Car insurance guide

Everything you need to know about car insurance


Why do you need car insurance?

If you own a car, you’re legally required to insure it.

If you’re caught without insurance, you could face an unlimited fine and get six points on your driving licence. In worst case scenarios, your car may be repossessed, and you could be issued a driving ban.

There are only a few instances where you aren’t legally required to have car insurance:

  • Your car holds an off-road certificate (known as a SORN)
  • Your car has been stolen, scrapped, or written off
  • Your car is between dealers and registered as ‘in trade’

Car insurance types

There are three levels to car insurance:

  • Third party
  • Third party, fire and theft
  • Comprehensive 

Third party

This is the minimum cover level you’re legally required to have. It covers the other driver in the event of an accident and any passengers present in your vehicle.

It doesn’t cover you, meaning you’d have to pay out of pocket for your own vehicle damage and any injuries.

Third party, fire and theft

This is the same as third party cover with a couple of additional benefits. It covers your vehicle if:

  • It’s stolen and can’t be found
  • It’s damaged due to a break-in or attempted theft
  • It’s damaged during a fire (accidental or arson)


Comprehensive cover offers the highest level of protection. As well as third party damage, fire and theft, you’ll be covered for the full cost of accidental damage to your own car.

There are usually also additional extras you can add to your policy at a price. For example, breakdown cover and personal injury cover.

Which insurance type should you choose?

This depends on the level of cover you’re willing to pay for and whether you want to potentially pay out of pocket in the event of accidents.

Shopping around for policies with different providers will give you an indication of the price you might expect to pay. If you need help working out which type of insurance is right for you, you may want to work with a broker.

If you own a high-value car (typically worth more than £60,000) or a car that has specific needs (like a classic car or sports car), you’ll need to factor in your additional needs and costs. In most cases, you’ll need to take out a specialist policy.

This will ensure you’re covered for the full cost of repairs and the sourcing of any special parts. It sometimes means you can choose who your vehicle is repaired by, meaning you can select a specialist mechanic that you trust.

How do car insurance groups work?

All cars in the UK belong to a specific insurance group, numbered from one to fifty. The higher the number, the more expensive your insurance premium will be.

The group your car is placed in depends on a few factors, including the value of your car, its security features and the power of the engine.

Ultimately, insurers are trying to work out what risk you present to them and how much it would cost to repair or replace your vehicle. The higher the risk and cost, the higher the number you’ll be placed in.

If you’re in the market for a new vehicle or you’d like to see where your current car sits, you can use a free online car group checker. There are plenty to choose from and they’ll tell you which group you’re in, which will give you an indication of the price you could expect to pay for your insurance.

What affects your car insurance premium?

As well as your car’s insurance group and the type of cover you choose, there are a few other factors that affect your insurance premium. Unfortunately, the majority of these are out of your control.

  • Your age

    If you’re a younger driver or you’ve not held your licence for long, insurers will deem you as inexperienced and will likely charge you more for the same cover. This may not be fair as it doesn’t take your personal driving abilities into account, but the price will fall over time as you become more experienced.

  • Your location

    The higher the crime rates in your area, the more you’re likely to pay for your premium. If an insurer deems your car to be at high-risk of vandalism or theft, your insurance will likely cost more.

    One way you may be able to combat this is if you can prove your car will be kept in a secure location, like a garage or private parking lot. However, some providers will set your premium based on postcode alone.

  • Your driving history

    If you have driving convictions or a long claims history, you could end up paying more for your policy. On the flip side, if you haven’t made any claims, you could be eligible for a no-claims bonus.

How does car insurance excess work?

Whenever you make a claim on your car insurance, you’ll usually need to pay a set amount towards the claim. This is called an ‘excess.’ There’s compulsory excess, which is set by your policy provider, and voluntary excess, which is an additional amount you can choose to pay.

If you choose to pay voluntary excess, it could reduce the overall price you pay for your insurance. Just remember that you’ll need to pay excess every time you make a claim, so you should only pick an amount you can realistically afford.

The more excess you pay, the less you’ll get from your claim amount. As an example, if your excess is £300 and you make a claim for £1,000, you’ll only get £700.

If your insurer finds you not at fault for your claim, then you could get your excess waived. You’ll typically need to pay your excess upfront while your insurer investigates the claim, meaning you’ll get your excess back retrospectively.

You can sometimes add excess protection to your policy, which means you can reclaim your excess at an additional cost.

How to reduce your premium

There are a few things you can do to lower the cost of your next policy without sacrificing on protection:

  • Look for loyalty and member discounts

    Some insurance providers offer discounts for their existing policyholders, meaning if you have another policy with them, you could get money off your car insurance.

    At Wesleyan, eligible members get 20% off a range of insurance products for both personal and business needs. This includes car insurance and high-value car insurance.

  • Build your no-claims bonus

    If you don’t make a claim on your insurance policy, your insurer may reward you with a no-claims bonus. This builds for each year you don’t claim on your policy, meaning you’ll pay less on your renewal as a result.

    To build your bonus, you may want to avoid making claims for accidents that you can afford to cover yourself. Some policy providers also let you add no-claims bonus protection to your insurance, meaning for an additional cost, you can keep your bonus if you need to make a claim.

Benefits of using a car insurance broker

With so many providers and policies to choose from, it’s easy to get overwhelmed by your options and go with the first policy that suits you.

To make sure you aren’t overlooking insurers that offer the same cover for a lower cost, it’s important to set aside the time to search the market.

If you’re short on time or don’t know where to start, an insurance broker can do the hard work for you.

Ready to insure your car?

Car insurance

Feel confident that you’re covered on the road, with insurance that pays out for accidents, damages and more. Take the wheel and choose a level of cover that suits your needs.

High-value car insurance

Get specialist cover for your high-value car. This insurance is designed especially for vehicles worth more than £60,000.