Car Insurance Myths

There are plenty of myths and untruths revolving around car insurance than can easily lead you astray if you aren’t careful. In this guide, we’ll be running you through some of the most common car insurance myths and clarifying things so you can separate fact from fiction.

In This Guide:

• Third party cover is always the cheapest type of car insurance
• My premium shouldn’t go up next year if I don’t make a claim
• If a claim wasn’t my fault, I won’t have to pay an excess
• I don’t need insurance if I don’t use my car
• You should get insurance in a parent’s name if you’re a young driver
• Black box policies impose curfews on their drivers
• Paying for insurance monthly will spread out the cost economically
• Having a comprehensive policy allows you to drive any car

Third party cover is always the cheapest type of car insurance

It’s understandable that people assume that the lowest level of cover must also be the cheapest form of cover. However, this isn’t quite true. Insurers take on board a vast array of factors when calculating the price of insurance premiums.

One thing insurance companies have become aware of is the fact that higher-risk drivers are more likely to opt for third party cover. For many drivers, this has meant that the price of third party cover has risen to around the same price as comprehensive cover. In fact, some drivers may find that comprehensive cover is actually cheaper than taking out a third party policy.

My premium shouldn’t go up next year if I don’t make a claim

It makes sense, doesn’t it? You didn’t make a claim this year, so your premium for next year should at least stay the same, if not go down. However, insurance premiums are a bit more complicated than that.

For a start, if it was your first year with a particular insurer, it is quite likely that your policy will go up in price for the second year. Many insurers sell policies to new customers at a loss, hoping that their laziness when it comes to renewal will mean that they can hike up the price and make their profit on the subsequent years that a customer is with them.

On the other hand, if you’ve been with your insurer for a while, you may have reached the limit for how much discount you’ll receive for your no claims bonus. In addition to this, you may have also reached an age where you are now considered a higher risk.

Changes to Insurance Premium Tax, or even your own change of job or address, can also be factors in why your premium has gone up.

If a claim wasn’t my fault, I won’t have to pay an excess

Generally speaking, if you get into an incident and you can prove it wasn’t your fault your insurer will usually claim the costs from the party at fault and their insurance company.

Having said this, often what happens is that you are asked to pay the excess upfront regardless, and then it is refunded back to you after the costs have been recovered from the other side. This is why it is always a good idea to select an excess for your policy that you can afford.

I don’t need insurance if I don’t use my car

This is true, but only if you’ve followed the necessary steps. You’ll firstly need to declare your car as off the road via a Statutory Off Road Notice (SORN). Secondly, the conditions of a SORN stipulate that the car must be kept off of roads and on private property (e.g. in your garage or on your driveway).

If you keep your car on the road, regardless of whether it is used or not, you’ll need some form of insurance policy due to the Continuous Insurance Enforcement (CIE) rules.

You should get insurance in a parent’s name if you’re a young driver

It’s quite common for a parent to add their child to the existing insurance policy on the parent’s car when their child first starts driving. This is usually fine if the parent stays as the main driver and actually drives the car for the majority of the time.

However, taking out insurance in a parent’s name when the additional driver is going to be doing most the driving in that car is a different story. This is known as ‘fronting’ and is illegal as it is a form of fraud. The penalties for fronting can include a fine of up to £5000, as well as penalty points and disqualification from driving.

Black box policies impose curfews on their drivers

This was actually true in the past, but now most black box or telematics policies no longer have any form of curfew. These days, insurers base premiums for telematics policies on a driver’s competence - looking at their speed, braking and accelerating, as well as their overall mileage.

Some policies do alter your premiums for driving at night, but there aren’t many policies that will restrict night-time driving outright.

Paying for insurance monthly will spread out the cost economically

Spreading out the cost over time may be a good idea for some purchases, but your car insurance policy isn’t likely to be one of them. It will almost always cost you more than if you’d have paid the full cost upfront. This is because insurers will ask you for a deposit, and you will be charged interest on top - adding up to quite a bit more than paying for the whole premium at once. If possible, it’s always best to pay for your policy annually, rather than monthly.

Having a comprehensive policy allows you to drive any car

It’s commonly believed that having a comprehensive policy will allow you to drive other people’s cars with third party cover. This may have been true in the past when such a feature was common on comprehensive policies, but these days it is not very common at all.

It’s always best to check your policy documents and wording before you go driving someone else’s car. You can do this by looking under the Driving Other Cars (DOC) section on your policy.