Car insurance exists to protect you financially in the event of an accident, whether or not it is your fault. In the UK, car insurance is a compulsory as well as a necessary expense. A car insurance policy will provide you with much needed protection against financial losses incurred because of traffic accidents.
Unfortunately, not all policies will cover damage to your car, or protect you against liability, legal fees or property damage. You can buy additional options such as gap insurance, inconvenience cover, and legal protection can be valuable additions to your policy and could protect you against financial losses after an accident.
Choosing the right car insurance will protect not only you, but your vehicle, and third parties in the long run. If you want to drive a vehicle in the UK, you must prove that you have a valid car insurance policy. Your insurance company will cover you at a level determined by the type of policy you choose.
WHY YOU SHOULD SHOP AROUND FOR NEW CAR INSURANCE
Shopping around for car insurance is very important for several reasons: • You may find better quotes • Effects of car depreciation • A change in personal circumstances • Car financing could put you and the car in a higher risk category • It may be possible for an insurer to cover the loss of certain personal effects • You may find inclusive breakdown cover • Some insurers may offer you legal cover included in your policy • It may be possible for an insurer to also cover a second car • You may be offered an introductory discount
Just because you have used the same insurance company or insurance broker for several years, does not mean you are getting the best deal. It really only means just that - you have used the same insurance company or insurance broker for the past several years.
A good insurance broker is most likely to get you the best coverage if they manage your full insurance portfolio as they then know your history and needs. This is also the case with car insurance as they can often consolidate your insurance needs into an all inclusive package which most insurance companies only make available to brokers.
Car depreciation occurs as a result of the age and usage of a vehicle. Your new car begins to depreciate as soon as you put the first few miles on the clock. Every year that you own the same car, its value decreases. You should insure accordingly by getting the same coverage at a lower price. This makes perfect sense. So always ask your broker to check the value of your car against its blue book value, rather than the purchase price. The reason is that even fully comprehensive car insurance policies do not cover a vehicle to the purchase price, but rather the blue book value. So ensure you are as accurate as possible when declaring the car’s value. Generally speaking, a more expensive car will cost more to insure. In rare cases the insurance company may offer a replacement car of the exact model or spec after an accident. There is however an insurance product called Vehicle Replacement Insurance which does just that! Click on the link to find out how it works in more detail.
Your personal circumstances may be different that at your last renewal. Perhaps you do not drive as far or often as you did, or perhaps your children have grown and want the keys to the car. Change your insurance details to reflect these changes in circumstance. If you drive fewer miles your insurance company will recognise the decreased risk and your premium will be reduced accordingly.Adding additional drivers is not as expensive as you would think; a great tip here is to wait until renewal time if possible. Insurers may charge you an administration cost for adding additional drivers, but if you wait until it’s time to renew you may not incur this fee.
WHICH LEVEL OF COVER SHOULD I CHOOSE FOR MY CAR INSURANCE?
In the UK, there are three types of vehicle insurance.
1. In many countries including the UK, Third Party Insurance is mandatory. If you are involved in an accident, this type of cover will protect you financially against damage to the other vehicle or its occupants. Third Party Insurance acts as security against liabilities for damage to another person in a vehicle accident. Third party insurance will not cover any damage inflicted on your own car or to your person. You will not be reimbursed for repair costs with a third party only insurance policy.
2. Third Party, Fire and Theft Insurance will cover the benefits of third party insurance and includes any financial loss to the insured vehicle caused by fire or theft. The average driver may find this the best type of cover, especially for a vehicle which doesn’t have a very high market value. A leased or financed vehicle will require a fully comprehensive insurance cover.
3. The widest coverage is provided by a Fully Comprehensive insurance policy - or “fully comp”. Damage to your car, and personal injury caused by an accident, as well as the basics of third party, fire and theft, are covered by a comprehensive car insurance policy. If the vehicle value is higher than the insured can afford to pay to replace it, then fully comprehensive is the preferred choice. Finance Gap or Vehicle Replacement Gap Insurance are additional insurance products available to top up the gap between your payout and the cost of paying off a new car, so go online and find out more about these insurance products.
There are lots of factors affecting car insurance and most insurers offer secondary products which can meet any specialised needs of the policyholder.
FACTORS AFFECTING CAR INSURANCE
1. The Policyholder• Age of the policyholder • Men are considered higher risk than ladies • Marital status • Where the policyholder lives • Engine and car size • The cost of replacing the vehicle • Any modifications that have been made to the vehicle by its owner
A younger less experienced driver will pay a higher insurance premium than someone with several years driving experience.
A married person is considered more responsible for their actions than a person is with no commitments. It stands to reason that married men with kids have more responsibilities than single men and the insurance companies therefore consider married men a lower risk category.
The location or area of residence can have a massive effect on insurance premiums. Rural areas that have less traffic and areas with a lower crime rate will mostly likely get a better premium than towns or high crime areas.
A powerful car is more likely to lose control at the hands of younger drivers: expensive cars cost a lot to replace if scrapped and should they simply require repairs the sum of the replacement parts often costs more than the used car’s value, making more powerful cars very expensive to ensure.
A modified car could have had safety compromised in terms of improved performance and different handling which could make the car unpredictable. Car modifications therefore equate to increased risk for insurance companies, and will result in increased premiums.
2. Driver History • Years of driving experience • Claims history • Any convictions for driving offences • Annual mileage
The number of years a person has been driving suggests their understanding of the rules of the road, shows the driver has built up experience of driving under varied driving conditions and has attained a certain level of confidence while behind the wheel. Insurance companies base these assumptions on the policyholder’s claims history over the last five years. Most driving convictions negatively affect motor insurance premiums for drivers. This does not include parking violations.
Your annual mileage is a factor too. The more a vehicle is on the road, the higher the risk for an accident.
3. Vehicle History • Current vehicle value • If you own the vehicle, or is it leased or financed • Vehicle make and model • Engine capacity and performance • Modifications to the vehicle
If the vehicle has a low book value, it may not seem to be cost effective to pay for comprehensive insurance; however this is not necessarily the case. A named driver with several years of insurance cover and no claims against his or her name could find that fully comprehensive car insurance costs almost the same as a lesser level of cover, but with additional benefits such as a free courtesy car etc. Buying car insurance online can mean including a range of additional benefits with only a small increase to your premiums. Fully comprehensive insurance cover will be required for leased or financed vehicles. The leasing or finance company will require reimbursement from the policyholder for damage to the car. This will be covered if you have fully comprehensive insurance.
There may be other benefits included in your car insurance policy, which are not always necessary but sometimes advisable:
• Breakdown insurance • Courtesy vehicle • Roadside or breakdown cover • Some insurers may offer you legal cover included in your policy • Cover for your windscreen • NCD protection • Compulsory or voluntary deductible amount
Choosing the correct insurance and getting the best quote can be daunting as there are so many variables to consider. If a website was built properly its users will find it easy to get a great price quickly and easily. It is a good idea to consider using an insurance aggregator website to get started. Aggregator websites are easy to use. You only need to answer the questions once, and then they will select products to show you based on your answers. After the site has collected the quotes, you can then compare different policies, as well as being able to save your quote, amend your requirements if necessary and if you are happy you can then buy online. It’s always a good idea to find out if your broker can get you a better deal first, so keep him posted on your findings. The most important factor about buying online is that you compare like for like quotes. This is more difficult than you may initially think. Good luck on finding the best policy for your needs.