Car Subscription Services Do They Include Insurance

As a leading FCA-authorised UK motor insurance broker that has helped arrange over 800,000 policies, WeCovr explains the crucial link between car subscriptions and insurance. While most all-inclusive models bundle cover, understanding the details is vital for staying legal and protected on the road. This guide breaks it down.

WeCovr explains how insurance works with flexible car subscription models

The way we access and use cars in the UK is evolving rapidly. Beyond traditional ownership, leasing, and PCP deals, a new player has gained significant traction: the car subscription service. Promising hassle-free motoring for a single monthly fee, these services offer a tantalising alternative.

But beneath the bonnet of this convenience lies a critical question for every driver: how does the insurance work? Is it included? What are the limitations? And how does it affect your personal driving record? This comprehensive guide explains everything you need to know.

What Exactly is a Car Subscription Service?

Think of it like Netflix or Spotify, but for your driveway. A car subscription service provides you with a vehicle for a recurring monthly fee. Unlike a lease or finance agreement, these subscriptions are typically short-term and flexible, often on a rolling monthly basis or with commitment periods as short as three months.

The key appeal is the "all-inclusive" nature of the monthly payment, which usually bundles:

• The vehicle itself
• Routine servicing and maintenance
• Vehicle excise duty (road tax)
• Breakdown cover
• And, crucially, the motor insurance.

This model contrasts sharply with traditional ways of running a car, where the owner is responsible for arranging and paying for each of these elements separately. According to recent market analysis, flexibility and the simplicity of a single payment are the primary drivers for consumers exploring these services.

The Big Question: Is Insurance Included in a Car Subscription?

For the vast majority of UK car subscription services, the answer is yes, insurance is included as a core part of the package. This is one of their main selling points – the simplicity of one payment covering all major running costs.

However, the way this insurance works is fundamentally different from a personal motor policy you would buy yourself.

Instead of taking out a policy in your own name, you are added as a permitted driver to the subscription company's fleet insurance policy. The subscription provider is the policyholder, and they extend cover to you, the subscriber, for the duration of your agreement.

This distinction is the single most important thing to understand, as it has significant implications for your no-claims bonus, the cost of the excess, and what happens when you make a claim.

Understanding Your Legal Insurance Obligations in the UK

Before diving deeper into subscription insurance, it's vital to remember the law. The Road Traffic Act 1988 mandates that any vehicle used on a public road in the UK must have, at a minimum, third-party motor insurance. Driving without valid insurance is a serious offence, which according to gov.uk, can lead to a fixed penalty of £300 and 6 penalty points, with the potential for unlimited fines and disqualification if the case goes to court.

Here are the three levels of cover available:

1. Third-Party Only (TPO): This is the minimum legal requirement. It covers injury or damage you cause to other people (third parties), their vehicles, or their property. It does not cover any damage to your own vehicle.
2. Third-Party, Fire and Theft (TPFT): This includes everything TPO covers, plus protection for your own car if it is stolen or damaged by fire.
3. Comprehensive: This is the highest level of cover. It includes everything from TPFT and also covers damage to your own vehicle in an accident, even if you were at fault.

Most car subscription services provide fully comprehensive insurance as standard. This is a significant benefit, but you must always verify this by reading the terms and conditions and the Insurance Product Information Document (IPID) before signing up. Never assume the level of cover.

Key Insurance Terms Explained for Subscription Users

Because you are not the policyholder, some standard insurance concepts work differently. Here's what you need to know.

The Excess

The excess is the amount of money you must pay towards any claim you make. For example, if your excess is £1,000 and you have an accident causing £4,000 of damage, you pay the first £1,000 and the insurer pays the remaining £3,000.

With car subscriptions, the compulsory excess is often significantly higher than on a personal policy. It's not uncommon to see figures between £750 and £2,000. This is set by the subscription company's insurer to mitigate their risk across a fleet of vehicles driven by various individuals. Always check this figure before you commit, as you will be liable for it in the event of an at-fault claim.

No-Claims Bonus (NCB) / No-Claims Discount (NCD)

This is a critical drawback of subscription insurance. A No-Claims Bonus is a discount you earn on your own insurance premium for each year you drive without making a claim. According to the Association of British Insurers (ABI), a healthy NCB can reduce premiums by over 60%, making it one of the most effective ways to lower the cost of motor insurance UK.

• You do not earn an NCB while using a subscription car. Because the master policy belongs to the subscription company, your claim-free driving during the subscription period does not count towards a personal NCB.
• You risk losing your existing NCB. Most insurers will void an NCB if it hasn't been used on an active policy for two consecutive years. If you subscribe to a car for more than two years and don't have another vehicle insured in your name, you could lose your hard-earned discount completely.

This makes car subscriptions potentially less cost-effective in the long run for experienced drivers with a significant NCB.

