Car dealership insurance

Getting cover at the point of purchase

Car dealership insurance typically refers to motor insurance arranged through a dealership when you buy or lease a vehicle. It aims to make the handover simple so you can drive away legally, often bundling cover with finance or protection products. The right policy can offer convenience and consistent protection, but it is important to check what is and is not included before you sign.

In 2025 the UK market has been volatile. Premiums rose sharply due to theft and rising repair costs, especially for high-value and tech-heavy vehicles. Some models saw annual premiums exceed £1,700 where theft targeting and complex repairs are common. Many drivers reported double-digit increases, with urban areas and younger drivers hardest hit. Recently, average prices have started to ease, helped by competition and pricing adjustments, though theft claims and parts shortages still pressure costs.

This guide explains how dealership-arranged motor insurance works, what it usually covers, the limitations to watch for, and how pricing is set. We will use plain English, focus on consumer safety, and give you a practical checklist so you can compare a dealer quote with direct insurers and brokers. The aim is simple: help you drive away with the protection you actually need, at a fair price, with no surprises later.

Buy at the dealership if it clearly fits your needs and budget. If it does not, you can walk away and arrange cover elsewhere.

What is covered and how claims work

Most dealership policies are standard UK comprehensive motor insurance, arranged with a partner insurer. Comprehensive cover typically includes damage to your own car, third-party liability for injury and property damage, fire, theft, and windscreen cover. Many policies offer courtesy cars during repairs at approved garages and 24/7 claims helplines. Excesses apply and may differ for windscreens, compulsory excesses, and young drivers.

Exclusions are common. Wear and tear, mechanical breakdown, using the car for excluded business activities, and driving without the correct licence are not covered. Theft claims may be declined if keys are left in the vehicle or if required security devices are not fitted or activated. If you modify the car or add accessories without notifying the insurer, you may not be fully covered.

If you need to claim, you usually report the incident as soon as possible, share photos and details, and use an approved repairer. Insurers may supply manufacturer-approved parts when available, but shortages can extend repair times, especially for electric vehicles with complex components. Theft claims often require proof of ownership, both keys, and a crime reference number. Settlement can be repair, replacement, or a cash payout based on the car’s market value at the time of loss.

Who benefits most

Dealership-arranged cover can suit buyers who want a seamless handover, new drivers who value guidance, and customers financing a vehicle where the lender requires continuous comprehensive cover. It can also help when your current insurer will not cover a new vehicle type, such as moving from petrol to electric, or when you need immediate temporary cover to drive away the same day.

It may be less suitable if you already have a multicar policy, a strong no claims discount elsewhere, or if you prefer to compare specialist policies for modified, classic, or high-performance cars. If you live in a high-theft area or drive a frequently targeted model, shopping around can be essential to balance price with robust security and theft cover.

Your choices at a glance

1. Basic comprehensive

   • Core cover: third-party liability, fire, theft, accidental damage.
   • Typical features: approved repairers, standard courtesy car, windscreen cover.
   • Limitations: higher excesses, fewer add-ons, limited personal belongings cover.

2. Standard comprehensive with add-ons

   • Core cover plus: legal expenses, breakdown cover, enhanced courtesy car.
   • Optional extras: protected no claims discount, key cover, personal accident.
   • Balanced choice for most buyers seeking day-to-day convenience and support.

3. Premium comprehensive

   • Core cover plus higher limits, new-for-old replacement on newer cars, larger courtesy car class, and often UK and European breakdown assistance.
   • May include cover for home charger units on EVs, OEM parts preference, and guaranteed repairs at manufacturer-approved networks.

4. Temporary drive-away cover

   • Short-term insurance from 1 hour to 28 days to take the car home while you compare annual policies.
   • Useful when switching vehicles or awaiting a renewal date.

5. Business and commuting variations

   • Social, social and commuting, or business use. Confirm the exact business definitions, especially for gig-economy or delivery, which usually require specialist policies.

What it costs and why prices shift

Rising theft and repair costs pushed premiums up in recent years, particularly for tech-heavy models. Average premiums eased into mid-2025 as competition increased, but claim costs and theft remain significant. Your price depends on risk profile, cover level, and the insurer’s view of your vehicle’s theft and repair exposure.

