Car insurance explained

Car insurance explained

Car insurance guide for UK drivers

When car insurance gets to the top of the to do list, we all want to tick it off as quickly and easily as possible.

At boom we spend a lot of time making it as hassle-free as we can, but it’s also handy to know exactly what to expect before you get started. If you’ve got car insurance-related questions, then this guide is for you.

It runs through the different types of car insurance to help you decide what’s best for you and your vehicle. You’ll learn when to buy car insurance and what documents you need. Finally, find out about policy add-ons and your excess.

Let’s get into it.


  1. When do you need to get car insurance?
    • when don’t you need to get car insurance
  1. What information will you need to get your car insurance?
    • How to prove your no claims record
    • How to estimate your mileage
    • Other information to have on hand
  1. Types of car insurance
    • Third party only
    • Third party, fire and theft
    • Fully comprehensive
    • Specialist car insurance
  1. What isn’t covered by car insurance?
  1. Policy add-ons
    • Breakdown cover
    • Motor legal protection
    • No claims bonus protection
    • Personal injury cover
    • Car key protection
  1. How to set your excess
    • Compulsory vs Voluntary

1. When do you need car insurance?

Anyone who drives a vehicle on the roads needs insurance, whether it’s their own vehicle or one they’ve hired.

Don’t even think about driving without insurance – if you’re caught, there are a range of potential penalties.

You could face the likes of:

  • a fine
  • up to 6 points on your licence
  • being disqualifiied from driving
  • losing your car

When you don’t need car insurance

You won’t need car insurance if you’re only driving on private roads (which is an unlikely scenario). Or if you’re keeping the vehicle on private property, like on a driveway, garage, or some land.

If this is the case, you can register your car as ‘off-road’ with the Driver and Vehicle Licensing Agency (DVLA).

To do this you declare a statutory off road notification (SORN). This means you won’t need car insurance and can get a refund if you’ve prepaid for road tax.

It’s important to note that you must either get car insurance or SORN your car as soon as you buy it. If you leave your car just sitting in your driveway you risk further penalties, including a fine of up to £2,500.

2. What information do you need to buy car insurance?

Before you sit down to buy your insurance, make sure you have the right documents and information to hand. The insurance company needs all this to give you a quote for your insurance premium (the premium is the amount of money you pay for your policy).

It’s important that all the information you give to car insurance companies is accurate. Otherwise, you could find that your insurance is invalid if you need to claim.

Documents you may need include:

  • your driving licence (if issued in the UK and Northern Ireland, you’ll likely only need the licence number. If issued outside of the UK and Northern Ireland, you may need to submit a copy of the original)
  • car proof of ownership OR proof of sale such as a V5C registration certificate
  • proof of being a named driver on someone else’s policy (if this is the case)
  • proof of no claims OR proof of previous claims (see section below)

You’ll also need an estimation for your mileage over the next year (more on that below) and be ready to put in information like your age, address and occupation.

Estimating your mileage

The number of miles you expect to drive in a year also affects the price of your car insurance premium.

This is because, as a rule of thumb, the more miles you drive the more likely you are to have an accident. So if you drive further, the insurer will see you as a greater risk and so charge you more.

Don’t underestimate your mileage to get a lower premium. It could invalidate your insurance if you need to claim. Always try to accurately predict your mileage.

There are some nuances to this. For example, you may be seen s a higher risk by your insurer if you don’t drive much in a year (generally less than 2,000 miles). This is because you aren’t driving often enough to be a ‘regular’ driver.

How to estimate your mileage

There are three common ways to estimate your insurance:

  1. Reset your odometer (aka the mileage counter in your car). See how far you drive in one week, then multiply that by 52 weeks for an annual number. A lot of people then add 5% to account for unexpected trips or longer drives like holidays.
  2. Look at your MOT history to check the exact number of miles you drove last year.
  3. Use the national average mileage for the country.

How to prove your no claims

If you’ve driven for at least a year and you’ve never made an insurance claim, you may be eligible for a ‘no claims bonus’. This is a discount on the cost of your policy that you get because you have a proven history of claims-free driving. The no claims discount increases with the number of years you haven’t made an insurance claim.

You may need to show your new insurer proof that you’re eligible for a no-claims bonus. You can confirm this with the renewal notice your current insurer sends you. Some insurers may also require a letter confirming how many years you haven’t claimed.

Other information to have on hand

You’ll need to give your personal details like address, occupation, why you drive, and where you’ll park overnight. This info can also affect the price of your insurance. For example, if you park on a drive overnight you might be seen as less risky (and therefore get cheaper insurance) than if you park on the road.

Some locations and professions are also seen as higher risk than others. For example, research showed that labourers are higher risk drivers than legal secretaries.

Car insurance companies also need to know if you’re using the car for business.

They’ll also ask if you have any security devices or if you’ve made modifications to the car.

