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UK Guide to Car Insurance

Car insurers usually issue three documents.

The Certificate of Insurance - this is evidence of car insurance as required by the Road Traffic Act.

A Cover Note
- acts as a temporary policy and also as a temporary certificate of car insurance for the purposes of the Road Traffic Act.

The Policy Document - sets out in full the terms and conditions of your policy.

You should read your policy carefully - there is no small print or difficult language in modern car insurance policy booklets.

The Law

The Road Traffic Act requires all motorists to be insured against their liability for injuries to others (including passengers) and for damage to other people's property resulting from use of a vehicle on a road or other public place. It is an offence to drive your car or allow others to drive it without vehicle insurance.

How Car Insurance Premiums are Calculated

Factors taken into account in costing your car insurance include who will drive, the type of car, where it is kept, the uses to which it is put, and the type of cover required.

When buying car insurance you must give the insurer full information.


The policy may only cover driving by yourself or specified people, or it may allow driving by any qualified person with your permission, possibly over a certain age limit. Your insurers will want to know about anyone who is likely to drive - particularly their age, experience, claims and driving record and occupation.

Your Car

Family cars with moderate repair costs are usually cheaper to insure than large or powerful cars which can be expensive to repair.

Each model is given an insurance group rating. This system is described later in this Fact Sheet.

Older cars often attract discounts from comprehensive insurance premiums.


Car insurance claims are more frequent in urban areas so motorists in cities usually pay more for their insurance than those who live in the country. The place where the car is kept is a rating factor, so tell your insurers if the car is not kept at your home address.


Your policy and certificate set out the uses for which your car is insured. For example, if you or any authorised driver want to use your car in connection with work, make sure that your car insurance policy covers this.

Driving Other Cars

Most policies cover the policyholder in person while driving a car which belongs to someone else.

However, cover will be limited to third party only, even if you have a comprehensive car insurance policy. Accidental damage to the borrowed car will not be covered by your vehicle insurance.

Make sure you have the car owner's permission to drive it and that they have arranged comprehensive insurance to cover you as a driver under their policy. If they have done this, then accidental damage claims to their car, while you are driving, will be met by their policy.

Similarly, before letting someone else drive your car make sure your policy does not have a restriction on who may drive it.

Drinking and Driving

Drink driving convictions are taken very seriously by insurers. Convicted drivers returning to the roads may face difficulty in obtaining car insurance and will certainly have to pay premium increases of at least 100%. The level of cover may be reduced - for example from comprehensive down to third party fire and theft. These higher premiums and cover restrictions can well last for a number of years.

Giving Lifts

All motor insurers have agreed that if your passengers contribute towards your running costs your car insurance cover will not be affected, as long as lifts are given in a vehicle seating eight passengers or less. This agreement does not apply if you make a profit from payments received or if carrying passengers is your business.

Changing Your Car

You must tell your insurers if you change your car. A premium adjustment may be necessary and you will probably need a new certificate.

No Claims Discount

Policyholders with a claim free (not blame free) record normally qualify for a premium discount. Scales do vary but usually range from 30% for one claim free year up to 60% or more after four or five years.

"Protected Discount" policies are often available for motorists with maximum discount. For an extra premium, a number of claims are allowed without affecting the discount. Typically two claims are allowed in a three to five year period.

Your insurance premium or your excess may be affected however, even though your discount is protected, if you have a poor claims record or have driving convictions.

Motoring Abroad

All UK motor policies provide the minimum cover required by law in other European Union countries or the minimum cover required by UK law if that is greater. This cover does not automatically include theft or damage to your car and it may not completely cover your liability to other people. If you do not already have full cover for travel in Europe and you tell your insurers in advance, they can extend your UK level of cover to most holiday destinations. If you are unsure check with your insurer.

Your insurers can also supply a Green Card. This is recognised internationally as evidence that you have car insurance which meets local law.

The insurance position when motoring abroad is covered in detail in the separate information sheet "Holiday Insurance and Motoring Abroad".

Look After Your Car

All insurance policies require you to make sure your car is in a roadworthy condition. If you don't, you may find that your claim will not be paid.

From time to time vehicles may be subject to a manufacturer's recall to address a possible safety concern. You should check with your local dealer or vehicle manufacturer to see if your vehicle may be affected.

Tell Your Insurer

You must tell your car insurer of any changes in the details given on your proposal form such as address, occupation, type of car and motoring convictions including fixed penalties.

Remember - not only is it an offence under the Road Traffic Act to make a false statement or withhold information for the purposes of obtaining a certificate of vehicle insurance, but it may also invalidate your policy.

Policy Cover

Four out of five private motorists have comprehensive car insurance. Most of the remainder choose third party fire and theft, with a small proportion taking out more limited forms of cover.

