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Car insurance for unemployed drivers

Does being between jobs or claiming benefits make a difference to your car insurance? If you’re a jobseeker looking to save money on your premiums, here’s how to go about getting car insurance for unemployed drivers.

Does being between jobs or claiming benefits make a difference to your car insurance? If you’re a jobseeker looking to save money on your premiums, here’s how to go about getting car insurance for unemployed drivers.

Written by
Julie Daniels
Motor insurance comparison expert
Reviewed by
Kate Hughes
Insurance expert
Last Updated
15 MAY 2023
3 min read
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Does being unemployed affect car insurance?

Car insurance providers will usually ask you for your job title when you apply for a quote. That’s because occupation is one of the variables they use to calculate car insurance premiums.

Unfair as it might seem, car insurance can cost more if you’re unemployed. Without a job, providers may consider you a higher risk, which can hike up the cost. 

That said, it’s important to bear in mind that insurance providers use a wide range of other risk factors when calculating premiums, like your age and where you live. These can all have a bearing on how much you pay for your car insurance.

Why are unemployed drivers seen as high risk?

Insurance providers may consider that unemployed drivers are:

  • Less likely to maintain their car – with less disposable income to hand, out-of-work drivers may try to save money on their car’s upkeep.
  • A higher credit risk – unemployment may make it harder to settle debts.
  • Likely to be driving more often – unemployed drivers may be travelling more and driving to unfamiliar places while looking for work.
  • Distracted by their circumstances – with job search worries on their minds, drivers may be more likely to get into an accident.

For these reasons, a  change in your employment status often means insurance providers charge a higher premium.

When should I inform my car insurance provider of a change in my employment status?

Preferably as soon as possible. If you don’t let your provider know about any change to your employment status, it could lead to your insurance being invalidated. This includes a significant change to your job title.

If in doubt, give your insurance provider a quick call to check whether your policy details need amending.

Do car insurance companies check employment in the UK?

Insurance providers won’t usually check your employment status when you apply for a quote, but they will ask you for details about your occupation.

You’ll need to answer all questions honestly, otherwise you could find your policy is invalid when you come to claim. Even if you think being out of work will only last a few weeks, don’t be tempted to fib about your employment status just to get cheaper car insurance.

How to find lower cost car insurance if you’re out of work

While cheap car insurance for unemployed drivers may be hard to come by, there could be other ways to bring down the cost of your premium.

  • Be rewarded for safe driving 
    Consider getting a ‘black box’ policy, otherwise known as telematics insurance. You could be rewarded with lower premiums for driving safely.
  • Reduce your annual mileage 
    Without a lengthy commute, unemployment could reduce your annual mileage. This could in turn cut your renewal costs.
  • Add a named driver 
    Adding someone with more experience to your policy as a named driver may reduce your premium. But never name them as the main driver if they’re not. This is known as fronting and is illegal.
  • Remove business and commuting from your policy
    If you no longer use your car to get to work, or as part of your job, you may be able to save money by removing commuting and  business use cover from your policy

Take a look at some other ways to reduce your car insurance premiums.

Frequently asked questions

Do I need car insurance if I’m unemployed?

Yes. If you’re still driving, you’ll need at least third-party cover for your vehicle, even if you only use it to go shopping. Car insurance is a legal requirement in the UK.

Although it can be tempting to cut back on things like car insurance when you’re on a low income, that’s a really bad idea.

Unless your car is registered off the road and you have a Statutory Off Road Notification (SORN), you could be fined and even prosecuted for driving without insurance.

What if I’m a housewife/husband, student or retired?

Don’t describe yourself as unemployed if you’re a homemaker, stay-at-home parent, student or retiree. If you do, it could mean you end up paying more for your premium than you need to.

You’re only classed as unemployed if you’re out of work and looking for a job, or claiming unemployment benefit.

Instead, choose the occupation that most closely matches your situation when you apply for car insurance. For example, ‘retired’ and ‘houseperson’ will typically be included in the list of job titles.

What happens to my car insurance if I’m unemployed due to disability?

You won’t need to class yourself as unemployed if you’re unable to work because of a disability. There will usually be an option to select ‘not employed due to disability’ under the job descriptions tab when you apply for car insurance.

It’s illegal for car insurance providers to discriminate against disabled drivers by charging higher premiums or refusing to provide cover altogether.

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Julie Daniels - motor insurance comparison expert

Julie is passionate about delivering a great customer experience and rewarding people for saving on their insurance through our loyalty and rewards programme. She’s spoken to the media, including outlets like Sky News and Capital FM, about car and home insurance, as well as our rewards scheme.

Learn more about Julie

Kate Hughes - Insurance and finance expert

As an award-winning journalist, author and broadcast commentator, Kate has been writing about personal finance for more than 20 years. She’s the former Money Editor for The Independent. Her work has appeared across the UK broadsheets as well as a number of international titles. Kate brings her financial expertise to inform her readers on ways to save money. She’s also written a book. ‘Going Zero: One Family’s Journey to Zero Waste and a Greener Lifestyle’ is available now.

Learn more about Kate

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