Insurance advice
Can you get it thrown in for free?

How to get insurance included in the cost of your new car

  • Published 24 March 2020
  • 3 minute read
  • By Gavin Braithwaite-Smith

Data released by Compare The Market shows that the average car insurance premium in the UK is £666. That’s a devilish amount of cash to fork out when you’re buying a new car.

Insurance is one of the unavoidable costs of motoring and it can be especially expensive if you’re a young or inexperienced driver. Which is why including the cost of insurance in the cost of your new car makes sense. Not only does it make it easier to manage your monthly outgoings, you could save yourself a tidy sum.

But be warned: it’s not necessarily the most cost-effective solution. Although some deals claim to offer free insurance, in reality the cost has been added elsewhere. That’s not to say it can’t work for you. Here are your options.

Buying a new car from a manufacturer

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Some manufacturers offer free car insurance as part of a finance package, the most famous being Peugeot’s ‘Just Add Fuel’ deal.

For a fixed monthly payment over three years, the offer includes insurance for up to three drivers, vehicle excise duty (VED car tax), warranty, breakdown recovery and servicing. For drivers aged 18-20, or those with less than two years’ no-claims discount, the package comes with a telematics device.

We ran a test to see how much it would cost for a driver aged 18 to buy an all-new Peugeot 208 using the Just Add Fuel deal. Based on a Hampshire postcode, with zero no-claims discount and an allowance of 10,000 miles a year, the cost is from £385 per month.

That might seem expensive in an age of cheap Personal Contract Purchase (PCP) deals, but remember, that’s all your motoring costs included in one monthly fee for three years. Well, everything except fuel, but you probably guessed that from the name.

Citroen’s ‘SimplyDrive’ deal is fundamentally the same thing, albeit with a less memorable title. Other manufacturers might offer free insurance deals for a limited period of time. For example, Toyota has been known to offer free cover for young drivers on the Aygo.

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Dealer offers

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It’s not uncommon for car dealer groups to offer all-inclusive finance and insurance packages. These tend to be short-term promotions designed to tempt motorists into the showroom.

You’re advised to do your homework before signing a contract. Although the insurance might be advertised as ‘free’, the cost is likely to be contained within the overall fee. Ask the dealer how much the finance would cost without the insurance, then see how much you could save by arranging cover elsewhere.

Alternatively, see if you get insurance thrown in as part of a finance deal, regardless of whether or not the dealer is running a promotion. If you don’t ask, you don’t get.

Insurance and car packages for young drivers

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You don’t have to buy a new car from a manufacturer. If you’re a young driver hoping to get behind the wheel for the first time, Marmalade offers an innovative solution. In the majority of cases, drivers will receive free or discounted insurance, although in some circumstances the company might require a contribution towards your deposit.

The policy uses telematics – or ‘black box’ technology – to monitor your driving. This will transmit data via a GPS signal to allow Marmalade to assess your driving skills and determine a driving behaviour score. If your score falls below a certain level, you may have to pay an additional premium.

Marmalade offers two finance options. One is a PCP deal, which can be spread over two, three or four years. You pay a deposit then make set monthly payments for the duration of the contract. At the end, you can hand the car back or make a final payment to keep the car.

Alternatively, you can choose a more traditional hire purchase (HP) approach. The monthly costs might be higher, but at the end of the contract the car is yours – there’s no final payment to make.

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Insurance as part of a leasing contract

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Typically, car insurance isn’t included as part of a Personal Contract Hire (PCH) plan. In fact, because you don’t own the car, you will have to arrange fully comprehensive cover.

That’s not to say that it isn’t possible. Some leasing companies offer insurance as a bolt-on option, while others can arrange a package similar to Peugeot’s Just Add Fuel deal.

In the case of the latter, the package should include third party liability cover, own damage protection, windscreen cover, maintenance, breakdown assistance and accident management. You might find that these deals are restricted to drivers aged 21 and over, and you’ll almost certainly pay more for the privilege.

We’d recommend comparing packages. In other words, see how much it would cost to lease the car without the insurance, then find out if it’s possible to arrange cover for a cheaper price elsewhere.

‘Driveaway’ insurance

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Many manufacturers will offer free short-term insurance when you buy a new car. Such deals are designed to provide protection from the time you drive away from the showroom to when you can arrange annual cover.

For example, Volvo offers two options. Free ‘driveaway’ insurance provides comprehensive cover for up to five days and is available for drivers aged 21 to 79. Alternatively, ‘get me home’ cover is available until 23:59 the day after the policy starts.

Other manufacturers might offer up to seven days’ free insurance, so it’s worth asking the question when you’re in the showroom.

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