Guide to car insurance
- Why do I need car insurance?
- How does car insurance work?
- How is the premium worked out?
- What does car insurance cover?
- What doesn’t car insurance cover?
- What is an excess?
- What is a No Claim Discount?
- Can I drive other cars on my insurance?
- Can I insure my son or daughter on my car insurance policy?
- Car insurance when you have medical conditions
- Saga's car insurance
Why do I need car insurance?
If you have a car that’s not declared as off the road (SORN), you must have car insurance. If you’re caught driving without insurance, you will face prosecution. Car insurance offers financial protection in case of an incident involving your car. Cover levels vary but at the very least, it’ll make sure you’re not left footing the bill for damage to another person’s car, property or injuries.
How does car insurance work?
In very basic terms, the money that the insurance company collects from all its customers forms the pot that they use to pay out claims. You may never make a claim on your insurance, but you’ll still pay the money each year. Insurers give their customers a discount for not making a claim, called a No Claim Discount.
How is the premium worked out?
When you take out car insurance, an underwriter needs to work out how much of a risk there is of you making a claim. They take into consideration a wide range of risk factors, such as:
- What car you drive
- How many miles you drive each year
- Where you live
- Your occupation
- Your age
- Your claims history
- Whether your car has an alarm or immobiliser
- Where you store your car at night.
How much of a risk you are to an insurance company is down to statistics, so what has happened before. These factors combined determine whether they will be prepared to cover you and at what cost. The more of a risk you’re thought to be, the more expensive your insurance premium will be.
What does car insurance cover?
The breadth of your cover will depend on the type of policy you take out. There is a range of policies available – from very basic policies only covering the legal minimum, to extremely comprehensive policies, which means you’ve got protection in place for almost all eventualities.
Generally, the more cover a policy offers, the more expensive it is. It’s up to you to decide how much cover you’d like so that you can choose the most suitable policy for your needs, and budget.
Types of car insuranceThird Party
Third Party is the most basic cover, which is the legal minimum. It only covers damage to a third party, whether that’s another vehicle, a building or a person, and not the cost of repairing or replacing your car.Third Party, Fire and Theft
In addition to cover for damage to a third party, this insurance also covers the cost of repairing or replacing your car following fire damage or theft.Comprehensive
Comprehensive car insurance offers the highest level of protection and often includes (in addition to Third Party, Fire and Theft) glass cover, cover for your belongings inside your car, a courtesy car to use if yours is being repaired after an accident and vandalism.
The exact level of cover will depend on the policy you choose, so you should always read the policy details to ensure you choose the best cover to suit your needs.
It’s often assumed that Comprehensive cover is the most expensive option, but this isn’t always the case. So, if you’re not sure which type of cover will be best for you, it’s worth getting quotes for the different types so you can compare.
It’s also important to note that not all Comprehensive car insurance policies are the same. You may have noticed that many insurers display Defaqto star ratings with their policy details. Defaqto is an independent financial information business that looks at what’s covered by insurance policies and gives those policies a star rating out of five to show consumers the breadth of cover offered. The higher the star rating, the more policy features are available.
Interestingly, the policy doesn’t have to offer a certain feature as standard to achieve the higher star rating, it could be an optional extra that’s available for an additional charge, so this is also something to look out for when comparing cover and getting quotes for car insurance.
Comprehensive car insurance policies usually include windscreen/glass cover. This means that if your windscreen is damaged you can get it repaired or replaced. Depending on your insurer, this may be covered as standard and not affect your No Claim Discount, but you’ll need to check your policy documentation to make sure. Some insurers also cover other glass such as your car windows and sunroof, but might not cover a panoramic glass roof, so that’s another thing to check out.
The amount of excess you’ll need to pay varies by provider, so you’ll want to establish how much this is when comparing cover. Often there’s no excess to pay for having your windscreen repaired but an excess does often apply when a replacement windscreen in needed.
Currently, all UK car insurance gives you the minimum third-party cover to drive in EU countries. However, this won’t cover you for things like damage to your car or theft. This additional cover may be provided by your car insurance company as standard, often for a limited number of days, or you may be able to add it for an extra premium.
Cover levels vary, so if it’s important to you that your car insurance covers you while abroad, please check with your insurer exactly what’s included. Depending on where you’re travelling to, you may also need to ask your insurer for a green card, which is your proof of insurance while abroad.
Saga offers cover for driving in over 30 European countries with both Saga Essential and Saga Car cover levels. Find out more on our European cover page.
The amount of cover that is automatically provided when driving your own car in the EU may well change after the end of 2020, once the Brexit transition period is over. For now, all existing arrangements still stand, but it’s all subject to negotiations between the UK and EU.
What doesn’t car insurance cover?
