What is the cheapest type of car insurance?

Third Party Only is the most basic and cheapest type of car insurance. However, comprehensive cover is often cheaper in practice because insurers assume drivers choosing Third Party Only are higher risk. Always compare all three cover levels to find the cheapest option for your circumstances.

How much can I save by comparing car insurance?

According to the FCA, drivers who compare and switch can save an average of £120-£250 per year. The savings are even greater if you have been auto-renewing with the same insurer for several years, as loyalty penalties have historically inflated renewal premiums.

Does a higher voluntary excess always mean cheaper insurance?

Generally yes — increasing your voluntary excess from £100 to £500 typically reduces your premium by 10-15%. However, you must be able to afford the excess if you need to claim. Setting an excess too high could leave you out of pocket after an accident.

Is it cheaper to pay car insurance monthly or annually?

Paying annually is almost always cheaper. Monthly payments involve credit, so insurers charge interest — typically 15-30% APR. Over a year, this can add £100-£200 to the total cost. If you can afford the lump sum, paying annually is the better option.

Cheap Car Insurance UK

Compare the cheapest car insurance quotes from leading UK providers. Find out how to reduce your premium and get the cover you need at a price you can afford.

Finding genuinely cheap car insurance in the UK requires more than just picking the lowest quote. The cheapest policy is the one that gives you adequate cover at the best price — and the only reliable way to find it is to compare quotes from multiple insurers. According to the FCA, drivers who shop around save an average of £120–£250 per year, with some saving considerably more depending on their circumstances.

Since the FCA banned the “loyalty penalty” in January 2022 (under General Insurance Pricing Practices rules), insurers can no longer charge existing customers more than new ones for the same cover. This was a significant win for consumers, but it does not mean all policies are priced equally. Factors like your postcode, vehicle, driving history, occupation and even your job title still create wide variations between quotes. Comparing remains the single most effective way to find cheap car insurance.

Comparison table: ways to get cheaper car insurance

Method	Potential Saving	Effort	Notes
Compare quotes online	£120–£250/yr	Low	Use comparison services and check direct-only insurers (e.g. Direct Line, Aviva)
Increase voluntary excess	10–15%	Low	Only increase to an amount you can genuinely afford to pay
Build no-claims bonus	Up to 65%	Time	Each claim-free year adds discount; protect it for a small extra cost
Choose a lower insurance group car	20–40%	Medium	Groups 1–10 are cheapest; check before buying a new vehicle
Pay annually	£100–£200	Low	Monthly payments include interest at 15–30% APR
Add experienced named driver	5–15%	Low	Must be a genuine regular driver — “fronting” is illegal
Reduce annual mileage	5–10%	Low	Be accurate; under-declaring can invalidate your policy
Improve vehicle security	5–10%	Medium	Thatcham-approved alarms and immobilisers, off-street parking
Use telematics (black box)	Up to 30%	Low	Best for young or new drivers; rewards safe driving habits
Compare 21 days early	Varies	Low	MoneySavingExpert data shows this is the sweet spot for cheapest quotes

What to look for in a cheap car insurance policy

The cheapest quote is not always the best value. Before buying a policy based purely on price, check these key factors:

Cover level

Make sure the policy provides the level of cover you actually need. Comprehensive is the most protective and, counterintuitively, is often cheaper than Third Party Only. Insurers view drivers who choose Third Party Only as higher risk, which can inflate the price. Always compare all three cover levels.

Excess amounts

Check both the compulsory excess (set by the insurer) and your voluntary excess. A very low premium might come with a £1,000+ total excess, which could leave you significantly out of pocket after an accident. The FCA recommends ensuring you can comfortably afford your total excess before buying.

Policy exclusions

Read the key facts document carefully. Common exclusions include driving abroad, windscreen cover, courtesy car, and cover for modifications. If you need any of these, check they are included or available as add-ons before committing.

Claims handling

Cheap insurance is only good value if the insurer pays out when you need them. Check independent review sites and the Financial Ombudsman Service complaints data to gauge an insurer’s claims handling reputation. A slightly more expensive policy with a well-rated insurer may be better value in the long run.

