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Why you need car insurance

The short answer is, to comply with the law. Any car you own (or van, motorbike or other vehicle) must be insured if you use or park it on the road or in a public place.

In the UK and most other countries, you must have a minimum of Third Party cover (find out more about Which level of cover). This is to protect other people and their property if you had an accident.

Could you pay out?

Say, for example, you lost control of your car and hit a minibus, causing major damage and seriously injuring the twelve people inside. Apart from the cost of repairing or replacing the minibus, all twelve people could sue you for lost earnings and specialist treatment for their injuries. The bill could be hundreds of thousands of pounds. Few people have that amount of money going spare, so the law insists you have insurance in place that will pay out if the worst happens.

Looking after you, too

Car insurance can also protect your finances by repairing or replacing your car if it's damaged or stolen (depending on the level of cover you choose). For this, you need Comprehensive cover (sometimes called Fully Comprehensive - see Which level of cover for more information).

The penalties if you don't have insurance

In the UK you have to prove your vehicle is insured before you can tax it. Driving without insurance or road tax is an offence that can put points on your licence, result in a fine and/or possible prison sentence, and maybe see your car confiscated and destroyed.

The UK Government has introduced a continuous insurance enforcement scheme to check automatically that your insurance is renewed when it's due. If you're not planning to renew the insurance, you'll have to declare your car SORN and keep it off the road.

As you can see, it's simply not worth the risk of driving without car insurance.