Evolution of Car Insurance

Under the Road Traffic Act of 1930 it became compulsory for drivers to be insured for their liability in the event of an accident. While motor insurance had been in existence for 30 years by this point, this was the first time it had become mandatory. After World War Two the industry moved towards working with brokers who could deal with many different insurance companies. Along with the development of financial services, this offered customers many ways to spread their risk.

In line with the development of technology, today’s car insurance sector has transitioned successfully from being paper-based to now providing an efficient web based service. Customers can obtain a car insurance quote within minutes by submitting their details online. Previously there could be lengthy delays while paperwork went back and forth, but now cover can be provided almost immediately.

Types of Car Insurance

At a minimum third party cover is required which means that you have protection should you cause damage or injury to another person, vehicle, animal or property. It doesn’t however cover costs for repair to your own vehicle – for that you would need comprehensive insurance.

In order to save money and get a cheaper premium, it’s worth considering what car insurance groups are in place. Administered by the Motor Insurance Repair Research Centre, new car models are assigned to a category - with insurance group 1 cars being the cheapest to insure. There are 50 groups in total and not surprisingly, high performance models are likely to result in higher premiums.

As drivers know, it is prudent to shop around for the best deals – so car dealerships such as Lookers offering car finance deals with free insurance for instance are often good places to start any search.


How to Get Cheap Car Insurance for New Drivers

Insurance for new drivers is notoriously expensive – often trumping the cost of a first vehicle. And the reason for this? Well, it relates to the concept which underpins insurance – risk. It is estimated that 1 in 5 young drivers are likely to have an accident within 6 months of passing their test.

The average cost of a policy for those in the 17 – 22 age range is £1,357 – and that is on top of all the costs associated with learning to drive and passing the test in the first place.

There are however ways to combat these costs. Read our handy tips and ensure you get the best deal possible.

Add a second responsible driver

This can help spread risk. So if you are considered to be a high risk driver then adding in to the mix someone with good no claims history may result in a cheaper policy. The responsible driver should have as clean a driving history as possible and it may be trial and error to find the optimal person – and by extension the best deal. Remember though the responsible driver should be realistically expected to drive your car.

Don’t customise your car

It may be cool to ‘pimp your ride’ but it ultimately will cost more money. The more changes that are made to a car, the more the policy holder will be charged. If modifications are made, it is prudent to ensure that the insurance company is informed. Failing to do so may invalidate the car insurance policy.

Be mindful of the right level of excess

One way to keep the cost of a car insurance policy down is to consider setting the excess at a higher level. A higher excess will result in lower premiums but policy holders must be aware that they can afford the premium in the event a claim is made.

Don’t auto renew

Insurers are known to charge increasing amounts each year in the knowledge that inertia will stop policyholders from switching. It’s in your own interests to always shop around, particularly ahead of an existing policy coming to an end.

Telematics, anyone?

Telematics is a policy which prices premiums based on the quality of your driving. A device - commonly referred to as a ‘black box’ - is installed and monitors the driver's actions while behind the wheel. The ultimate goal is to demonstrate that you are a careful driver - and see those premiums come tumbling down. Of course it could work in reverse - bad driving could increase premiums.

Insurance deals with car

Many drivers, when looking to buy their first car, will also look for cars with free insurance. Dealerships these days can very cleverly package together not only the vehicle, but the finance and insurance too. This can help first time drivers keep costs down by looking for finance cars with free insurance.


How to Get Cheap Car Insurance

While new and young drivers under 22 can find it costly to insure their vehicle of choice, even those who have been on the road for some time can face a similar challenge. To ensure you get the best possible deal, read our steps to lower premiums.

Shop around

This may seem like an obvious thing to say, yet many people simply don’t do it! Saving of hundreds of pounds can be achieved simply by pitting one provider against another. A word of caution however – just make sure that you are comparing like for like cover. While some policies may seem cheaper they may not offer the same level of cover. This is where price comparison sites can come into their own. Platforms such as confused.com or moneysupermarket.com all aim to save drivers money. Simply pop your details in and let the site do the rest. You will then have a number of options to choose from.

Protect your no-claims bonus

Achieving a long no claims bonus is the single best way of cutting car insurance costs in the first place, and a good way to continue this is to protect it. While it may increase the premium by a few pounds, if you consider the offset cost against the potential loss of a 90 percent discount on premium of a few hundred pounds, the choice is very clear.

Secure your car

Fitting an approved alarm, immobiliser or tracking device can achieve a discount of 5% or more. It's worth remembering that many newer cars come with these as standard, so if you are insuring a brand new vehicle make sure you check if you have them and let your insurance company know.

Cover fewer miles

While this may be easier for some than others, the fewer miles the car covers the greater the saving. For instance a cut of 5,000 miles per annum could save a typical 35 year old driver around £50 in premiums.

