Car Insurance Guide
Introduction Types of Car Insurance Policy Excess Legal Fees No Claims Bonus Classic Car Insurance Breakdown Cover /Types of Breakdown Cover Car insurance policy calculation What Information do you need to get a quote? How to apply for car insurance?| Introduction | Top |
For all car owners in the UK, including four by four owners, estate car owners, classic car owners etc, the UK Road Traffic Act states that all motorists must be insured against their liability for injuring other people (including passengers) and for damage against other people’s property. In other words motor insurance is compulsory.
Therefore a very large and lucrative business has grown up around providing us with motor insurance for our pride and joy.
There are lots and lots of car insurance companies and brokers eagerly waiting for your call so they can sell you ‘just the right insurance package’ at a price to suit you. As with every market there are good companies and there are bad companies offering car insurance, and as you would expect, there is a big variation in what price the car insurance companies and brokers quote for the same type of car insurance cover.
So whether you are just starting out looking for car insurance cover, want to change your present car insurance provider or want to change your existing type of car insurance cover, the first thing to do is to decide what type of car insurance cover is right for you, and how much you want to spend.
| Types of Car Insurance | Top |
There are three basic types of car insurance cover available to you in the UK, as well as a number of additional types of cover for specific purposes.
Third Party
The most basic form of car insurance cover is called Third Party and this is the minimum car insurance cover required by UK law. As the title suggests it provides insurance cover liability for third parties such as passengers, other people involved, other people’s property, where you have caused the accident or damage.
It does not provide car insurance cover for you, your car or your property. If the accident was not your fault and you and your property sustained damage then you would have to claim off the other driver’s insurance liability. Third Party only does not provide insurance cover if your car catches fire or someone decides to steal it, “little devils”.
You need to weigh up all the implications, for example whether the money you save on car insurance premiums is worth the risk if you have an accident. If of course your car is not worth a lot, then Third Party cover may be fine for you.
Third Party Fire and Theft (TPFT)
Guess what additional car insurance is provided by this type of cover!
That’s right, insurance against the car catching fire or being stolen and if you are unlucky to have you car stolen, it is more than likely that the thieves will set it on fire as well, ‘bless em’. Third Party fire and theft does not, however, cover any damage to your car if you were to blame for the accident. If you were not to blame, you would have to prove that the other person was at fault and make a claim on their insurance. This type of car insurance cover is OK for those of us that don’t drive an expensive car or don’t drive many miles during the year. It may also suit younger drivers who cannot afford Comprehensive car insurance cover.
Fully Comprehensive Cover
With this type of car insurance cover your insurance company will pay out to repair the damage regardless who is to blame. Fully Comprehensive also provides the same cover as Third Party Fire and Theft and there can be a number of additional variants that the policyholder can arrange for.
|
Policy Excess |
Top |
If you have to make a claim against your car insurance, you usually have to pay the first part of it or the policy excess. Usual excess costs for damage to the car or theft of the car is around 150.00 GBP and for a replacement windscreen around 50.00 GBP, so it is important you check the excess amount required before you sign on the line.
Some car insurance policy providers offer a voluntary excess scheme whereby you can agree to pay part of the claim, based on a percentage, i.e. the more the percentage of any claim you agree to pay, the less your car insurance premiums. This needs some calculation to see what is the best voluntary excess amount for you, that results in the most cost effective premiums.
|
Policy Excess |
Top |
If you have to make a claim against your car insurance, you usually have to pay the first part of it or the policy excess. Usual excess costs for damage to the car or theft of the car is around 150.00 GBP and for a replacement windscreen around 50.00 GBP, so it is important you check the excess amount required before you sign on the line.
Some car insurance policy providers offer a voluntary excess scheme whereby you can agree to pay part of the claim, based on a percentage, i.e. the more the percentage of any claim you agree to pay, the less your car insurance premiums. This needs some calculation to see what is the best voluntary excess amount for you, that results in the most cost effective premiums.
|
Legal Fees |
Top |
This addition to your car insurance policy covers you for any legal expenses you may incur if you have to pursue a claim that was not covered by your standard car insurance policy. Examples of this could be loss of earnings because of injuries received in the accident, and the cost to hire a replacement car whilst yours is being repaired.
In most cases the majority of car insurance policies will not provide legal insurance cover unless the other party is at least 50% to blame for the accident, although if the claim is for serious injury, the percentage of accountable blame attached to the other party could be as little as 10% for the car insurance policy to take effect.
|
No Claims Bonus |
Top |
Now being the careful driver that you are, or are going to be, after each year of accident free motoring you are entitled to a discount against your car insurance premiums. The longer you do not make a claim the more discount you will receive, the maximum discount is usually given after five years. This can be around 75%. If you have an accident after this time and need to claim, the “No Claims Bonus” usually goes back to what it was with four years of no claims.