What happens if any of these details change while I have my insurance?

You must tell your insurer if any of your details change half-way through your policy.

boom doesn’t charge admin fees to make changes to your policy, but many insurers do, so check your Ts and Cs when you buy.

Types of car insurance

So, your documents are all in order and you’re ready to buy. Now you need to decide what insurance you’re going to get.

There are three main types of car insurance that most people choose between:

  1. Third party
  2. Third party, fire and theft
  3. Fully comprehensive

There are also some specialist car insurance policies which might be worth thinking about.

Third party only

Third party car insurance is the minimum legal insurance you need in the UK. It means that if you get into an accident that’s your fault, the other people and their vehicles have cover.

However, it doesn’t provide you or your car with any cover if an accident is your fault. This means that you’d have to pay for any damage to your car (or costs because you’ve been injured) out of your own pocket.

If you didn’t cause the accident, you may be able to claim on the at-fault driver’s insurance.

Third party, fire and theft

The next step up is third party, fire and theft car insurance. This includes the same cover as before but with additional cover if your car is damaged or destroyed in a fire, stolen, or is damaged while attempting to be stolen.

But it still does not cover damage to yourself or your own vehicle during an accident that’s your fault. Again, if the accident wasn’t your fault, you may be able to claim on the other driver’s insurance.

Fully comprehensive

This is the highest level of cover that drivers can choose.

Fully comprehensive insurance covers everything mentioned so far, plus you and your own vehicle. So if an accident is your fault, you, your passengers, and your car are covered (as well as the other car and people involved).

If you pick fully comprehensive insurance, make sure you check what’s included as it’s often bundled together with other covers.

Here’s a quick summary of the differences between fully comprehensive, third party fire and theft, and third party car insurance:

Fully ComprehensiveThird Party, Fire and TheftThird Party Only
Covers others involved in the accident and their vehicles AND you, your passengers, and your vehicleCovers others involved in the accident and their vehicles but NOT you or your vehicleCovers others involved in the accident and their vehicles but NOT you or your vehicle
Covers damage if there’s a fire or someone steals (or attempts to steal) the carCovers damage if there’s a fire or someone steals (or attempts to steal) the carDOES NOT cover damage if there’s  a fire or someone steals (or attempts to steal) the car
Covers personal injury for you and your passengersDOES NOT cover personal injury for you or your passengersDOES NOT cover personal injury for you or your passengers

You might also find that some of the specialist car insurance that’s available might be better suited to you. These include:

Black box car insurance

A telematics policy, or black box car insurance, is designed for people who are new to driving – usually young or inexperienced drivers. As they lack driving experience, insurance companies assume that they are riskier drivers and more likely to make a claim. So, usually their insurance will cost more than someone who has been driving longer.

If this sounds like you, you can show that you can drive safely by installing a telematics device. It tracks your driving and sends the data back to your insurer. Telematics policies for shared cars use an app so that insurers can tell who’s driving.

How does it work?

A telematics device is installed in your car, which then sends GPS data back to the insurer. This includes top speed, average speed, acceleration, braking and turning corners, as well as total mileage, number of trips, and average journey time. Your insurer will then usually score your driving between 0 and 100. A higher score stands for ‘safer’ driving, hopefully leading to a lower car insurance premium.

Temporary car insurance

Temporary, or short term car insurance is also a specialist option. Most drivers can get insurance from 1 hour up to 24 weeks.

This could be useful if you’re borrowing a friend’s car or if you need to practice before your driving test. Or if you want to test-drive a new car or split driving duty on a road trip.

Business car insurance for commercial use

You’ll have to tell insurers whether you are driving for leisure, commuting, or business. Those with company cars have to get specific business use policies.

Private hire insurance

If you work for a company like Uber, Bolt or Lyft, then you’ll need specialist insurance to perform your duties. Driving without private hire insurance is illegal if you’re picking up passengers.

Generally, these policies include cover for public liability as well as standard motor cover. This covers claims made by passengers for incidents that happen while you’re on the job. 

What isn’t covered by standard car insurance?

Standard car insurance policies don’t cover all damage.

Your average car insurance policy doesn’t cover:

  • Normal wear and tear or damage caused by ageing, such as tyre wear
  • If the value of your vehicle goes down
  • Damage to rubber, fibreglass or wooden elements on the car (since these degrade at a faster rate than other materials)
  • Damage in the event of extraordinary circumstances, such as war

As always, read through your policy document carefully to see exactly what cover you have.

Picking your policy add-ons

There are some things that aren’t covered as standard, but you can add on to your policy. Unsurprisingly, we refer to these as ‘add-ons’.

So what exactly is a policy add-on, and how can you decide if you actually need one?

Policy add-ons are extra features that aren’t covered by a standard car insurance policy.

Buying add-ons can add up. Look carefully at what’s on offer to decide whether they’re worth it or not.