Pros and cons of cheap car insurance

Pros

Lower monthly or annual outgoings
Legal minimum cover met at reduced cost
More budget available for other expenses
FCA pricing rules mean quality need not suffer
Telematics rewards safe drivers with ongoing savings

Cons

May include higher excess amounts
Could lack useful extras (courtesy car, breakdown)
Some budget insurers have poor claims records
Third Party Only may actually cost more than Comprehensive
Lowest price might require telematics or restricted driving hours

How the FCA loyalty penalty ban changed cheap car insurance

Before January 2022, insurers routinely charged loyal customers more at renewal than they charged new customers for identical cover. The FCA’s General Insurance Pricing Practices (GIPP) rules put a stop to this, requiring insurers to offer renewal prices no higher than the equivalent new business price.

This has been broadly positive for consumers. According to the FCA’s own review, 6 million policyholders who previously paid a loyalty penalty have benefited. However, it has also meant that some new-customer discounts have been reduced, making the gap between the cheapest and most expensive quotes narrower. Despite this, comparing still yields meaningful savings because insurers use different risk models and different panels of underwriters.

Cheap car insurance by driver type

Different driver profiles face very different pricing. Here is how to approach finding cheap cover for common situations:

Young drivers (17–24)

This group faces the highest premiums in the UK, averaging £1,450–£2,400 per year. Telematics (black box) policies are often the cheapest route, with insurers like Marmalade, Veygo and ingenie specialising in this market. Adding a parent as a named driver (not the main driver — that would be fronting) can also help. See our young drivers insurance guide for more.

Experienced drivers with no-claims

If you have five or more years of no-claims bonus, you are in a strong position. Protect your NCD and compare widely — the difference between the cheapest and most expensive quote for experienced drivers can still be £200+. Consider multi-car policies if you have more than one vehicle in the household.

Drivers with convictions or claims

Specialist insurers cater to drivers with points, convictions or previous claims. While premiums will be higher, comparing across specialists (such as Adrian Flux or Hastings) can still reveal significant variation. A spent conviction (over five years old) does not need to be declared.

Low-mileage drivers

If you drive fewer than 5,000 miles per year, pay-per-mile insurance from providers like By Miles could be cheaper than a traditional annual policy. You pay a daily rate plus a per-mile charge, which rewards low usage.

Tip: never lie to get a cheaper quote

Under the Consumer Insurance (Disclosure and Representations) Act 2012, you must answer all questions honestly and to the best of your knowledge. Providing false information (such as a different address, incorrect mileage or failing to declare modifications) is fraud and can result in your policy being voided, claims being refused, and difficulty obtaining insurance in the future.

How to compare cheap car insurance

To get the most accurate and competitive quotes, follow these steps:

Gather your details — You will need your vehicle registration, driving licence number, claims and convictions history for the last five years, and details of any named drivers.
Compare at least 21 days before renewal — Data from MoneySavingExpert consistently shows this is the optimal time to compare for the cheapest prices.
Check comparison sites and direct insurers — Not all insurers appear on comparison sites. Direct Line, Aviva and some specialist providers only quote directly, so check their websites too.
Try different cover levels — Get quotes for Comprehensive and Third Party Fire and Theft. Comprehensive is often cheaper.
Adjust your voluntary excess — Try £250, £500 and £750 to see how each affects the price. Find the balance between lower premiums and affordable excess.
Check the policy details — Before buying, read the key facts to understand what is and is not covered.

Frequently asked questions

Third Party Only is the most basic level, but Comprehensive is often cheaper in practice. Insurers view TPO buyers as higher risk, inflating their premiums. Always compare all three levels to find the cheapest for your specific profile.

According to the FCA, drivers who compare and switch save an average of £120–£250 per year. Savings can be considerably higher for drivers who have been auto-renewing with the same insurer for several years.

Generally yes — increasing from £100 to £500 typically reduces your premium by 10–15%. But you must be able to afford the excess if you claim. Setting it too high could leave you unable to use your policy when you need it.

Paying annually is almost always cheaper. Monthly payments involve credit at 15–30% APR, adding £100–£200 to the total cost over a year. If you can afford the lump sum, pay annually and save.