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In a word, yes. Not only is having car insurance financially wise, it’s also a legal requirement. Under the Road Traffic Act 1988, all drivers must be insured against their liability to other people.

If you’re driving without car insurance you could be fined or even banned from driving. There is no limit to how much you can be fined and you’ll likely receive six to eight points on your license. You do not want this.

It may seem like a silly question but it is not. With insurance providers auto-renewing insurance and multi-car insurance meaning you might be covered under somebody else’s policy, it’s easy to not know who you’re provider is or if you’re insured at all. And as we know, not being insured is a big issue.

Finding out if you’re insured is easy. Search your number plate on the Motor Insurer’s Database (MID). It will tell you whether you’re insured and the make and model of your car — this part is free. If you would like to find out the name of the insurer and further policy details, it’ll cost you £4.

Excess is the amount that you have to pay if you make a claim against your car insurance. There are two types of excess: compulsory excess and voluntary excess.

Compulsory excess is just that: compulsory. It’s the fixed amount you have to pay if you make a claim. Let’s say your compulsory excess is £200, and you make a claim of £800. Your provider will hold on to the £200 and give you the £600.

Your compulsory excess will likely change depending on what kind of driver you are. If you are under 25 years old, you’ll probably have a higher compulsory excess, as you’re considered a higher risk driver.

Voluntary excess is how much you decide to pay on top of your compulsory excess if you make a claim. The reason people decide to set up voluntary excess is to lower the cost of their insurance premium. 

Having a higher voluntary excess can be a bit of a risk. Think carefully about how much voluntary excess will change the cost of your insurance, and how careful a driver you are. You don’t want to be in a scenario where you make a claim but can’t afford your voluntary excess.

Your car will fall into one of 50 car insurance groups. This applies to all cars, everything from luxury 4x4s to electric cars.

The group that your car insurance falls in is a factor that helps determine how much your car insurance premium will be.

Cars that fall into group 1 are the cheapest cars to insure. The higher up the group, the more expensive the insurance, until you get to group 50, which is the most expensive for insurance. 

How expensive, rare and powerful your car determines what group your car falls into. The cheaper and more common your car is, the lower the group it’ll be in.

While it’s widely accepted that car insurance can be costly, and premiums have increased in recent years, there are good reasons for this.

These include a rise in personal injury claims such as whiplash, which has been driven by what some people refer to as a “compensation culture”, seen in TV advertisements encouraging people to claim for accidents. 

Legislative changes like the increase in Insurance Premium Tax to 12% in 2017 have also boosted premiums.

The ‘Ogden Discount Rate’ an industry guideline set by the government, on life changing accidents, was reduced from 2.5% to -0.25% in recent years. This led to an increase in compensation payouts. 

Meanwhile, the rise of keyless entry technology has made it potentially easier to break into and steal vehicles, leading to an increase in theft claims.

In addition to all this, uninsured drivers continue to cost the industry significant amounts of revenue, the cost of which unfortunately has to be passed on to consumers.

It’s factors like these and others that have driven the continued rise in payments.

There’s a popular theory that car insurance goes down once you hit 25. In reality this isn’t always the case. The price of your car insurance is based on a range of factors and not just your age.

As a young person, there are still ways you can make your car insurance cheaper. For example, consider adding an older, experienced driver (like a parent) to your insurance to reduce the price.

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