Some popular add-on features include:

  • Breakdown cover
  • Motor legal protection
  • No claims bonus protection
  • Personal accident cover
  • Car keys

Breakdown cover

This is one of the most popular add-ons. If your car breaks down, it offers cover for things like towing, repairs, completing your journey and a courtesy car.  Check the specifics of the policy before you buy as exactly where you’re covered and what you’re covered for varies a lot.

You can read more about breakdown cover here.

Motor legal protection

Motor legal protection helps if you’re involved in legal action against another driver. For example, it would cover your solicitor’s fees if you need to go to court to get money back for medical expenses or loss of earnings. You can usually only claim on this if the accident wasn’t your fault and your insurer thinks you have a decent chance of winning.

No claims bonus protection

Building up at least four years of driving without making an insurance claim could make you eligible for no claims bonus protection. This insurance add-on aims to protect the annual discount that you get, even if you do have to make a claim. You can read more about no claims bonus protection here. 

Personal accident cover

Personal accident cover is an add-on for people with third party, or third party, fire and theft insurance or who’d like greater cover than is offered in a standard fully comprehensive package. It usually covers medical fees and loss of earnings if you can’t work, as well as compensation in the case of serious injury or death.

Car key protection

On average, 43% of drivers regularly forget where they put their car keys. And, in total, these have cost more than £18 million to replace.

Some drivers choose to add extra protection against the loss or theft of their car keys, particularly if they only receive one key when they buy a second-hand car.

Setting your excess

Another important thing to think about when you buy your insurance is your excess. This is the amount of money that you must pay towards a claim.

What is an excess?

For example, let’s say that your policy includes a £250 excess and you make a claim for £1000. You pay £250 towards the cost and the insurer will pay for the remaining £750.

When do you pay your excess?

If an accident is clearly another driver’s fault, you can claim against their insurance and you don’t pay your excess. This is because your insurance company can claim back the costs from the other driver’s insurer.

You usually will have to pay the excess if you’re claiming on your policy for something that was your fault, for example to fix your car from an accident that you caused. If the third party bit of your insurance is paying to fix someone else’s car, then you don’t pay an excess.

There are some exceptions where an accident isn’t your fault but you still might need to pay your excess. For example, if you’re hit by an uninsured driver or if the insurance companies decide that both parties are at fault, a claim needs to be split 50/50. These are situations where an insurance company can’t reclaim the costs from another company.

Your excess amount is set by you and the insurer. Your policy premium will usually be smaller if you agree to a higher excess.

Your excess is made up of two bits: compulsory and voluntary.

Compulsory vs voluntary excess

Your compulsory excess is the amount that your insurer requires you to pay towards a claim. On top of that, you can set a voluntary excess when you get your policy.

A higher voluntary excess will reduce the price of your total car insurance premium. This is because you have agreed to contribute more to the cost of a claim, so the insurer will pay less. But before you set your voluntary excess as high as it will go, remember it needs to be affordable.

For example, let’s say that your compulsory excess is £100 AND you have a voluntary excess of £300. If you claim, you’ll have to put £400 towards the cost of vehicle repairs, third party compensation, and anything else covered in your policy.  Then your insurer pays the rest.

Here’s a quick summary of the differences between compulsory and voluntary excess:

Compulsory excessVoluntary excess
The amount your insurer requires you to pay towards a claimAn extra amount that you set depending on how much you could afford to pay towards a claim
This may be higher for young or inexperienced drivers, as well as those with luxury cars or modificationsThe amount is entirely up to you and how much  you can pay
This is baked into the basic price of your premium.Setting a higher voluntary excess will typically bring the price of your insurance premium down

Depending on your car insurance excess, it may not be worth making a claim.

If the price of excess is higher than the price of repairs, it could be more cost-effective to just pay. This way, you won’t affect your no claims bonus (if you have one). Remember all accidents must be reported to your car insurer even if you don’t plan to claim.

Your policy documents

Once you’ve paid for your car insurance, your insurer will send you your policy documents and what’s known as a schedule. This goes into detail about what your cover. It’s worth reading it to check that it’s what you expect.

Some insurers still send your documents by snail mail, but many now email them. At boom we’ll email you, but the best thing to do is download our app. All your policy details are stored in the ‘My Documents’ section so you’ll know exactly where they are if you need them.

If you do get a paper policy, make sure you keep it safe. The last thing you want if you have to claim is to spend half an hour looking for your details first.

Time to get started

Now you’ve got the knowledge, get a quote for your car insurance from boom. We’ve done everything we can to make the process quick, hassle-free and easy-to-understand.

Happy driving!

Get the boom app

Your car insurance on the move
You can get info and make changes when you’re out and about. If you need some help or to make a claim, it’s at your fingertips.

It’s your policy in your pocket – wherever you are, whenever you need.