Use your garage

Insurers like cars to be kept in garages overnight as it reduces the risk of damage or break-in. Aside from the benefit of not scraping ice off in winter, there is also more likelihood of the car being stolen if parked on the road.

New car package

When changing cars, and if in the market for a brand new one, asking dealers what offers they have that include free insurance is always a good idea. Manufacturers have recognised that offering cars with free insurance (and often finance options too) is another way to appeal to customers. So if you find a deal that works for you, it's certainly worth considering the whole package.


What is car excess?

Car excess is a fixed amount that you are expected to pay in the event that you make a claim. For instance if your excess is £200 and you make a claim for £1,000, your insurer will keep the first £200 and give you the remaining £800. When car insurance is first taken out you have the option to set the excess – and in return can see a reduction in monthly premiums.

The trick however is to get the balance right. Too low and your premiums will be higher. Too high and in the event of a claim you may lose a considerable sum.

Voluntary vs Compulsory

Compulsory excess is applied to your policy no matter what and is decided by your insurer.

If you’re a young or inexperienced driver, don’t be surprised if your compulsory excess is higher than someone who is older or has been driving for a while. And if you own a prestigious or high-performance car, there may be an additional premium to pay.

Voluntary excess is different, because you set the amount of excess you’re willing to pay. A higher voluntary excess is one way people choose to lower the cost of their insurance premium.

When you get a car insurance quote, it’s worth looking at how changing the voluntary excess affects your price, and choose an amount that you’re comfortable with.

But remember that, if you make a claim, you’ll have to pay both the compulsory and the voluntary excess.


No Claims Bonus Explained

A no claims bonus can save you huge amounts of money each year, yet do you know what they are and how they work?

Simply put a no claims bonus (NCB) is a count of the number of years in which no claims have been made against the insurance policy of a car. Its value can be vary between insurers, but a NCB of 5 years and above, could result in as much as a 75% discount on premiums.

In the event of a claim it is generally accepted that some or even all, of the no claims bonus will be lost. The exception to this is where the fault lies with another driver. In that case your insurer may be able to reclaim the payment from the other cars insurer and the no claims discount will remain unaffected.

In more complicated cases where fault can’t be agreed on, insurers may end up deciding to split the cost of the claims and both drivers no claims bonus could be affected.

It is possible to protect the NCB which then allows for two ‘at fault’ accidents without affecting the bonus. In the event of an accident the NCB remains intact – even if your insurer can’t claim back their costs.

Of course this won’t guarantee that premiums can't increase after the fact, as insurers will use your claims history in order to calculate a premium.

In the event that you change vehicle the NCB is normally able to be transferred to another car. This also applies to a company car where the driver is named on the company insurance policy. The onus is on your insurer to provide proof of the NCB which will allow you to present to another provider if required and to prove its continuity. If a policy is cancelled there is a grace period of 2 years whereby you can still use it. Thereafter it expires and the process will start over from the beginning.

There are exceptions, however, to watch out for. Named drivers for instance are not generally allowed to build up their own NCB. This is because it’s normally the record of the main driver that the claim-free history will be supporting.


What Insurance Group is your Car in?

Car insurance groups can affect car insurance premiums. If you were asked today would you know what group your car was in? It can affect so much that it’s really worth taking the time to learn more about them.

The Group Rating Panel is administered by the Motor Insurance Repair Research Centre which meets to assign new car models to an insurance group from 1 (cheapest to insure) through to 50. Cars in the highest groups, typically high performance models, are likely to cost insurers the most in claims.

Insurers may defer to these recommendations when calculating car insurance premiums. According to official figures, motor vehicle repair costs accounts for over half of all the money paid out in claims, so repair costs feature strongly in how the groups are defined.

When assessing new cars, the Motor Insurance Repair Research Centre incorporates many of the following factors:

Parts prices

A standard list of 23 common parts is used to compare the cost of parts from one manufacturer with those from another. The lower these costs, the more likelihood there is of a lower group rating.

Damage and parts costs

This considers the extent of damage to specific car models as well as the cost of the parts involved in any repair. There is a direct relationship and as a result, the lower these costs, the more likelihood there is of a lower group rating.

Repair costs and times

Longer repair times = higher costs and therefore the greater chance of a higher group rating. Different paint types for example, on modern cars can be an important element, so these are factored in.

New car values

The prices of new cars are taken into account, as they are often a good guide to the cost of replacement and repair.

Performance of the car

Acceleration and top speed are key indicators. Insurers understand, from their claims data, that high performance cars can lead to frequent insurance claims.

Safety & Technology

An Autonomous Emergency Breaking (AEB) system is an important consideration as it can help reduce low speed front to rear accidents. As a result cars fitted with AEB as standard will benefit from a lower insurance rating.

