How to get the right deal on car insurance
Essential advice and information on car insurance and getting the right cover.
Why do I need car insurance?
You must have your car insured by law. The Road Traffic Act 1988 says all motorists must be insured against their liability to other people, including passengers, and for damage to other people’s property if their car causes an accident.
What will happen if I don’t have car insurance?
You could be fined or sent to prison. You could also be disqualified from driving.
What different types of car insurance are there?
There are three types of car insurance:
- third-party car insurance
- third-party, fire and theft car insurance
- fully-comprehensive car insurance
What is third-party car insurance?
Third-party car insurance is the basic cover required by law.
It protects you from claims against you if you are involved in an accident and injure someone, and will cover the cost of repairing or replacing the other person’s car. It won’t cover damage to your car.
What is third-party, fire and theft car insurance?
Third-party cover, fire and theft car insurance protects you from claims against you if you are involved in an accident and injure someone or their property (car), but it also pays for damage to your car if it is damaged in a fire or if it’s stolen.
It doesn’t pay for damage to your car in an accident, for that you need fully comprehensive car insurance.
What is fully-comprehensive car insurance?
Fully-comprehensive car insurance is the widest cover you can buy to protect you and your car if you’re involved in an accident or if your car is stolen. The big advantage of having comprehensive car insurance is that it covers the cost of repairing or replacing your car if it’s involved in an accident, whether or not it’s your fault.
Fully-comprehensive car insurance may also include additional benefits such as medical expenses and cover for personal belongings in your car. It’s a good idea to compare car insure quotes and cover from a range of insurers.
What will my car insurance cover?
Car insurance will protect you against claims by other motorists if you have an accident and, if you have fully comprehensive insurance, it will pay for repairing or replacing your car. It can also cover items in your car, for example audio and satellite navigation equipment, plus personal possessions such as map books, jackets and CDs.
There will be an upper limit on how much you can claim for each item or for the whole lot, so it’s important to check this when getting insurance quotes and comparing car insurance.
What factors affect how much I pay for car insurance?
A wide range of factors are taken into account in calculating car insurance premiums. They include:
- the type of car you drive;
- where the car is kept;
- the driver;
- the age of the driver and anyone else who will be driving the car;
- where you live;
- what you use your car for: business as well as leisure, for instance?
If you have a driving conviction this might also affect how much you pay for your car insurance. It will depend on the seriousness of the offence; if you have a drink-driving conviction, for example, you will certainly face higher premiums.
What is a no-claims discount?
If you have been driving for some time without making a claim on your car insurance then you may be entitled to a no-claims discount on your premium. The amount of discount will vary between different car insurers but typically you can save 30% if you’ve driven for one year without a claim and up to 70% after four years.
Once you have the maximum no-claims discount you can for a small additional premium protect your no-claims, which means you can make one or more claim in a set time without losing your discount.
What is an excess?
Most car insurance policies will expect you to pay the first part of any claim, a compulsory excess, but how much this is will depend on the individual policy and on the claim. There may be different excesses for different claims, for example there’s usually a different excess if your claim is for damage to your car’s windscreen.
You can cut the cost of your car insurance by choosing to pay a higher voluntary excess, although your premium won’t reduce in an equal proportion to what you’ve agreed to pay. You also need to make sure that you’re able to pay the voluntary excess amount you’ve chosen.
How can I cut the cost of my car insurance?
There are plenty of ways to reduce what you pay for car insurance:
- choose to pay a higher excess (the amount you pay towards each claim);
- limit who drives your car to yourself only or your plus a named driver;
- park your car in a garage or off the street;
- keep your mileage low (doing less than 12,000 miles a year);
- fit a security device such as an alarm or immobiliser.
Glossary
Certificate of Insurance
The certificate is a document that proves you have valid car insurance. It includes who can drive the car and what it can be used for.
Claim
This is the formal application you make to your insurer for payment under your policy.
Cover
The risks your car insurance policy protects you against.
Cover note
A document issued when you take out car insurance as temporary evidence that your vehicle is covered by the insurance.
Excess
The amount you agree to pay of each claim.
The compulsory excess is the amount your insurer insists you pay, a voluntary excess
is an additional amount you can opt to pay towards a claim to cut the cost of your premium.
Exclusion
An event or circumstance in which the insurance company does not have to pay out under the policy.
Fully comprehensive insurance
The widest car insurance cover available which, in addition to protecting you from liability to other people and their property, covers the cost of repairing or replacing your vehicle whether you are at fault or not.
Immobiliser
An electronic anti-theft device activated when the ignition key is removed. Generally these are now fitted into new cars at the factory.
Insurance group
Insurance groups are used by insurers to assess the risk of a vehicle taking into account the make, model, engine size and desirability to thieves of a car. The range of insurance groups has now been expanded from 20 to 50.There are 20 groups with higher risk vehicles, such as Aston Martins and Ferraris, belonging to Group 20. The higher the group the more you are likely to pay for your car insurance.
Insurance schedule
The insurance schedule is a document that gives details of the cover you have and information that you have supplied to your insurer.
Insured
The person whose car is insured, also called the policyholder.
Insurer
The underwriter that issues the insurance policy and pays any claims in exchange for an insurance premium.
Market value
The cost of replacing your car with another of the same make and model and of a similar age and condition at the time of the accident or loss.
No claims bonus/discount
A discount on your premium if you have driven for a length of time without making a claim on your insurance.
Policy
The document setting out the legal rights and obligations of you and your insurer.
Policy holder
The person whose car is insured.
Premium
The amount you pay for your insurance.
Protected no-claims bonus or no-claims discount
If you have four or more years no-claims bonus then you may be able to pay an extra amount and not lose your bonus if you make a claim.
Renewal notice
The notice sent by the insurer to you as the policyholder inviting you to renew your policy.
Sum insured
The total amount for which the vehicle is insured.
Third-party insurance
The basic car insurance required by law. Third party only covers your liability for death or injury to someone else and your liability for damage to someone else’s property.
Third-party, fire and theft insurance
Similar to third party insurance but third party, fire and theft also pays compensation if your vehicle is damaged by fire or is stolen.