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. 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. 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 product will protect you, your vehicle, and other parties in the long run. If you plan to drive, you must be able to prove that you have purchased car insurance. 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 • 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 • Some insurers may include breakdown cover • 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.
An insurance broker already familiar with your demands and needs from your insurance history will probably be in a position to get you the best deal. 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.
Your car will depreciate in value according to both age and usage. Car depreciation starts as soon as you drive it away from the car dealership. Your car’s value will decrease every year. Make sure that your insurance policy reflects this reduction in value. This makes perfect sense. Check the value of your car against its blue book value rather than the price you paid - your broker can do this for you. This is because even fully comprehensive policies will only cover a vehicle to its blue book value rather than it’s purchase price. 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. You may be lucky enough to find a policy which offers to replace your car with the same of similar following an accident, but this is not usually the case. There is however an insurance product called Vehicle Replacement Insurance which does just that! To find out more about how Vehicle Replacement Insurance works click on the link.
At the time of your last renewal your circumstances may have been different. 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 accordingly. You can get a significant discount from your insurer if you are a low mileage driver.You can add additional drivers to your policy for relatively little expense, especially if you wait until it’s time to renew. By waiting until renewal time you may be able to avoid the administration costs of adding extra drivers.
WHICH LEVEL OF CAR INSURANCE IS THE BEST CHOICE?
In the UK, there are three types of vehicle insurance.
1. You must by law have the minimum of Third Party Insurance in many countries, including the UK. It provides coverage to any third party involved in an accident with the insured vehicle including passengers. This type of insurance covers your liabilities in the event of damage to another vehicle or person in an accident. The insured is not protected against bodily injury or damage to their own vehicle with this type of policy. 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. The average driver may find this the best type of cover, especially for a vehicle which doesn’t have a very high market value. If you are leasing a vehicle or have acquired it via a finance company, then you will need to provide fully comprehensive insurance for the vehicle.
3. Fully Comprehensive Insurance offers the widest coverage. 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. 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.
Many factors affect car insurance and most insurance companies offer a range of secondary covers to meet the varied and specialized needs of the policyholder.
FACTORS AFFECTING CAR INSURANCE
1. The Policyholder• Age of the policyholder • Insurance companies favour woman policy holders • 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 a married man with children has more responsibilities and the insurance companies will therefore consider this person a lower risk than a single male in his early twenties driving a WRX.
The location or area of residence can have a massive effect on insurance premiums. If you live in the country or in a low crime rate location you are likely to get a lower premium than if you are a city-dweller.
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. These factors translate to increased risk for insurance purposes, and premiums will increase as a result.
2. Driver History • Years of driving experience • Historical claims • 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. This is confirmed or denied by the number of insurance claims made during the previous five years. Driving convictions such as speeding, dangerous driving or drink diving will affect the premium. This does not include parking violations.
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 • Make and model of the vehicle • 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. 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. Many online insurance buyers find that for just a small premium increase, many additional benefits can be included. Leased or financed vehicles require comprehensive insurance. This is so that they can be reimbursed for any damage caused to the car by the policyholder. 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 • Provision of a courtesy car while yours is in the garage • Roadside and/or breakdown insurance cover • Some insurers may offer you legal cover included in your policy • Windscreen replacement • 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. The right car insurance price is easy to find when you’re on a great website. An insurance aggregator website is a good place to get you 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. 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. When comparing quotes online, remember to do so on a like-for-like basis. This may not always be as simple as you at first think. Good luck on finding your ideal car insurance.