The dark side of car insurance

There is a dark side to car insurance. Despite the existence of cheap car insurance sites such as or no deposit car insurance sites such as millions of UK motorists are paying monthly for their car insurance; and although you cannot say fairly they are being ripped off by the insurers, but they are certainly paying far more for their motor policies than they should do. The reason in many cases is so-called 'no deposit' car insurance.

No deposit car insurance

Simply; this doesn't exist, and yet it is one of the most popular search terms on the Internet. Car insurance prices are horrific in the UK for many motorists, particularly younger ones who often have to pay well into four figures for their insurance premiums. This is not the fault of the insurers; the fact is that young people do indeed have far more accidents, and often at higher speeds, than older people. As a result insurers have to pay out far more in claims for people in this age group, so premiums are naturally higher.

Sadly, a large proportion of youngsters simply cannot afford to pay you to premiums in advance, so a high proportion of them prefer to make monthly payments. Having just paid out for a car a lot of them don't have any money at all in the kitty, so they search for a car insurance policy that they can get without paying out anything at all upfront. This simply is not going to happen; no insurer is going to cover a young driver (or any other driver!) Without at least seeing some money, and some evidence that the balance of the premium is going to be paid.

The law and no deposit car insurance

It simply would not be legal for an insurer to sell a car insurance policy without at least a reasonably substantial sum paid in advance. This is because of UK contract law. For a contract to be enforceable, both sides have to have what is called a 'consideration'. This means that the insured person gains by having indemnity against claims; and the insurer must have something (i.e. money) in order to make the contract enforceable. No deposit, no legal insurance!

The result

Despite the fact that a number of unscrupulous websites claiming to offer no deposit insurance, it simply isn't going to happen. Any driver, including youngsters, will have to expect to pay about 20 percent minimum deposit in advance; and then there will be interest charges to pay on the balance of the premium. A lot of insurance companies in fact will not accept monthly payments, and insist on the whole balance upfront. This reduces the choice of insurer for people who need to pay monthly, which means that very often they cannot choose the cheapest policy on offer.

It is always far cheaper for motorists to pay yearly for their insurance in the normal manner; but then again life is never all that simple.