After carefully driving around the UK for five years to earn your “No Claims Bonus”, the last thing you want is to lose it, so in order to protect your hard won bonus, you can, if you want, pay an extra premium. This will allow you to make one or two claims during a four to five years period without losing your ‘No Claims Bonus’.
You will need to check with your car insurance policy provider to make sure what exactly is protected and for what period, before committing pen to paper.
Although there are only three main types of car insurance cover, there are many variations and additions that can be added or subtracted that directly affects the final cost of a car insurance policy.
|
Classic Car Insurance |
Top |
If you own a ‘classic car’, it is likely that you only use it for a limited amount of miles each year. There are specialist classic car insurance companies that offer policies specifically suited for the classic car owner.
|
Breakdown Cover/Types of Breakdown Cover |
Top |
As a motorist, you already know that motorists only break down in the most awkward of places, and during the most inhospitable hours of the day. Now, as we are not all trained motor mechanics, the next best thing is to take out some kind of breakdown cover.
I suppose the two of the most well known are the AA and the RAC, but there are other motoring organizations that are big enough to compete with them, such as Green Flag. If you require breakdown cover then it makes sense to check them all out to see what they have to offer.
Car insurance providers offer several types of breakdown cover:
Roadside Rescue
If you break down, your chosen motoring organization will send a mechanic out to you who hopefully will repair your car, thus allowing you to continue your journey.
If the breakdown is more serious, then the organization will arrange that you are towed to the nearest garage within a specified distance.
Roadside Rescue with Home Start
All the benefits associated with Roadside Rescue plus the area of cover now is right up to your own doorstep. Cover should include returning your car back to your house or a local garage.
Addition Breakdown Services
If you require extra cover such as a replacement car whilst yours is being repaired or overnight accommodation, or even cash to get you home then again this can be catered for. However, please check your agreement to make sure that you understand what exactly you are covered for.
European Breakdown Cover
If you intend to travel in Europe by car, I would suggest that you investigate the possibility of a policy that covers you against breaking down in Europe.
Depending on what type of car insurance you have taken out, European breakdown cover is sometimes included within the main policy, so as always, check out what exactly your policy covers you for. Minimum requirements for European breakdown cover should include ‘Roadside Repair’, ‘Tow to the nearest garage’, ‘Travel Costs to get you home’. Additional cover should include delivery of the car back to your home if it is not feasible to be repaired.
|
Car insurance policy calculation |
Top |
What car are you insuring?
Before you rush out and buy the latest GTI, XXL, AWD, with more power that a rocket, it is worth considering what impact the new dream machine will have on the cost of insuring it (Quite a lot I am afraid). Standard ratings for insurance purposes usually go from one to twenty, but some car insurance policy providers have rating systems that sometimes go higher into the mid forties (Rocket Ship!!!!!).
The engine size of the car and the weight of the car are the two main factors when assessing the rate of the car, i.e. if it has a big engine and is very light, then chances are you can break the land speed record in it, and the car insurance company or agent will rate the car accordingly!!
Other factors that are taken into consideration are such things as cost of spare parts, how likely it is to be stolen, and what additional equipment is in it.
How many named drivers?
Depending on who wants to, or who is allowed to use the car, usually the more named drivers on the policy the more expensive the policy.
The cost for car insurance cover is usually lower after you have reached the age of 25, so adding your teenage son or daughter may be rather expensive. If you need to do this then one way to reduce the cost of your car insurance premiums is to get your teenagers to take the Pass Plus Course.
This course is for new or teenage drivers and costs about 150.00 GBP to take.
Some car insurance policy providers give up to 20% discount to first year drivers that have taken and passed the course. However, it always pays to shop around looking for the best option that suits you.
Where do you live?
Where you live can make quite a difference to how much you pay for your car insurance premium. If you live in the center of a large city, you will pay a higher premium than people living on the outskirts of the city, and if you are in the country side, your car insurance premiums will be lower still, and if you live on a desert island, then virtually nothing at all. However, I am not suggesting that you move house just to save on your car insurance premiums or be tempted to tell your car insurance policy provider a little white lie where your dream machine is located, as all car insurance companies look very carefully at each claim and if there is anything amiss, they are very quick to declare your insurance invalid. So when providing the car insurance company with relevant information, always tell the truth, it is not worth the risk.
Where you park the car?