Making a Claim

If you have an accident, your first point of contact is almost always the subscription provider, not their insurer. They have a dedicated process for managing incidents. You will report the details to them, and they will liaise with their fleet insurer to handle the claim, repairs, and any third-party communication. You will be responsible for paying the policy excess directly to the provider or their approved repairer.

Who Is Covered to Drive the Subscription Car?

Insurance on a subscription vehicle isn't a free-for-all. Strict eligibility criteria apply, which are set by the provider's insurer.

• Age Restrictions: Most companies require drivers to be at least 25 years old. Some have a higher minimum age of 30, especially for high-performance or premium vehicles. There is also usually an upper age limit, typically around 75.
• Driving Licence: You will need a full, valid UK driving licence, usually held for a minimum of 12-24 months. International licences are rarely accepted for long-term use.
• Driving History: Providers will run a DVLA check. You are unlikely to be accepted if you have major convictions (e.g., IN10 for driving without insurance, or DR10 for drink-driving) or a high number of penalty points (usually more than 6).
• Adding Named Drivers: Many services allow you to add a second driver, such as a spouse or partner. They must meet the same eligibility criteria, and an additional monthly fee usually applies. "Any driver" policies are extremely rare in this space.

What About Business Use?

Standard subscription insurance typically only covers Social, Domestic, and Pleasure (SDP) use, which includes commuting to a single, permanent place of work. If you need to use the car for business purposes, such as travelling to multiple sites, visiting clients, or transporting goods, you must declare this.

Some providers offer a "business use" add-on for an extra fee, which extends the cover to Class 1 Business Use. Failing to get the correct cover for business use would invalidate your insurance in the event of a claim, leaving you personally liable for all costs.

As experts in motor insurance, from private cars to complex commercial fleets, WeCovr can advise businesses on whether a subscription model or a traditional fleet insurance policy offers the best value and protection for their specific needs. We help you find the best car insurance provider for your circumstances.

Common Exclusions: What Isn't Covered by Subscription Insurance?

Even with a comprehensive policy, there are always exclusions. Reading the fine print is essential. Common things that are not covered include:

• Personal Belongings: The policy covers the car, not your possessions inside it. Your phone, laptop, or handbag would need to be claimed on your home insurance, provided you have personal possessions cover.
• Misfuelling: Putting petrol in a diesel car (or vice versa) is considered negligence, and the cost of draining the tank and repairing any engine damage is rarely covered.
• Lost or Damaged Keys: Replacement and reprogramming of modern car keys can cost hundreds of pounds and is usually excluded from the standard policy.
• Deliberate Damage or Gross Negligence: Any damage caused intentionally or through reckless acts (e.g., leaving the sunroof open in a hailstorm, or damage from pets) will not be covered.
• Prohibited Use: Using the car for activities like racing, track days, or as a taxi/private hire vehicle (e.g., Uber or delivery work) is strictly forbidden and will void the insurance instantly.
• Towing: Using the vehicle to tow a trailer or caravan may be excluded or require specific permission and an additional insurance endorsement.
• Driving Abroad: Cover is typically limited to the UK. If you plan to drive in Europe, you will need to inform the subscription company well in advance. They may be able to arrange a "Green Card" or foreign use extension, usually for an additional fee and for a limited duration.

Optional Extras and Add-ons

While the core package is comprehensive, some benefits that are often standard or cheap add-ons with personal policies might be different with a subscription.

• Breakdown Cover: This is almost always included, but check the level. Does it include at-home assistance and onward travel, or just roadside recovery? The AA and RAC both report that home-start is one of the most common call-out reasons.
• Courtesy Car: A replacement vehicle is usually provided if the car is off the road for repairs after an accident. However, check the terms. Is it guaranteed to be a like-for-like model, or just a small standard car? How long can you have it for?
• Motor Legal Protection: This covers your legal costs (up to a limit, e.g., £100,000) if you need to pursue a claim for uninsured losses (like your excess or loss of earnings) against a third party. This may be an optional extra.
• Windscreen Cover: Most comprehensive policies include windscreen repair or replacement, often with a lower excess than the main policy excess (e.g., £100). This is usually the case with subscriptions, but it's worth confirming.

Business and Fleet Use of Car Subscriptions

For business owners and fleet managers, car subscriptions present a compelling proposition. They offer a way to scale the company fleet up or down in response to demand, without the long-term capital commitment of purchasing vehicles or the rigid contracts of leasing.

Insurance Considerations for Business Fleets:

• Flexibility vs. Cost: While flexible, the per-unit cost of a subscription can be higher than a traditional lease combined with a dedicated fleet insurance policy. A thorough cost-benefit analysis is essential.
• Business Use Cover: It is absolutely critical to ensure the subscription's insurance policy includes the correct class of business use for your company's needs. Commercial travelling requires different cover than simple commuting.
• Driver Eligibility: You must ensure every employee who will drive the car meets the subscription provider's strict eligibility criteria. This can be challenging with a fluctuating workforce.
• Administration: The subscription model simplifies administration by bundling costs, but it reduces control over the specific insurance policy terms, excess levels, and claims management process.

