Motor Insurance Made Simple
Should you ever have an accident, your car insurance is there to give you a degree of financial protection. You must factor-in car insurance as part of your motoring expenses. You need a good car insurance policy for the financial protection it will afford you in the event of an automobile accident.
Repairs to your own car after an accident, legal fees and liability for property will often not be covered by a bog-standard car insurance policy. 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 want to drive a vehicle in the UK, you must prove that you have a valid car insurance policy. 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 personal circumstances may be different • Your car finance may put your car at risk • You may be able to cover the loss of personal goods • You may find a policy which includes breakdown cover • You could find a policy which includes 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. All it really means is 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. They may be able to consolidate those demands and needs into a package which often will only be available via a broker.
Car depreciation occurs as a result of the age and usage of a vehicle. Car depreciation starts as soon as you drive it away from the car dealership. For every year that you own a car it will decrease in value. You should therefore insure accordingly by adjusting your car’s declared value at renewal time. This is an obvious statement but can be surprisingly often forgotten. So always ask your broker to check the value of your car against its blue book value, rather than the purchase price. This is because even fully comprehensive policies will only cover a vehicle to its blue book value rather than it’s purchase price. It is therefore important that this is what you declare the car’s value as. The more expensive a car is the more it can cost to insure. It’s possible that your insurance company may offer you a like-for-like replacement after an accident – but this is uncommon. 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. 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. Allow your insurance policy to reflect these changes by renewing accordingly. Insurance companies lower their prices for low mileage drivers and discounts can be significant.It’s not always as expensive as you may think to add additional drivers to your existing policy – particularly if you wait until renewal time. 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 CAR INSURANCE IS THE BEST CHOICE?
In the UK, there are three types of vehicle insurance.
1. Third Party Insurance is mandatory in the UK. It gives you cover against a claim against you for damage to another car, its driver, or passengers should you be in an accident. This type of insurance covers your liabilities in the event of damage to another vehicle or person in an accident. Third party insurance will not cover any damage inflicted on your own car or to your person. Third party insurance will not cover any necessary repairs made to your car.
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. For a vehicle that does not have a high market value, this is often the best cover for the average driver. 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. 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 your car is worth more than you could afford to replace it, then you should opt for a fully comprehensive insurance policy. There are specialised insurance products like Finance Gap or Vehicle Replacement Gap which can top up the gap between what your insurance company will pay out and the cost of getting a new car – you can find out more online by doing a simple search.
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 • Insurance companies favour woman policy holders • Your marital status • The area you live in • Engine and car size • Vehicle replacement cost • 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.
Where a person lives also affects the insurance cost. 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 made in previous years • History of driving convictions • 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. Parking offenses do not push up your premiums unless you incurred points.
Your annual mileage is a factor too. The more time the car is on the road, the greater the risk of having an accident.
3. Vehicle History • Current vehicle value • If you own the vehicle, or is it leased or financed • Make and model of the vehicle • 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. 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 • Courtesy vehicle • Roadside and/or breakdown insurance cover • Help with legal fees and advice • Windscreen cover – repair or replace • 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. Good websites make it easy to get quotes with little aggravation. A good place to start is on an insurance aggregator website. They are fairly easy to use. As the buyer you only need to answer the questions once and they will search the insurance market for you. Once they have collected all the quotes, you will be able to compare insurance policies against each other, save and email your quote to your personal email address, go back and change your options to include or reduce the benefits you may be considering and – when you’re happy – buy online. Before you commit to a purchase it’s a good idea to first tell your broker the results of your search to see if he can get you a better deal. Remember that you need to compare quotes on a like-for-like basis. This is more difficult than you may initially think. Good luck.
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