Car insurance is there to give you financial protection in the event of an accident whether or not you are responsible for it. In the UK, car insurance is a compulsory as well as a necessary expense. Having good car insurance will give you financial protection which you will need if you have an accident.
Unfortunately, not all policies will cover damage to your car, or protect you against liability, legal fees or property damage. Bolt-on niche insurance products such as inconvenience cover, gap insurance and even legal protection insurance can prove to be invaluable additions to your comprehensive car insurance to ensure an accident does not end up costing you more than you can afford should the worst happen.
Choosing the right car insurance will protect not only you, but your vehicle, and third parties in the long run. You must prove that you have bought car insurance if you plan to drive in the UK. There are different levels of cover which are determined by the type of car insurance policy you choose to take out.
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
• Depreciation will affect the value of your car
• Your circumstances may have changed
• Car financing could put you and the car in a higher risk category
• You could find a policy which includes cover for loss of personal items
• A different insurer may include breakdown cover in your policy
• You may find an insurer offering inclusive legal cover
• 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 doesn’t always follow that the same company or broker can offer you the best deal for your insurance.
If your broker manages your entire insurance portfolio then he is in the best position to get you the best deal, as he already has information about your demands and needs. They may be able to consolidate those demands and needs into a package which often will only be available via a broker.
The value of your car will depreciate according to the amount of use as well as it’s age. Your new car begins to depreciate as soon as you put the first few miles on the clock. For every year that you own a car it will decrease in value. Make sure that your insurance policy reflects this reduction in value. This makes perfect sense. For this reason you should make sure that you have your assumed car’s value checked against its current blue book value as opposed to against 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. Ensure you declare the vehicle’s value accurately. If you have bought an expensive car, then the chances are that it will cost you more to insure. The exceptions to this rule may be when an insurance company offers to replace your car in the case of the accident for the exact same car or new car of same specification, but this is rare and the chances are that this will not be the case. There is however an insurance product called Vehicle Replacement Insurance which does just that! Finding out more about vehicle replacement insurance is easy, just click on the link.
Your car insurance could be affected if your circumstances have changed since your last renewal. You may have switched jobs and not drive as many miles per year or have paved the front lawn and turned it into off-street parking. Get insured according to any changes in circumstances – no matter how small you think they are. Insurance companies lower their prices for low mileage drivers and discounts can be significantIt’s not always as expensive as you may think to add additional drivers to your existing policy – particularly if you wait until renewal time. By waiting until renewal time you may be able to avoid the administration costs of adding extra drivers.
SO WHICH IS THE BEST CHOICE OF CAR INSURANCE COVER?
There are three different types of cover available in the UK.
1. Third Party Insurance is mandatory in the UK. This type of cover insures a vehicle and driver against damage to another person’s car, driver or passengers if involved in an accident. This type of insurance covers your liabilities in the event of damage to another vehicle or person in an accident. This type of cover will not protect you against damage to yourself or your own car. This type of insurance will not cover repairs to your vehicle.
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. This type of cover can offer the best value for a policyholder if the car does not have a high market value. A car which has been either leased or financed must have a fully comprehensive insurance policy.
3. “Fully Comp” will give you the widest insurance cover for your vehicle.As well as providing basic cover as in third party, fire and theft, it will also cover vehicle damage and bodily injury sustained in an accident. If the vehicle value is higher than the insured can afford to pay to replace it, then fully comprehensive is the preferred choice. Search online for products like Vehicle Replacement Gap insurance or Finance Gap – these will close the gap between what your payout would be and the cost of buying a new car in the event of an insurance write-off.
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
• Gender of the policyholder
• Your marital status
• Inner city, suburban or rural residential locations
• How large the car and engine are
• How much your car will cost to replace
• 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 personis 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.
Where a person lives also affects the insurance cost. Motorists living in rural locations and in areas with a low crime rate are more likely to get a lower insurance premium than those living in cities.
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.
Modifications are more likely to alter the vehicles safety; performance is improved, and handling may be compromised making the vehicle more unpredictable. The insurance company therefore sees these factors as an increased risk and will increase their premiums as a result.
2. Driver History
• Years of driving experience
• Previous claims
• If you have points on your licence
• 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. Certain assumptions and associated levels of risk are made according to the number of claims made in the previous five years. Driving convictions such as speeding, dangerous driving or drink diving will affect the premium. This does not include parking violations.
Your annual mileage is a factor too. The risk of having an accident increases the longer a vehicle is on the road.
3. Vehicle History
• Current vehicle value
• If you own the vehicle, or is it leased or financed
• Car make and model
• Size of engine and performance category
• 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. Often as the named driver with many years of no claims under the belt, fully comprehensive motor insurance could cost no more than third party insurance, but with additional perks. Additional benefits to your policy can often be added at little extra cost when buying online. Fully comprehensive insurance cover will be required for leased or financed vehicles. This is so that they can be reimbursed for any damage caused to the car by the policyholder. Comprehensive insurance will cover this.
There may be other benefits included in your car insurance policy, which are not always necessary but sometimes advisable:
• Breakdown insurance
• A courtesy car could be offered while yours is being repaired
• Roadside assistance
• Specialist legal advice/assistance with legal fees
• Windscreen replacement
• Protecting your no claims bonus
• 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. Minimise your aggravation by only visiting user-friendly insurance sites. It is a good idea to consider using an insurance aggregator website to get started. The average insurance buyer finds aggregator websites easy to use. As the buyer you only need to answer the questions once and they will search the insurance market for you. 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. Think about first giving your current broker a call and asking them to get you a better deal based on your findings. It’s important to remember that you should compare like-for-like quotes when looking at different insurers. This is more difficult than you may initially think. Good luck on finding your ideal car insurance.