Everything you need to know about car insurance

What is car Insurance?

If you want to drive a car on UK roads, it is a legal requirement that you have insurance in place. Unless a car is declared off the road (SORN), it must have the correct tax and insurance in force. Usually, this insurance is for a twelve month period, although temporary insurance and provisional insurance offer short term cover for those learning or individuals who do not require a yearly policy. The government continually compare driver and vehicle records which can also be viewed online, to check for cars which do not follow the rules of car insurance and according to ‘Money Supermarket’, more than 6,500 are prosecuted every month for disobeying laws and avoiding insurance.

People convicted of not insuring their cars are often faced with fines and in some cases, vehicles have been seized and destroyed. Those who avoid paying the premiums of car insurance affect the rest of the UK due to a price influx as a result of claims against the uninsured – roughly £256 million a year, or £15 on top of every premium.

How is car insurance calculated?

Car insurance and its premiums are calculated on a number of factors based around the risk. The riskier an individual is to insure, the higher the premium will be. It is common knowledge that the biggest indicator of risk is younger and inexperienced drivers. The reason why? On average they make up over a quarter of all motoring accidents a year which is heavily reflected on their premiums.  Younger drivers pay higher premiums as a result and may find their premiums do not decrease until over the age of 25.

The postal code of where you live is also a high factor when calculating the risk. Built up areas such as London which have higher crime ratings can see higher premiums as they are more likely to be a victim of damage or theft to their vehicle than a driver in a quieter, lower crime rated location. Where a car is parked during the day and night, again can make increases to a premium. For example, storing a car in a locked garage or on a driveway is seen as safer and less likely to be damaged or stolen in comparison to a car parked on a public road away from the home or in an unsecured car park.

Although it is forbidden to judge a driver on their sex, females tend to have cheaper premiums than male drivers as statistically they are safer drivers. Other factors which do impact car insurance premiums though are driver’s occupations – a famous celebrity or entertainer again is more likely to be susceptible to a claim than someone who is not well known to the public. Previous claims and convictions are taken into account when working out car insurance premiums as drivers are seen as more likely to have a second claim or be involved in an accident. Finally the make, model and age of the vehicle you are insuring will be considered along with what you will be using the car for and at what times you will be driving it.

What are the types of car insurance?

The three different levels of cover for car insurance are:

• Third party car insurance
• Third party, fire and theft insurance
• Comprehensive car insurance

Third party insurance is the most basic level of cover which in simple terms means; if you have this cover and are involved in an accident of which is your fault, the insurance will only pay out repairs to the third parties vehicle and driver and not your own.

Third party, fire and theft is a slightly higher level of cover which again covers the third party vehicle and driver, as well as your own for fire and theft.

Finally, fully comprehensive cover is the highest form of insurance. This covers you for all of the above as well as any injury or damage even if it was your fault. Most drivers opt for this level of cover as it is today often the cheapest and most popular.

How can I make my car insurance cheaper?

It is known that often car insurance is expensive, many customers see their policy premiums increase year to year and do not realise that by making small changes, they could pay less. If you were to protect your no claims discount for example and a claim was to arise that was your fault, you would not be penalised, meaning at renewal, you would still receive your discount.

Excesses are often a grey area however can be very helpful when bringing premiums down. Although compulsory excesses are set by insurers as standard and cannot be changed, voluntary excesses can be adapted which in turn, can make policies cheaper. For example, by increasing the voluntary excess under a policy, the insurer see’s you are willing to pay out more In the event of a claim, which means they are happy to offer a lower overall premium. Excess protection is a type of insurance which helps customers claim back the money they have paid out to insurers when claiming which works well for those who have increased their excesses as it means they can claim back the funds they have paid out.

Younger drivers often find that by adding a black box to their vehicles – a device which monitors their speed and overall driving ability, insurers can view their driving habits and reward them with cheaper premiums if they show they are safe and abide by speed limits etc.

One further way to make insurance cheaper, is to add on additional drivers. This is helpful for younger and experienced drivers as adding friends or family with clean licenses show that the car will be driven by people with experience and therefore are less likely to claim. Drivers can also save on their premiums by calculating the mileage they will be doing over the year. Often drivers estimate anywhere between 3,000-10,000 miles upwards however by working out a more realistic figure, you could bring the cost of your policy down.

At renewal, shopping around with other insurance companies can save customers hundreds of pounds and comparison sites allow those comparing to view the best competitors in the market. It is important to query your current insurer at renewal to ensure that they are offering their best price. Asking If your current insurer can add a further discount to the premium, again can help reduce the price.

Other things to consider with car insurance

As no two insurance companies are the same – drivers should look out for other inclusions and exclusions under their policy. For example, some companies have windscreen cover included as standard, whereas others see this as a privilege which can be included for an extra cost.

Other cover options include breakdown cover and courtesy cars in case a vehicle stops working or needs replacing, these can be included as standard or added as an optional extra to the policy. Many drivers insure their cars for breakdown through separate companies as this can be the most cost effective. Motor legal expenses and personal accident cover are also covers to consider when taking up insurance as they can cover you and any drivers for injuries and legal disputes in motor related accidents.

It is important to explore all options and not just purchase car insurance for the cheapest price as you may find in the result of a claim or dispute that you are not fully covered.

Conclusion

Insurance fraud is common when insuring vehicles and is a criminal offense. It is important that drivers answer the insurers questions honestly and reasonably to ensure they are covered for everything they need and to abide by the laws. If there are any changes throughout the year, customers should inform their providers to maintain cover in the event of a claim.

Although it can seem difficult and confusing, car insurance is required by law so having a general understanding of its features, can really help customers to understand their policies and get the most out of them.