For companies running multiple vehicles, a dedicated fleet insurance policy, arranged through a specialist broker like WeCovr, often provides greater control, potential cost savings through scale, and cover that is precisely tailored to the business's operational risks. We can help you conduct a cost-benefit analysis to determine the best approach for your business.

What to Do After an Accident in a Subscription Car: A Step-by-Step Guide

Having an accident is stressful, but knowing the correct procedure can make a huge difference.

1. Stop Safely and Assess: Stop the car as soon as it is safe to do so. Turn off your engine and turn on your hazard lights. Check yourself and your passengers for injuries before checking on anyone else involved.
2. Call Emergency Services: If anyone is injured or the road is blocked, call 999 immediately and ask for the police and/or ambulance. The police should be called if the other driver leaves the scene or if you suspect they are under the influence of drink or drugs.
3. Do Not Admit Fault: Be calm and polite, but do not apologise or accept blame at the scene. This can be used against you later by insurers.
4. Exchange Details: You must legally provide your name and address to anyone else involved. You should also get their:
   • Name, address, and phone number.
   • Vehicle registration number.
   • Their insurance company details (if they have them).
5. Gather Evidence: Use your phone to take pictures of the scene, the position of the cars, and the damage to all vehicles. Note the time, date, weather conditions, and exact location. If there were witnesses, ask for their contact details. A dash cam can be invaluable here.
6. Contact Your Subscription Provider: This is the most important step. As soon as you are safe, call the dedicated 24/7 accident helpline for your subscription provider. Do not call their insurer directly. They will guide you through their specific process, arrange for vehicle recovery if needed, and start the claim process. You will give them the third-party details you collected.

Remember, you will be liable for the policy excess if the accident is deemed to be your fault.

Top Tips for Choosing a Car Subscription

1. Read the Insurance Documents: Don't just tick the box. Ask for and read the full policy wording and the summary IPID. Pay close attention to the excess, exclusions, and driver eligibility.
2. Clarify the Excess: Know exactly how much you'll have to pay in a claim for damage, windscreen replacement, and theft. Ask if an excess reduction waiver is available for an extra fee.
3. Check Driver Rules: If you need to add a family member, check the process and the cost before you sign up. Ensure they meet all criteria.
4. Consider Your NCB: If you have a long, clean driving history, calculate the financial impact of not earning an NCB and potentially losing your existing one after two years.
5. Confirm Mileage Limits: Subscriptions come with annual mileage caps (e.g., 8,000-10,000 miles). Exceeding this incurs pence-per-mile charges that can be very expensive (e.g., 10-30p per mile).
6. Assess 'Fair Wear and Tear': Understand the provider's policy on what constitutes acceptable wear versus chargeable damage when you return the car. Ask for their official guide.

Frequently Asked Questions (FAQ)

Do I need my own car insurance for a subscription car? No, you almost never need your own separate policy. The subscription fee includes comprehensive insurance provided by the subscription company under their fleet policy. Your responsibility is to verify the terms of that included cover, such as the excess amount and any specific exclusions.

Will a claim on a subscription car affect my future insurance premiums? Yes, indirectly. While it won't affect a No-Claims Bonus (as you aren't earning one), you are legally required to declare all accidents, claims, and convictions from the past five years when applying for any new motor insurance. An at-fault claim, even in a subscription car, will likely lead to higher premiums for your personal car insurance in the future.

Can I use my existing No-Claims Bonus on a car subscription? No, you cannot apply a personal No-Claims Bonus (NCB) to a subscription plan because the insurance policy is owned by the subscription company, not you. Furthermore, if you go without a personal motor policy for two years or more while using the subscription, you will likely lose your accumulated NCB entirely.

What happens if I get a speeding ticket or parking fine in a subscription car? You are fully responsible for any fines or penalty points you incur. The fine notification will be sent to the registered keeper (the subscription company), who will then nominate you as the driver at the time of the offence. They will also likely charge you an administration fee for this process.

Whether you're considering a flexible car subscription, managing a business fleet, or simply looking for the best motor insurance provider for your own vehicle, understanding the details is key. The convenience of a single monthly payment is appealing, but it's vital to know exactly what you're covered for. With consistently high customer satisfaction ratings, WeCovr is committed to clarity and value.

At WeCovr, our FCA-authorised experts provide free, impartial advice and help you compare policies from a wide panel of leading UK insurers for your car, van, motorcycle or business fleet. We can also help you find discounts on other products when you purchase a motor or life insurance policy through us. Drive with confidence, knowing you have the right cover at the right price.

Get your personalised motor insurance quote from WeCovr today.