Buying motor insurance

Most drivers buy or renew motor insurance once a year.

The cover you choose and the answers you give decide what the policy will pay for. These notes follow GOV.UK, the Financial Conduct Authority (FCA), the Financial Ombudsman Service and the Association of British Insurers (ABI), the insurers' trade body.

The legal minimum

You must have motor insurance to drive your vehicle on UK roads. Third party insurance is the legal minimum. It covers you if you cause damage or injury to another person, vehicle, animal or property. It does not pay to repair your own vehicle.

Being insured to drive that particular vehicle is a separate question. GOV.UK says police can give a fixed penalty of £300 and 6 penalty points to someone driving a vehicle they are not insured to drive. A court can impose an unlimited fine and a driving ban. A vehicle kept off the road needs no insurance once it has been declared off the road (SORN).

What a policy covers

The ABI calls comprehensive the highest level of cover. It can include damage to your own vehicle, theft, fire, medical expenses and the contents of the vehicle. Even so, a comprehensive policy may or may not include things like windscreen cover or a courtesy car.

The ABI lists what standard motor insurance does not usually cover.

Drivers who are not on the policy.
Uses the policy does not allow, such as business use without business cover.
A vehicle in an unroadworthy condition.
Wear and tear, and mechanical or electrical breakdown.

Named drivers

Another person's policy does not cover you to drive their vehicle. The ABI says you need to be added to it as a named driver. A named driver gets the same level of cover as the main driver.

Sometimes a parent says they are the main user of a car that a younger person drives regularly. This is called fronting. The ABI says fronting is insurance fraud, and the policy could be declared invalid.

Some policies let you drive other people's cars. The ABI says that cover may be third party only, so check with your insurer first.

Answering the insurer's questions

Before you buy, the insurer asks you questions. The law puts a duty on you to take reasonable care not to give a wrong answer. If the insurer later asks you to confirm or correct those details and you do not, that can count as a wrong answer too (Consumer Insurance (Disclosure and Representations) Act 2012, section 2). Read the details on your documents and correct anything that is wrong.

Your no-claims bonus

Drivers earn one year of no-claims bonus for each year without a claim. Insurers set their own discount for it. Some also cap the number of years they will count.

An insurer records a fault claim when it cannot recover its costs from someone else. That can happen when the accident was not your fault, such as when another driver hits your parked car and cannot be found. The Financial Ombudsman Service says a fault claim normally cuts an unprotected bonus by 2 years. A bonus earned as a named driver may not be accepted on your own policy.

Renewal, cancelling and complaints

Since 1 January 2022, FCA rules have said that an insurer's renewal price must be no higher than the price it would offer you as a new customer.

Under FCA rules you can usually cancel a new motor policy within 14 days without giving a reason. After buying, you can check that your vehicle shows on the Motor Insurance Database through askMID.

A complaint starts with the insurer. It has up to 8 weeks to answer most complaints. If you are unhappy with its answer, the Financial Ombudsman Service can look at the case, and it is free to use.