Car Insurance in the UK

General information on the types of vehicle insurance available in the UK, what the cover provides and how to insure a foreign car...

Third party motor insurance is obligatory in the UK and covers the civil liability of the vehicle owner in the event that they may cause death, injury or damage to property by using the vehicle.

In addition to the minimum insurance requirements, all vehicles must be registered with the Driver and Vehicle Licensing Agency (DVLA), have proof of payment of vehicle tax and an MOT test certificate as proof of roadworthiness (if applicable).

The DVLA is a division of the Department for Transport (DfT).

Types of Insurance

There are three main types of vehicle insurance policies available in the UK. These are:

  • basic third party (the minimum required by law)
  • third party fire and theft
  • comprehensive insurance

Comprehensive insurance covers the vehicle for third party, fire, theft and damage caused by accident. Additional cover is also available from some insurance companies, for example roadside assistance, payment of any legal expenses incurred and repairs in the event of a breakdown.

Cost of Car Insurance

The insurance premium depends on various factors, such as the make and model of the vehicle, where the vehicle will be parked, the age and occupation of the owner, how long they have been driving and their driving history.

The cost of car insurance packages can be compared online through a number of websites including:

Once a vehicle insurance contract has been signed, the following documents are issued:

  • Motor insurance certificate
  • Copy of the terms and conditions of the policy
  • Schedule with details of the no-claims bonus, the excess and the type of insurance

The insurance certificate is required when paying vehicle tax and in the event of an accident.

Policy excess

The policy excess is the amount that has to be paid by the driver towards the costs in the event of an accident or claim. The amount varies from one insurance company to another and may be negotiable.

No-claims Bonus/Discount

The UK insurance system operates a no-claims bonus/discount system. Drivers with no prior or recent accidents or claims are rewarded with a reduction to the insurance premium. The driver can benefit from up to a 75 percent reduction in the cost of insurance after four or five years of making no claims. The no-claims discount is transferable when changing insurers.

A no-claims bonus accumulated in another country may be transferred to an insurance policy in the UK if the driver can obtain written evidence from the present or previous car insurance company.

Making a Claim

The insurer provides guidelines on what to do if involved in an accident.

In the event of a road traffic accident that causes damage or injury to a third party, both parties should provide their name, address and car registration details to anyone that has reasonable grounds to request this information.

An accident should be reported to the insurance company as soon as possible after the event. Some companies provide a specific time period in which it must be reported; this can be from 48 hours to two weeks.

Uninsured Driving

It is illegal to drive a vehicle on the road or in public places without the minimum third party motor insurance. To combat uninsured driving, police can verify that a vehicle is insured using the Motor Insurance Database (MID). Insurers must provide the MID with details of any new policy issued within seven days of its effective date. If correct details are not entered into the MID a vehicle may be seized by the police.

A driver can check that their insurance details have been entered on the MID database and also check the insurance details of anyone else if an accident occurs. This can be done with a mobile phone and is a free service.

Transferring/Cancelling an Insurance Contract

An insurance contract may be terminated at any time by the policy holder, who must inform their insurance provider and follow the procedures stipulated in the contract. A cancellation fee usually applies if the contract is terminated before the expiry date. The insured may be entitled to a refund on premiums paid, calculated on the short term premium rates in force.

Under UK law, the insurance certificate must be returned to the insurance provider, or a signed statement confirming that the certificate has been lost or destroyed must be provided.

The insurer has the right to cancel an insurance policy by giving seven days written notice.

The Green Card

The Green Card system is no longer in place. It was replaced by the European Motor Insurance Directives which states that a car registered in any EU country is presumed to be covered by basic insurance. However many people still carry their green card (or basic insurance documents) and any cross-country initiatives related to vehicle insurance are still commonly referred to as the Green Card.

Further Information