Guide to car insurance
If you think that finding car insurance is a complicated task, then think again – this guide will ensure you can approach the market with confidence and help you find a deal that’s right for you.
What does car insurance cover?
Car insurance is designed to cover accident-related damages and injuries – but exactly what is covered is dependent on the level of protection you take out. There are three options:
- Third party cover: Covers liability for injuries to others, damage to their property and liability while towing a caravan or trailer.
- Third party, fire and theft cover: Protects your car against fire damage, theft and attempted theft on top of traditional third party cover.
- Comprehensive cover: All the protection of a third party, fire and theft policy plus repairs for your own vehicle, subject to policy exclusions. Typically, a comprehensive policy will also incorporate personal accident cover, windscreen cover and cover for personal effects.
When shopping around for a policy you should also consider the following:
- Driving other vehicles: Some insurance companies will allow you to drive other vehicles in emergency situations, although you will need the owner’s permission and the car must be insured by another party.
- Excess levels: The excess is your contribution towards a claim and will normally be divided into a compulsory excess set by the insurer and a voluntary excess, an additional amount you agree to pay, on top of the compulsory excess, in case a claim is ever necessary.
- Exclusions: These are circumstances in which you will not be covered. These are normally outlined in your policy documents.
- No-claims bonuses: This is a reward for drivers who are claims free and can reduce premiums by as much as 60 per cent after four or more years.
What should you look for from a policy?
Remember that car insurance differs widely between insurance companies and what is covered as standard on one policy may not be offered on another. Some of the cover features you may wish to look for include:
- Breakdown cover: Though this can be bought independently with breakdown companies, some car insurance companies offer breakdown cover as an add-on. Check to see what is included, such as: recovery/relay, home starts, onward travel and European cover.
- Courtesy car cover: Provides you with another car while yours is repaired. Some policies even offer replacement cars if yours is stolen or written-off.
- Legal protection: Pays for legal costs arising from an accident while you are driving.
- Personal accident cover: Provides a limited payout to you or your passengers in certain circumstances such as death, permanent loss of sight or permanent loss of a limb.
- Travelling abroad: Most car insurance policies offer third party cover while you drive abroad. However, only with a handful of insurance companies can you get the same cover on the Continent as you would at home – Also check the number of days you are covered for as it is usually restricted to a certain amount per year.
- Windscreen cover: Protects you against chips and cracks in your windscreen, and a smaller excess usually applies.
How can you find the cover to suit your needs?
Shopping for car insurance used to be a complicated affair that involved making numerous phone calls or searching numerous websites. However, now comparison websites allow you to compare quotes from as many as 120 insurance companies with one search so you can get an overview of the market. Buying online is normally cheaper too – many companies offer discounts to internet shoppers due to the savings they make on overheads.
Just remember to look beyond price alone when comparing policies – pay attention to the cover offered by each policy and read the terms and conditions thoroughly to ensure you’re receiving value for money.
How to lower car insurance premiums
Car insurance premiums are usually determined by an assessment of the ‘risk’ you pose – i.e. how likely you are to make a claim. Reducing this risk can lower premiums – here are some tips:
- Agree to a mileage limit: Limiting the number of miles you drive each year reduces the risk of an accident occurring.
- Choose your car carefully: Insurers assess the vehicle you drive when offering a quote. Older vehicles cost less to repair/replace, while vehicles with smaller engines are less likely to be involved in high impact accidents. Don’t be tempted to modify a vehicle, and stick to a standard specification to keep premiums in check.
- Increase security: You can limit the risk of theft by installing a car alarm, immobiliser or a tracking device.
- Increase your excess: Raising your voluntary excess will usually lower premiums but be careful to keep it at an affordable level.
- Limit named drivers: Avoid adding drivers with poor driving records or limited experience to your policy as they could cause your premiums to rise.
- Park safely: Parking your car in a garage overnight and in a secure car park during the day limits the risk of theft or vandalism and usually lowers premiums.
- Pay annually: Avoid monthly interest charges by paying premiums upfront.