Car or vehicle insurance is in place to protect you financially in the event of a road accident. It will cover all costs you incur for theft, fire, car damage, personal injuries and legal fees.
In the UK car insurance is a legal requirement, so you will need at least third party insurance to be able to drive your vehicle on the road legally. To tax your vehicle (which is also a legal requirement) you will need to provide a valid insurance cover note so there is no way to avoid not having insurance.
The Right Insurance Type
For total piece of mind you can’t beat a fully comprehensive policy as it offers the broadest cover and is a good idea if you have an expensive car that would cost you a lot if it needed any repairs.Choosing a third party policy can be the cheapest way to insure your car and can be a good way for new drivers to reduce the cost of that first year without any no claims as long as your confident that you won’t have any accidents and you have a car worth less than £1000.You may normally make the assumption that a comprehensive policy would always cost more than a third party policy as it covers you for more however oddly this is not always the case so if it your choice of cover is government by the cheapest policy it’s best to always get a quote fort both.There are two main types of car insurance policies:
- Third Party, Fire and Theft Insurance
- Fully Comprehensive Insurance
In the UK most insurance companies are trying to discourage people from buying third party insurance cover only. Insurance companies are doing this by increasing the price of their third party cover. As a result, third party insurance is often more expensive than full comprehensive cover.
Third Party, Fire and Theft Cover Overview
Third Party, Fire and Theft insurance covers the cost of claims made by third parties in the event of an accident. Third Party insurance will not
cover any damage to your own vehicle or you yourself.If you have Third Party, Fire and Theft insurance your insurance provider will pay out in the event of a fire (accidental or intentional) and also if your car is stolen. The policy will also cover damage to your car if someone tries to steal your car. For example they will repair damaged bodywork or broken windows that were a result of an attempted break in.Third Party, Fire and Theft insurance used to be more popular with younger or newer drivers because it was cheaper than fully comprehensive insurance but now the tables have turned and not a lot of people are taking out Third Party insurance. This is because it is more expensive than fully comprehensive insurance. You are also better covered financially if you purchase fully comprehensive insurance which makes it more desirable than Third Party insurance.
Fully Comprehensive Insurance
Fully comprehensive insurance will cover any damage to your vehicle and damage caused to third parties in the event of an accident. It also provides medical cover and compensation to anybody in the car during the accident.Fully comprehensive cover will also cover you for everything the third party fire and theft insurance covers you for.When you take out fully comprehensive insurance you are usually covered to legally drive other cars on the road but only with third party insurance. This is not the case with every insurance provider so its always best to check with your insurance company whether you can legally drive other cars with your insurance policy. If you drive a friend or colleague’s car they must also have fully comprehensive insurance on their car.With fully comprehensive insurance you can also receive:
- Courtesy car
- Protected no claims
- Breakdown cover
You might not get any of these benefits with your insurance providers so you should always check. Usually the benefits listed are still available but at an extra cost. In some cases it might be worth paying more for these benefits because it will work out cheaper for you than if you had to pay for these items yourself.
Which Policy to Choose
With more drivers on the roads then ever before, the risk of an accident is even higher. Therefore, it is always best to go for fully comprehensive cover rather than Third Party cover because then you are covered for any type of accident.If you do decide to go with third party, fire and theft cover its best you know the risks you are taking:
- You will not receive any money for damage to your own vehicle
- You will not be able to drive any other cars other then your own
- Passengers in your car will not be covered for any injures
- You will not be covered for any personal injures
- You will be paying more for less cover
We recommend you always go for fully comprehensive cover, this way you are covered whatever happens.
Factors that affect car insurance
The cost of your insurance is determined by both your individual details as well as the overall statistics of motorists. Factors insurance providers take into consideration when quoting a car insurance policy are as follows:
- Engine size – The larger and therefore more powerful your car’s engine, the higher the cost of your insurance.
- Vehicle age – Both old and new cars can be subject to high premiums as the former is seen as being more likely to breakdown whereas the latter has a higher value.
- Where is your car kept? – Whether or not your car is kept on the street, a driveway or garage and the crime levels in your area will influence the level of risk insurance companies associate with your vehicle being stolen or vandalised.
- Experience – It’s well known that the young and new drivers suffer immensely at the hands of insurance companies because of their lack of driving experience. The reason for this is that statistically drivers are far more likely to have an accident in the first 2 years of driving than at any other time in their life.
- No Claims – For each year you are insured on a car without making a claim you are considered a safer driver by insurance companies. For this reason, drivers who have not made a claim on their insurance receive a no claims bonus which is a discount that can dramatically bring down your insurance premium. The amount you are discounted for no claims bonuses depends on the number of years you have not made a claim.
- Excess – The amount of excess you opt to pay in your policy will have a big impact on the price of insurance. If you are confident that you will not need to make a claim then a large excess is a great way to reduce your premium.
- Security – Vehicles fitted with anti-theft security equipment such as alarms, immobilisers and tracking are likely to have lower premiums for drivers as the extra measures taken in securing the car mean there is less of a risk of the car being stolen.
- Driving convictions – It’s very likely that previous driving convictions will present you as a greater risk to insurance companies and push up your premiums for up to 5 years.
Car Insurance Trends Young Drivers’ Insurance
– Vehicle insurance in the UK has risen in price by around 33% since 2009 and this has had a huge effect on younger drivers trying to get on the road. The average quote for a new driver under the age of 25 is around £1000 annually! Since 2013, Insurance companies have been using black box technology to bring down the price of premiums for young drivers and this has had a beneficial impact for many young drivers, who beforehand would not have been able to get on the road at all.Sex and Insurance
– For years, women have been blessed with the privilege of getting cheaper car insurance, this is because women have been statistically proven to have less road accidents than men. This makes insurance providers more likely to charge less for female drivers’ insurance as they consider women safer drivers and less of an insurance risk. However, the European Court of Justice ruled that a person’s gender could not affect the insurance premiums. This ruling became active from December 2012 and has resulted in female insurance premiums rising.Sex and Insurance
– Perhaps one of the newest and most exciting developments in the insurance industry has been the emergence of telematics. It is the use of technology that tracks driving performance and this allow insurers to assess how safe a driver a person is and this enables them to price their insurance accordingly. It’s still relatively early days in this technology but with the advent of connected cars becoming mainstream by 2018, this is going to become a massive factor in the cost of insurance and across motoring overall.There’s always plenty you can do to bring down the cost of your premiums however always keep in mind that it doesn’t matter how cheap your insurance is, if it comes to making a claim and it doesn’t cover what you need it to it’s worthless.
Gap Insurance Gap Insurance
– Gap insurance is a stand-alone addition to a traditional car insurance policy that can help you ensure you get the full value of your car back if the vehicle is written off. This is particularly useful for new cars, where depreciation can result in a huge shortfall between what you paid for the car and the amount covered on a standard insurance policy.You’ll find some really useful information on gap insurance from ALA here
, and you can also check out this link
for a video explaining how it works.