Third Party

This covers:

1 Liability for injuries to other people, including passengers.

2 Liability for damage to other people's property.

3 Liability of passengers for accidents caused by them.

4 Liability arising from the use of a caravan or trailer, while attached to the car.

Third Party Fire and Theft

As previous plus

5 Fire or Theft - If your car is not normally kept in a garage at night, theft cover may be excluded or subject to special conditions. There may be an "excess" - a part of the cost of the claim for which you are responsible - following an incident of theft. If you are selling your car make sure you receive proper payment before parting with it. Your insurance policy will not cover your loss if your car is taken from you by deception.

Comprehensive Car Insurance

As above and previous plus

6 Accidental damage to your own car. There may be an "excess" - part of the cost of the claim for which you are responsible.

7 A personal accident benefit. Certain amounts are paid in the event of the death or specific permanent disablement of the policyholder - and sometimes his or her spouse or family member.

8 Medical expenses necessarily incurred, up to a stated limit.

9 Loss of or damage to personal effects in the car, up to a stated limit.

What to do When Making a Claim

After the accident get as much on the spot information as possible. Get hold of the names and addresses of independent witnesses before they lose interest and leave the scene. If you have a video or camera in the car, get pictures before vehicles and property are moved. Also, make a sketch plan of the accident while the details are fresh in your mind.

Ask the other drivers involved for their names and addresses and make a note of their car registration numbers together with the make and model.

Ask for the name of their insurers and also, if possible, their policy number or certificate number.

If anyone is injured, produce your certificate of insurance. If you cannot do this at the scene you must produce it at a police station within 24 hours.

There may be injury to people or animals or damage to vehicles or property. If so, you are required to give your name and address, the name and address of the owner of the car you are driving and its registration number to anyone with reasonable grounds for wanting them.

Tell your insurers about any statement made at the scene by any of the parties. Do not discuss whose fault it was. If you do, you could create problems for you and your insurers in the handling of your claim.

You must tell your insurers as soon as possible - even if you don't intend to make a claim. This is a condition of your policy.

Ask your insurers for an accident report form. When completing the form include as much information as you can.

To Get Your Car Repaired

If you have a comprehensive car insurance policy: Ask your insurer for advice. Take your car to a competent repairer and tell your insurer immediately. If your insurer recommends a garage then take your car there if possible. This may avoid the need to get a separate estimate and could speed up the repair considerably.

Many insurers' recommended repairers will be able to provide you with a courtesy car whilst your vehicle is being repaired.

Unless your insurer has special arrangements, send a repairer's estimate to them. They will check it and if it is agreed they will authorise repairs subject to your completing a satisfactory claim form.

When you collect the car after repairs you will have to pay the first part of the claim if you have an excess on your policy. You pay this money direct to the garage, whether or not you were to blame for the accident. Your insurers may also ask you to pay a part of the cost of repairs if your car is put into a better condition than before the accident.

If you are registered for VAT, pay any VAT due to the garage and claim it back from Customs and Excise. If you are not VAT registered your insurer will pay it.

The cost of repairs is your responsibility until your insurers have agreed to pay. For your peace of mind, you may want to obtain confirmation from your insurer that they accept liability and will pay the cost of repair.

If you have chosen third party fire and theft cover, your car insurance policy will not cover accidental damage to your car. You therefore have to pay the repair bill yourself or claim from the other driver if he or she was legally liable for the damage.

Write to the other driver saying that you intend to claim from him/her.

Say that you hold him/her responsible and ask him/her to tell their insurers.

Write direct to their insurers, if you have details, quoting the other driver's policy or certificate number.

Send a repairer's estimate as soon as possible - their insurers may well ask you for additional estimates.

Tell your own insurers that you are claiming against the third party.

The other driver should tell their own insurer of the accident. They will only be able to deal with your claim if the other driver asks them to. They can only act on the instructions of their own policyholder.

On receipt of your letter the third party may settle your claim themselves or may pass the matter to their insurers. If they consider their policyholder entirely to blame they will pay your claim provided they have full information. If they consider that you were entirely or partly to blame they may refuse your claim or suggest a compromise.

The third party may refuse to co-operate at all in which case you should seek advice from your insurer, insurance adviser, motoring organisation or solicitor. You may, at the end of the day, have to take legal action against the other driver; your policy may have a legal expenses section which will cover your costs.

If Your Car is Stolen

Tell the police immediately then tell your insurer and ask for a claim form.

Be prepared to wait a while in case your car is recovered. A great many cars taken without the owner's consent are soon found abandoned.

If property is stolen from your car tell the police immediately and then tell your insurer.

Most comprehensive car insurance policies protect you against loss of or damage to rugs, clothing and personal belongings which are in your car. Policies set a limit on the value of such property. Check your own policy for details. See below for advice on beating the car thief.