Depending on where you park your car at night, can and will make a difference to the cost of your car insurance premiums. If you park you car every night in a locked garage, this will reduce the cost payable for the car insurance premium. The same applies if you park your car behind locked doors. It is worth asking the question whether parking ‘off road’ also affects the cost of the car insurance premiums as it may be cost beneficial to you to rent a parking place .
What you do for a living?
Certain professions are seen by car insurance providers as a higher risk than others, so if you are a Movie star, Footballer, TV host or a Rally Driver, expect to pay more for your car insurance premium than a Teacher or Doctor. However, if you are a Movie star, Footballer, TV host or a Rally Driver, you probably don’t care how much the car insurance premiums are anyway. (Oh to be a Star!)
How many miles do you do in year?
Depending on how many miles you travel in your car each year, will have an impact on how much your car insurance premiums will cost. If you only ‘come out’ in the summer for the odd trip to the countryside, then you are deemed to be a better risk than the traveler who is up and down the motorway every week clocking up hundreds of miles. The average miles traveled by the private car user is around 8,000, so if you do less than this, it is worth informing your car insurance provider to find out if they offer lower premiums.
How old you are
The cost of car insurance premiums can be related to the seven ages of man, well more likely the three ages of man. Insurance companies look upon those of us who are under 25 as some kind of party animal with Lewis Hamilton aspirations, however when we reach the ripe old age of 25 and over, their research shows that there is a significant drop in the number of accidents for the group 25 plus. Remembering the seven ages of man (and woman) we go full circle and return to childhood, so if you are ninety five, be prepared to pay a higher premium.
Make and Model
We probably all understand why it would cost more to insure a Ferrari than a Skoda (unless you fitted an eight litre, twelve cylinder, quadruple carburetor, engine into it).
But by choosing a particular model, for example buying an L rather than a GXL, or the 1100 cc engine rather than the 1500 cc engine, and even the three door rather than the five door could make quite a difference to your car insurance premium.
Modifications to the Car
As with all other information submitted to a car policy provider, you must always tell the truth or run the risk of invalidating you car insurance. This is especially true regarding modifications made to your car. Obviously, if you have fitted an eight litre, twelve cylinder, quadruple carburetor, engine to your Lada, then your car insurance premium may go up a bit! But it does not stop there, anything from a fully multi stereo system to ‘go faster stripes’ are all modifications, and if you have changed the paint job from a ‘calming green’ to a ‘firebird red’, then this also has to be told to the car policy provider. There is a problem with all this in that it becomes a ‘catch 22’ situation whereby as soon as you inform the car policy provider that your car is modified, they will either refuse to insure you, or charge a lot extra, so once again it pays to shop around.
What is your Motoring History
Nearly every motor insurance policy provider wants to know your motoring history or to be more exact what incidents you have been involved in.
This can include all claims made by you on your car insurance policy, all the claims made against you, all outstanding claims against you, any ongoing claims or unsettled incidents, all incidents even if they did not result in a claim.
An incident might be an accident, window screen damage, malicious damage, car stolen, caught fire or even joy riding.
Have you had any Motoring Offences?
You need to inform your motor insurance policy provider all about you misdemeanors with the police regarding your convictions for any speeding, dangerous driving etc.
You can of course get some of the recorded convictions removed from you license before they come to the end of their term.
|
What Information do you need to get a quote |
Top |
When you are looking for quotations for your car insurance, always be ready with the information that the car insurance providers require such as:
Make and model of car
Any no-claims history
Where the car will be kept (in the street, off road, garaged)
Type of use, business or social and domestic
Number of miles per year (Estimated)
What type of policy required (Third Party, Third Party Fire and Theft, Comprehensive)
Details of any motoring convictions during the last three years
|
How to apply for car insurance? |
Top |
It always pays to shop around, and there are a number ways to get a price for car insurance.
Online web sites of intermediaries and agents who offer a service whereby they can obtain a quote from a number of different car insurers and brokers.
Make sure you fill in the application form correctly and that you fully understand what they are asking before agreeing to any contract.
Insurance Brokers offer a more personal (face to face service) and if you have a particular need for a specific type of car insurance or have a less than perfect motoring history, then discussing your requirements may be a better option.
However, in most cases this option usually turns out to be the most expensive.
Car Insurance companies’ web sites can be used when you wish to insure your car with a specific car insurance company.
Finally, you must remember that it is your responsibility to tell your respective car insurance provider any information that may affect the terms and conditions that the insurance cover operates under. This in the car insurance world is known as ‘duty of disclosure’ and appears in small print on most if not all agreements.
Summer is coming, the open road beckons, so may we wish for all of you, who have read this guide on car insurance, many accident free years of pleasant motoring.
May the no-claims bonus always be with you.