What is car Insurance?

If you want to drive a car on UK roads, it is a legal requirement that you have insurance in place. Unless a car is declared off the road (SORN), it must have the correct tax and insurance in force. Usually, this insurance is for a twelve month period, although temporary insurance and provisional insurance offer short term cover for those learning or individuals who do not require a yearly policy. The government continually compare driver and vehicle records which can also be viewed online, to check for cars which do not follow the rules of car insurance and according to ‘Money Supermarket’, more than 6,500 are prosecuted every month for disobeying laws and avoiding insurance.

People convicted of not insuring their cars are often faced with fines and in some cases, vehicles have been seized and destroyed. Those who avoid paying the premiums of car insurance affect the rest of the UK due to a price influx as a result of claims against the uninsured – roughly £256 million a year, or £15 on top of every premium.

How is car insurance calculated?

Car insurance and its premiums are calculated on a number of factors based around the risk. The riskier an individual is to insure, the higher the premium will be. It is common knowledge that the biggest indicator of risk is younger and inexperienced drivers. The reason why? On average they make up over a quarter of all motoring accidents a year which is heavily reflected on their premiums.  Younger drivers pay higher premiums as a result and may find their premiums do not decrease until over the age of 25.

The postal code of where you live is also a high factor when calculating the risk. Built up areas such as London which have higher crime ratings can see higher premiums as they are more likely to be a victim of damage or theft to their vehicle than a driver in a quieter, lower crime rated location. Where a car is parked during the day and night, again can make increases to a premium. For example, storing a car in a locked garage or on a driveway is seen as safer and less likely to be damaged or stolen in comparison to a car parked on a public road away from the home or in an unsecured car park.

Although it is forbidden to judge a driver on their sex, females tend to have cheaper premiums than male drivers as statistically they are safer drivers. Other factors which do impact car insurance premiums though are driver’s occupations – a famous celebrity or entertainer again is more likely to be susceptible to a claim than someone who is not well known to the public. Previous claims and convictions are taken into account when working out car insurance premiums as drivers are seen as more likely to have a second claim or be involved in an accident. Finally the make, model and age of the vehicle you are insuring will be considered along with what you will be using the car for and at what times you will be driving it.

What are the types of car insurance?

The three different levels of cover for car insurance are:

• Third party car insurance
• Third party, fire and theft insurance
• Comprehensive car insurance

Third party insurance is the most basic level of cover which in simple terms means; if you have this cover and are involved in an accident of which is your fault, the insurance will only pay out repairs to the third parties vehicle and driver and not your own.

Third party, fire and theft is a slightly higher level of cover which again covers the third party vehicle and driver, as well as your own for fire and theft.

Finally, fully comprehensive cover is the highest form of insurance. This covers you for all of the above as well as any injury or damage even if it was your fault. Most drivers opt for this level of cover as it is today often the cheapest and most popular.

How can I make my car insurance cheaper?

It is known that often car insurance is expensive, many customers see their policy premiums increase year to year and do not realise that by making small changes, they could pay less. If you were to protect your no claims discount for example and a claim was to arise that was your fault, you would not be penalised, meaning at renewal, you would still receive your discount.

Excesses are often a grey area however can be very helpful when bringing premiums down. Although compulsory excesses are set by insurers as standard and cannot be changed, voluntary excesses can be adapted which in turn, can make policies cheaper. For example, by increasing the voluntary excess under a policy, the insurer see’s you are willing to pay out more In the event of a claim, which means they are happy to offer a lower overall premium. Excess protection is a type of insurance which helps customers claim back the money they have paid out to insurers when claiming which works well for those who have increased their excesses as it means they can claim back the funds they have paid out.

Younger drivers often find that by adding a black box to their vehicles – a device which monitors their speed and overall driving ability, insurers can view their driving habits and reward them with cheaper premiums if they show they are safe and abide by speed limits etc.

One further way to make insurance cheaper, is to add on additional drivers. This is helpful for younger and experienced drivers as adding friends or family with clean licenses show that the car will be driven by people with experience and therefore are less likely to claim. Drivers can also save on their premiums by calculating the mileage they will be doing over the year. Often drivers estimate anywhere between 3,000-10,000 miles upwards however by working out a more realistic figure, you could bring the cost of your policy down.

At renewal, shopping around with other insurance companies can save customers hundreds of pounds and comparison sites allow those comparing to view the best competitors in the market. It is important to query your current insurer at renewal to ensure that they are offering their best price. Asking If your current insurer can add a further discount to the premium, again can help reduce the price.

Other things to consider with car insurance

As no two insurance companies are the same – drivers should look out for other inclusions and exclusions under their policy. For example, some companies have windscreen cover included as standard, whereas others see this as a privilege which can be included for an extra cost.

Other cover options include breakdown cover and courtesy cars in case a vehicle stops working or needs replacing, these can be included as standard or added as an optional extra to the policy. Many drivers insure their cars for breakdown through separate companies as this can be the most cost effective. Motor legal expenses and personal accident cover are also covers to consider when taking up insurance as they can cover you and any drivers for injuries and legal disputes in motor related accidents.

It is important to explore all options and not just purchase car insurance for the cheapest price as you may find in the result of a claim or dispute that you are not fully covered.

Conclusion

Insurance fraud is common when insuring vehicles and is a criminal offense. It is important that drivers answer the insurers questions honestly and reasonably to ensure they are covered for everything they need and to abide by the laws. If there are any changes throughout the year, customers should inform their providers to maintain cover in the event of a claim.

Although it can seem difficult and confusing, car insurance is required by law so having a general understanding of its features, can really help customers to understand their policies and get the most out of them.