As an example the following cars are classified as insurance group 1: Vauxhall Corsa, Citroen C1, Fiat Panda, Skoda Citigo, Volkswagen Up, Volkswagen Fox

At the other end of the scale, insurance group 50 include: R8 Coupe, Jaguar XJ Saloon. Lotus Exige, Porsche 911.


Free Insurance When Buying a Car

Buying a new car can be a very exciting time. From researching the brand and model, picking the right colour and accessories through to sourcing the best dealer to buy from, it is easy to forget the cost of insurance. And depending on the car group which applies to your vehicle, these costs could be considerable and take the shine off your dream purchase.

One way to combat this additional expense is to look for policies that offer free insurance with the purchase of a car. Typically these tend to be structured deals for new cars as manufacturers look for new ways to appeal to drivers.

For young drivers in particular this may be a sensible option to get on the road with a new car. Take a look at a few cars with free insurance.


The only additional cost beyond the finance agreement in Peugeot’s ‘Just Add Fuel’ offer is the cost of fuel. That’s because insurance, road tax, servicing, warranty and breakdown cover are all included in a single monthly payment.

Applying to models 108, 208, 2008 and 308 in both hatch and SW estate form and depending on the size of the car, drivers must be aged over 18, 21, 25, or 30-years-old.

Skoda Fabia

Skoda offers an easy to understand Personal Contract Purchase (PCP) deal which covers the cost of insurance for 12 months. At the time of writing buyers can get hold of a Fabia SE, for £250 per month. Open to drivers aged 21 and over.


Another manufacturer offering free car insurance is Vauxhall. This time it’s the Corsa that’s on offer. Those aged 18 – 20 will be charged £99 per year for insurance, while drivers 21 – 75 years of age will have nothing to pay. Drivers must agree to the use of a black box which monitors the quality of driving based on acceleration, braking and cornering. They driving style is reviewed every 10 days. Every 3 months the overall policy will be reviewed to ensure the driving performance is safe and performed at an acceptable level.


Does Occupation Have an Effect on Car Insurance?

Many people don't realise that something as simple as a job title can make a significant difference to the price of an insurance policy. That’s why, when completing your details, it’s important to pay attention to this detail. Insurance companies use occupation as a key rating factor in setting the premium. Every provider has a set of rates for each occupation, all based on statistical models and past experiences - essentially a risk assessment related to types of employment. Some of these are listed below.

Moral hazards

Moral hazard is concerned with the attitude and conduct of people and the impact this could have on their risk. Some insurers make – some might say – subjective - assumptions about the behaviour of people in certain occupations. As an example students being typically young are considered to be more reckless and therefore expect to pay a higher premium. Journalism is also considered to be a risky profession. A common perception with insurers is that journalists use the car more than average and also have a high risk of an important passenger being in the car with them, ergo higher risk.

However, on the other side, police officers, solicitors and school teachers are often considered to represent lower risk occupations, meaning lower premiums.

Risk of association

A number of occupations, due to their nature, attract an element of risk through association. In other words these are occupations whose members have a higher likelihood of mixing with people, who are either famous or potentially famous. For example, people employed in arts, entertainment and sports may not be a risk behind the wheel, but they may have highly famous passengers in the car. An accident for instance involving a sports star could mean a career ending injury, and a rather large payout.

Likelihood of using your car for your work

Tradesmen such as builders, electricians and salesman are all more likely to use their car for work and often have to travel large distances to get to jobs. This obviously increases risk and premium. Also builders and electricians will typically use an array of expensive tools – which are often left in their vehicles overnight – making themselves a target for theft. Insurance companies see this as a significant risk which premiums reflect.

Standard or non standard working hours

Its most likely that road accidents or collisions happen when the roads are busy – people in a hurry to get home at rush hour for instance. The insurance logic is that occupations using their cars during these times are considered higher risk.

Your job title can impact the price, even if in hindsight it is the same job.

Job title examples

For instance, if you owned a pub and put your profession down as a 'landlord' you will pay around average £694.94 for a car insurance policy. Change that title to 'publican' and the price increases to £737.

Likewise if you are a 'TV broadcaster', the average policy would cost £774.49. Refer to yourself simply as a 'broadcaster TV/radio' however and you could save almost £100.

Journalists who put their occupation down as 'newspaper reporter' can expect an average premium of £619.17, whereas a job role of 'journalist/correspondent' brings it down to £605.47.

The message here is that when completing car insurance details online, it is key to ensure the correct job role is inputted. Otherwise you could find yourself unnecessarily paying too much.


