance company. They will then have eight weeks to resolve the complaint and inform you of their decision;
• if you are not happy with the decision, you can take the complaint to the Financial Services Ombudsman. You could be awarded compensation up to £150,000 if the complaint is upheld;
• if you are still not happy, you can take the complaint to the Small Claims Court. It’s unusual for this court to rule differently than the Ombudsman, so you should be sure that you have a legitimate grievance before pursuing this. Find your local small claims court here.

Roadside assistance in the UK

You can purchase breakdown assistance coverage through most UK car insurance companies. Alternatively, you can join a membership organization such as the Automobile Association (AA) or the Royal Automobile Club (RAC). Breakdown assistance providers in the UK include:

• AA
• Green Flag
• RAC
• Rescuemycar.com

These groups cover the costs of emergency repair, car replacement, and repatriation if abroad. You can purchase a policy that covers you for just the UK or extend it to other EU countries. Costs depend on what kind of coverage you want but start at around £6 a month. You can compare breakdown assistance providers using comparison websites such as uSwitch.

Useful resources

• MIB – oversees the car insurance industry in the UK
• Financial Conduct Authority (FCA) – the main insurance regulator in the UK
• Automobile Association (AA) – the biggest membership body providing breakdown assistance in the UK