No Claims Discount

The discount is usually reduced by two steps after a claim. Whenever a claim is made under a motor policy, the discount will always be affected unless your insurer can recover its costs from another party.

If your insurer can make a full recovery or is only stopped from doing so by a knock-for-knock agreement, your no claim discount may not be affected.

Similarly, if you recover all your uninsured losses (such as accidental damage excess) then your discount may not be affected.

Sometimes your no claim discount will be reduced at policy renewal time if a claim is expected to come in, or is still waiting to be settled. The discount may be reinstated if your insurer subsequently doesn't have to pay out under the policy.

Recommended Repairers

Many insurers have lists of approved repairers. When you tell your insurer about the accident ask them for the name and address of the nearest recommended repairer. You are not obliged to use a repairer recommended by your car insurer although this will speed up handling of your claim and you may not need to obtain a repairer's estimate at all. Many insurers have arrangements with their recommended repairers whereby you may be able to use a courtesy or hire car free of charge whilst repairs are carried out.

Similarly, many insurers have arrangements with specialist windscreen replacement companies. Keep a note of these in the glove box of your car.

The Group Rating System

Insurers put car models into twenty groups. This means that each model of car can be accurately banded with cars of similar characteristics.

There can be a significant spread of groups within a particular model range.

How the System Works

Nearly three quarters of all money paid out in motor insurance claims goes on repairing cars. The cost of spare parts and the times taken by repairers are therefore major factors in pricing car insurance.

The factors used to calculate group ratings are:

Damage and Parts Costs
The likely extent of damage to each car model and the cost of the parts involved in its repair. The lower these costs, the more likelihood there is of a lower group rating.

Repair Times
Longer repair times mean higher costs and the greater likelihood of a higher group rating. Different paint finishes on modern cars are an important factor. These, too, are taken into account.

New Car Values
The prices of new cars identify the higher specification models within a model range.

Body Shells
The availability of body shells (the basic frame of the car) is taken into account in group ratings because they are essential for certain accidental damage repairs.

Acceleration and top speed are important factors. Insurers know very well, from their claims statistics, that high performance cars often result in more frequent insurance claims.

Car Security
Security features fitted as standard equipment by motor manufacturers can help to reduce insurance claims costs. Such features include high security door locks, alarm/immobilisation systems, glass etching, coded audio equipment, locking devices for alloy wheels and visible VIN numbers.

Recommended Group Ratings

The group ratings determined by the Association of British Insurers are recommendations only. Individual insurers, depending on their own experience, may vary from these recommendations.

Buying a Car

Motorists planning to buy a new car should check, in motoring magazines or on our web site, the insurance group rating of the exact model they have in mind. The higher the group number the more will be the premium.

How to Beat the Car Thief

The financial loss of a stolen car is bad enough and although insurance will compensate for this, nothing can help with the shock and inconvenience.

Walk around any car park. You'll see cars with windows open, ignition keys in the lock, sun roofs open, valuable property and clothing on display on the rear seat.

Be sensible. Follow the checklist below every time you leave your car.

Take Care of Your Property

Remember - if you are careless when leaving your car then your claim for theft may not be paid at all. Your car insurance policy requires you to take care of your property at all times.

Have all the windows etched with the registration number of your car. This deters car thieves.

Many insurers allow a special premium discount if your car has a professionally-fitted alarm/immobiliser system. The Motor Insurance Repair Research Centre checks on vehicle security devices to see if they comply with the criteria of the Insurance Industry Vehicle Security Scheme. The list of those products that have passed is used by insurers as a basis for premium discounts and required security. Ask your insurer what systems they approve or require. They may also require the system to be fitted by a member of the independent Vehicle Systems Installation Board. Your car insurer can advise you about this.

Check List

Where to leave your car
At night, park in a well-lit place. Thieves like working in shadows. In a ticket-exit car park, take the ticket with you.

Remove Car Ownership Information
Don't leave your certificate of insurance and registration document in the car.

Hide Property
Leave property in a locked boot. In a hatchback the rear shelf should be in position. In an estate car cover up property with a sheet or blanket.

Remove the Ignition Key
Don't leave the key in the ignition - not even for just a few seconds to go into your home, a shop or pay for petrol.

Close All Windows
When you leave the car, close windows. Don't forget the sun roof.

Use an Anti-Theft Device
Thieves are opportunists. They will probably move on to a car without a device fitted.

Always Lock Doors and Boot/Tailgate
Even when the car is in your own drive or garage, lock it and take the keys with you.

Children and Animals
Never leave young children or animals alone in a parked car. With windows or sun roof open you run the risk of theft. With windows closed there is a grave danger of suffocation.
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