Car Insurance for Previously Disqualified Drivers

If a driver has committed a motoring offence and has a conviction there is a real possibility that it could add significant sums to any future car insurance policy. Typically this converts to points on a driving licence where they remain for at least 4 years. Insurance companies will take these into account when calculating a premium, for up to 5 years. Having a conviction (which can range from speeding through to dangerous driving) normally doesn’t preclude a driver from obtaining insurance. It does mean that the policy is likely to cost more, as the insurance company perceives the risk to be greater.

Confused.com has listed the following as being the most common convictions.

SP30 - Speeding on a public road
CU80 - Using a hand-held device while driving (typically mobile phones)
IN10 - Driving without insurance
SP50 - Speeding on a motorway
TS10 - Failing to comply with traffic light signals

Read the full list of motoring convictions here

Each conviction will affect a premium depending on several factors - the individual circumstances involved and the insurance company who is providing the quote.

Car insurance could be harder to come by and could be more expensive if a driver has been previously convicted of a driving offence. The message for those groups of drivers is to shop around even more vigorously and compare as many insurance companies as possible.


Insurance While Driving Abroad

These days it’s not uncommon for British drivers while holidaying abroad to tour in their own car. The benefits of course are bountiful – direct transportation to your hotel, no navigating uncertain train or bus routes and seeing more of the country you are staying in can enhance the experience immeasurably. And while it’s good to focus on the fun times, it’s also sensible to think about protecting yourself against any risk. Insurance while driving abroad can ensure you enjoy peace of mind. It’s worth keeping the following in mind when planning a trip abroad:

Licence requirements

Your UK driving license is acceptable for driving within the EU/EEA, however be aware that if you drive outside of these regions, you'll need an International Driving Permit (IDP). Costing £5.50 from the Post Office, the AA or the RAC, you have to be over 18 and the holder of a full driving licence


To drive in another country, you need to make sure your insurance covers you outside the UK. So before heading off, let your insurer know that you’re travelling overseas, and make sure that your existing policy offers cover. Your insurer should automatically extend your cover when you’re driving anywhere in the EU, but this is usually third party only.

Extend your policy

If third party insurance is not enough for your needs, your insurer may be able upgrade your existing policy to be covered abroad. Remember to check though if you have to pay any extra for it.

Top tip - Your insurer should give you a Green Card if you’re driving in Europe which will act as proof of your European cover. If not, ask for it - the card itself is free Don’t forget to check the small print for any exclusions on your policy, as some will put a cap on the number of days you’re fully insured while in Europe.


Black Box Car Insurance

Black box insurance, also known as Telematics car insurance, monitors your driving style. It does this through a black box which is fitted to your car. Using satellite technology the box will assess speed, braking, acceleration, cornering and even the time of day that journeys are made.

The data is transmitted real time by GPS to your insurance company and ultimately can calculate how likely you are to have an accident. This personalised risk assessment can then be used to calculate your premium.

First introduced in cars around 2012 the technology can help assess the profile of all drivers, although is in particularly high demand with younger drivers who are likely to pay higher premiums. As the technology works by recording driver behaviour premiums can be accurately calculated.

In addition to rewarding safe drivers with lower premiums, telematics can also help identify who is at fault in the event of an accident. In turn this could also help reduce fraudulent claims. If a car is stolen it may also be traced using the black box.

According to research 88 percent of new cars will be fitted with a black box by 2025 which could ensure efforts are made to not only increase safe driving, but also help reduce premiums in the process.

Telematics insurance is available from a number of providers so shop around for the best deals.



Car insurance can be a complex process. At its core it calculates the risk of an event taking place and, depending on the presence of a number of variables, may drive costly premiums.

While drivers have a legal obligation to have insurance, most want to do this in the most economical way possible. Young drivers in particular are faced with almost prohibitive costs with the average price of insurance for those aged 17 - 22 coming in at £1,300 - almost as much as a first car. On top of that, the recent budget saw the Chancellor announce an increase in Insurance Premium Tax (IPT) - the second in a year - which now means that all insurance policies will be taxed at a rate of 10%.

While rising costs are concerning, there are ways to mitigate them. Drivers can be mindful of the class of car they own - the lower the group the better in terms of insurance cost. They can also look for deals from car retailers which offer free insurance with a new car. And you don't have to be a new car driver to shop clever. Protecting a no claims bonus, or opting for a higher voluntary excess are sensible ways to lower premiums. For young drivers adding a responsible driver to the policy can also result in cheaper premiums. Technology too is playing its part in reducing costs. The introduction of the black box heralds the evolution of personalised policies as it records the driving habits of a policy holder, with those driving responsibly benefiting from reduced insurance costs.

Shopping around also pays dividends. Never auto renew on a policy - no matter how busy you are, make the time to use one of the many comparison websites out there and let them do the hard work for you. Simply pop in your details and within minutes you will receive several options to consider.

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