The ins and outs of what is and isn’t covered will depend on the policy you choose, so you should always read your policy documentation carefully. However, there are a few things that are generally excluded. These include:
- Your car being stolen when you’ve left it unlocked
- Loss or damage due to war, terrorism, earthquake or radioactivity
- Damage you or anyone named on your certificate of insurance has done deliberately
- Your excess.
What is an excess?
In insurance terms, an excess is the first amount of any claim that you have to pay. The amount of excess you pay will be made clear to you when you take out any insurance policy.
For example, if you have a policy excess of £100 and your car is damaged in an accident, you’ll pay £100 towards the claim and the insurance company will cover the rest. You can usually reduce the cost of your car insurance premium by increasing your excess, but you need to make sure that your excess is affordable otherwise you could find yourself in financial difficulties if you need to make a claim.
What is a No Claim Discount?
Insurers offer their policyholders a percentage discount for not making a claim. This is commonly known as a No Claim Discount (NCD) or No Claim Bonus. The more years’ NCD you have, the larger discount you’re offered on your car insurance policy. The amount of discount you’re offered varies between insurers, but according to the ABI, it can be as much as 30% for one claim-free year and 60% for five claim-free years.
You may lose some of your NCD if you make a claim. Exactly how much will depend on your insurance provider’s NCD scale, but it’s likely to drop back to where it was in a previous year. Not all claims affect your NCD. Many insurers won’t reduce you NCD if your claim was not a ‘fault’ claim and they’re able to recover all the costs from the party at fault.
Is there a limit to how much NCD I can accrue?
This varies by insurance company. According to Which?, “Maximum discounts range from around 40% to 80%, while the number of claims free-years you need before you’re at the top of the scale ranges from around five to 15 years.”
Should I protect my No Claim Discount?
Many car insurance providers offer you the option to protect your NCD. This means that you can make a claim on your policy and not lose your entitlement to your NCD when you come to renew. Most insurers charge an additional fee to protect your NCD so whether it’s worth it for you will depend on how much NCD you’re likely to lose if you make a claim and what this loss of NCD will mean for the cost of your policy when you renew.
The rules for protected NCD will vary depending on your insurance provider, but with our car insurance if you have at least four years’ NCD, we’ll protect it automatically against two fault claims in any three year period.
Protected No Claim Discount is included as standard for eligible customers with our Saga Car and Saga Essential cover levels.
Can I drive other cars on my insurance?
Not necessarily. It’s dangerous to assume that if you have Comprehensive cover you can drive someone else’s vehicle and still be covered. If you need to drive a car other than your own, you should first check the details of your car insurance policy – it’s often outlined on your Schedule. If it’s not 100% clear in your policy documents, contact your insurer to check.
Although some Comprehensive car insurance providers may include Driving Other Cars (DOC) cover, it doesn’t generally come as standard. Even if it is included, the level of cover provided may differ from what you get when you’re driving your own car. For example, if you have a Comprehensive policy, you may only have third-party cover when you’re driving someone else’s car. This means that if you have a accident, you’ll be covered for any damage caused to the other car but not to the one you were driving.
With our car insurance, we provide cover under the ‘Liability to others’ section of the policy if:
- you're driving a car not owned or hired by you or your spouse/domestic partner
- you have the owner’s permission
- you or your spouse/domestic partner are not covered on any other insurance policy to drive the other car and
- the other car is insured in its own right.
This means you’re covered if you have an accident and are legally obliged to pay compensation for hurting someone or accidentally damaging someone’s property.
If you regularly need to drive someone else’s car, for example that of a family member, it might be worth being added as a named driver on their insurance.
Can I insure my son or daughter on my car insurance policy?
If you're happy for your child to drive your car, they can be added as a named driver on your car insurance policy.
If your son or daughter has their own car, it’s important that they hold the car insurance policy in their own name. With car insurance for new drivers being so expensive these days it might be tempting to take out a policy in your name and add your child as a named driver, even though they’ll be driving the car more often. This is known as ‘fronting’ and is fraud. Your car insurance policy could be invalid if you need to make a claim.
Car insurance when you have medical conditions
Having a medical condition can mean that your car is your lifeline. However, some conditions are 'notifiable', which means you must tell the DVLA, and they may impose restrictions on your driving. You can be fined up to £1,000 if you don’t tell DVLA about a medical condition that affects your driving and you may be prosecuted if you’re involved in an accident as a result.
Notifiable conditions are those that may affect your ability to drive safely, such as diabetes, epilepsy, heart conditions, strokes and glaucoma.
Find out more about medical conditions, disability and driving from the DVLA.
You can use this A to Z to check if you need to tell DVLA about your health condition.
Can I have more than one car insurance policy in my name?
Yes, you can have more than one car insurance policy in your name because you might own more than one car and choose to take out a separate policy for each. Some insurers offer multi-car insurance and give you a discount for insuring additional cars with them.