Prices vary widely. Families with multiple cars may see combined costs exceed £1,270 a year, while drivers with strong no claims records can pay less than headline averages.

Eligibility and what insurers check

Most UK residents with a valid driving licence can apply, subject to age, vehicle, and claims history. Insurers will ask for personal details, licence information, proof of address, and any recent claims or convictions. The vehicle’s registration, value, security features, and where it is kept overnight are key underwriting factors.

Applications can be declined for high-risk vehicles with strong theft exposure, inaccurate or incomplete information, serious convictions, non-UK residency, or outstanding fraud markers. Some insurers restrict cover for newly imported cars, heavily modified vehicles, or certain business uses. Providing accurate details upfront helps avoid cancelled policies and rejected claims later.

From quote to claim in simple steps

1. Gather your details, vehicle reg, mileage, and any finance or lease terms.
2. Get the dealer quote and ask for a full policy summary and IPID.
3. Compare like-for-like with at least three external quotes online.
4. Choose cover level and add-ons based on real needs and budget.
5. Confirm excesses, exclusions, business use, and security requirements.
6. Purchase policy and receive documents before taking delivery of the car.
7. Set up payments, review renewals, and store documents safely.
8. If something happens, report the claim promptly and follow guidance.

Balanced view of benefits and drawbacks

Short, clear documents beat glossy brochures. Ask for the Insurance Product Information Document to understand the essentials quickly.

Key checks before you say yes

Verify the excess amounts for accidental damage, theft, and windscreens. Check mandatory security requirements for high-risk models and whether a tracker or immobiliser is needed. Confirm what happens if parts are unavailable and whether the policy uses manufacturer or equivalent parts. Review personal belongings limits, courtesy car class, and any restrictions on business use. For no claims discount, confirm if protection is included and how it works. Look closely at renewal terms, mid-term change fees, and cancellation rights. Make sure your name, address, vehicle details, and driving history are accurate before the policy starts.

Alternatives and related options

1. Buying direct from an insurer
   • Useful for broader choice and price competition, including telematics policies for young drivers.
2. Independent broker
   • Helpful for non-standard risks, imported cars, or complex business use.
3. Short-term or temporary insurance
   • Good for test drives or driving home before arranging annual cover.
4. Multicar policies
   • Can reduce costs for households insuring several vehicles together.
5. Specialist EV insurance
   • Tailored for battery cover, home chargers, and high-voltage repairs.

FAQs

Q: Is dealership insurance more expensive than buying direct? A: Sometimes, but not always. Dealer policies can be competitive, especially with bundled extras. Compare like-for-like cover, excesses, and benefits to see the true cost before deciding.

Q: Can I drive away the same day? A: Yes, most dealerships can arrange immediate cover or temporary policies. Always get confirmation and policy documents before leaving the forecourt to ensure you are legally insured.

Q: Will my no claims discount transfer? A: In many cases, yes. You may need proof from your previous insurer. If you choose NCD protection, check eligibility rules, step-back terms, and how future claims affect your discount.

Q: Are EVs more expensive to insure? A: Often, due to specialist parts, repair times, and higher theft interest for certain models. Prices vary by make and security. Enhanced security and safe parking can help reduce costs.

Q: Why have premiums changed so much recently? A: Claims costs rose due to theft and repairs, pushing prices up. Competition increased in 2025, leading to some price falls. Trends vary by driver profile, location, and vehicle.

Q: Do I have to use an approved repairer? A: Many policies require it to guarantee repairs and manage costs. Using a non-approved repairer can increase your excess or limit guarantees. Check your policy schedule for details.

What to do next

Take the dealer’s policy summary and compare it with at least three quotes for equivalent cover and excesses. Focus on what you need, not just the price. If the dealership policy stacks up on cover and claims support, it can be a convenient choice. If not, you can arrange insurance elsewhere before collection.

Disclaimer

This guide provides general information only and is not personal financial advice. Policy terms, prices, and eligibility vary between insurers. Always read the Insurance Product Information Document and policy wording carefully before you buy.