You can also decide to insure each of your vehicles with a different insurance company, depending on what best suits your needs.
Can I insure a car owned by someone else?
Different insurers take different approaches. If you need to take out a full policy, you’ll need to make sure the insurance company knows that you’re not the owner or registered keeper of the car. Some insurers will ask these questions, others may include statements in the assumptions section of the quote process, so it’s vital to read these carefully. Not all insurers will cover you if you’re not the registered keeper.
Did you know? The owner is the person who bought, or was given, the car. The registered keeper is the person whose name is on the V5C or ‘log book’ and who pays for road tax, any speeding fines, MOT and all the other admin that comes with owning a car.
If you just need temporary cover, for example to test drive a car being sold privately or you need to drive a family member’s car, you have a few of options:
- Add the car temporarily to an existing car insurance policy that you have in place for your current car
- Take out temporary insurance with a specialist temporary cover provider
- Become a named driver on the owner/registered keeper’s policy.
Can I insure a car with no MOT?
Your car does not need to have a valid MOT in order to insure it. However, if your car doesn’t have a valid MOT certificate, it might invalidate your car insurance policy so you wouldn’t be covered if you need to make a claim.
You must not drive on the road without a valid MOT unless you’re driving to a pre-booked MOT appointment, or your car is less than 3 years old, or otherwise exempt.
You might think that if your car has no MOT and you’re not driving it, that you don’t need car insurance. However, unless your car has been declared as off the road (SORN) you’ll need insurance even if the car’s parked on your driveway, in your garage or on the road near your house. This is true for England, Scotland and Wales: the rules are different in Northern Ireland.
Can I tax a car without insurance?
No, a car has to be insured before you can tax it. When you buy car tax online, or at the Post Office, the DVLA’s Motor Insurance Database will automatically detect if the car is insured and has an MOT, if necessary.
Can I pay monthly for my car insurance?
It depends on your insurer, but many will allow you to set up a credit agreement to pay monthly. However, paying for your car insurance monthly might cost you more as there is likely to be a credit arrangement fee and interest to pay.
Can I pay for my car insurance with a credit card?
You should check with your chosen insurer, but most insurers will take payments by credit card. Saga does accept credit card payments.
Can I cancel my car insurance?
Yes, it is possible to cancel your car insurance before your policy is due to end. You will need to check the terms and conditions of your policy as it’s likely that you’ll be charged a cancellation fee. You may be entitled to a refund for any unused months’ insurance, but not all companies issue pro-rata refunds.
If you wish to cancel your Saga policy, please call us on 0800 056 9167. For more information on our cancellation policy, please see our FAQ page.
What if I can’t remember who my car insurance is with?
Firstly, you’ll want to check if your car is currently insured so that you don’t get fined for not having insurance. You can do this for free on the askMID website by entering your car registration number. MID is the Motor Insurer’s Database, a national register of all the cars insured in the UK.
Unfortunately, the askMID service doesn’t tell you who you’re insured with. To find this out, you’ll need to do some digging.
- Look through your bank and credit card statements
- Search your email inbox for ‘car insurance’, ‘insurance’, ‘policy’ or even ‘welcome’ or ‘thank you’ as any of these words might be used in an email subject line when you purchase a policy
- Ring or email companies who you think you might be insured with and explain your situation. They may be able to check their records and let you know if you have insurance with them.
If you drive without insurance, you’re committing an offence, so if you have any doubt about whether you have current insurance, do not drive.
What should I do if any of my details change, e.g. I move house?
If any of your details change, you must inform your insurance company so that they can update your policy. There may be administration charges and the cost of your insurance may change due to the new information but if you don’t tell your insurer, your policy could be invalidated, and you might not be covered if you need to make a claim.
Saga's car insurance
Saga offers Comprehensive car insurance policies for the over 50s.
Why choose our car insurance?
- Which? Recommended Provider for car insurance March 2020
- Defaqto 5 Star rated
- Protected No Claim Discount – if you have four or more years’ NCD, we’ll protect it against two fault claims in a three-year period
- Uninsured driver cover – if an uninsured driver hits your car, through no fault of yours, as long as you supply their vehicle registration and the accident details, we'll refund any excess paid and your No Claim Discount won't be reduced
- 3-year fixed price – if nothing changes over the next three years, neither will the cost of your policy: there are no ties and you'll still be invited to renew every year (only available with Saga Car, our highest cover level — T&Cs apply)
- Onward taxi travel – if the damage to your car means you can’t continue your journey after an accident in the UK, we’ll offer to arrange a taxi to take you to any necessary UK destinations (only available with our Saga Car cover level).
Saga’s car insurance policies are unique products designed by us specifically for our customers. They are underwritten by a number of carefully selected insurers that, like us, are committed to providing high standards of quality and service.