Types of Car Insurance
There are three main types of car insurance:
Third Party Only
This is the minimum level of car insurance cover you're legally required to have. This insurance would help cover the cost of damage you caused to someone else's vehicle or injury caused to a third party (i.e. the driver of another vehicle, passengers or a pedestrian) It would not, however, cover any damage to your own vehicle. This might not be a sensible option if you have a high value car, as you'd be leaving it totally unprotected financially.
Third party, fire and theft (also written TPFT)
As with third party only, this cover would help pay for damage you caused to another vehicle. It still wouldn't pay for damage to your car from a driving accident.
The added advantage of this type of car insurance is that it covers your vehicle for theft or damage caused by fire.
Comprehensive Cover
This is the most complete type of car insurance you'll find.
It offers you all the cover mentioned in the other two options above - but also covers you and your vehicle in the event of an accident. Obviously, you need to check your chosen policy so you know exactly what eventualities you're covered for.
Why you need it
Unfortunately, there are thousands of car accidents on UK roads every year, making car insurance an important consideration for all motorists. It is also a legal requirement to have car insurance in place before driving on public roads.
If you have a crash or your car is damaged or stolen, a sufficient car insurance policy could help you cover the costs. If you have a car accident and it's your fault - car insurance can also help to cover the damage caused to the other driver's vehicle.
Handy Hints
When searching for a car insurance policy, you might find the following pointers of use:
No Claims Bonus
A No Claims Bonus is normally acquired if you've not made any claims on your car insurance. A No Claims Bonus will usually entitle you to a reduction on your car insurance premiums. For example, if you've been driving for 5 years without making a single claim, you're seen as a low risk and may be rewarded with a discount from your insurer.
Some insurance providers also offer protection for this No Claims Bonus. This usually involves you paying fee to prevent the loss of your No Claims Bonus if you do need to make a claim. It's normally offered to drivers who have built up at least 4 years no claims.
Co-habiting couples
Couples living together could save money on their car insurance by taking out a joint policy. By covering both of you under one policy - you could actually save yourself some money. Many insurers consider co-habiting couples to be a low risk group and could therefore offer them lower premiums.
Car insurance excesses
An excess is the amount of money you would have to pay out yourself in the event of a claim. Your insurance company will not pay anything to you until you've covered this initial 'excess' amount.
You'll come across two types of excess with car insurance, voluntary and compulsory excess.
Compulsory Excess: This is a fixed amount that's set by your car insurance provider. This is part of your policy and can't be changed. You would have to pay this amount as part of any claim you make (e.g. the first £100). Sometimes, a higher compulsory excess will be given to young or newly qualified drivers, as they are seen as higher risk by insurers.
Voluntary Excess: When you take out a car insurance policy, you may be able to choose a voluntary excess. This is where you dictate the amount you'd be happy to pay in the event of a claim. If your policy has a compulsory excess, you could choose to add a voluntary excess on top. Typically, the higher your excess, the less you'll pay for your premium. Make sure you know exactly how much you'd have to pay out for a claim and that you'd be able to meet these costs.
Know-How
Take a browse through some of our helpful car insurance articles:
What affects your premium?
If you're hoping to find cheap car insurance, it's good to be aware of what can affect your premium. Here's a quick look at the factors affecting car insurance costs.
Area: Your postcode will probably have some bearing on your car insurance premium. Areas with high crime rates can be seen as a high risk to car insurance providers. Inner city and urban areas can be seen as particularly high risk - especially if you leave your car out on the street overnight.
Value and insurance group: How much your car costs will obviously influence the price you pay to cover it. Alongside price, all private cars are divided into different insurance groups. This group will normally affect the price of your premium. For more info on these group ratings, visit the Thatcham website.
Previous claims: If you have made a car insurance claim in the past, this could bump up your premium. If you don't make any claims, you can build up a No Claims Bonus to give you a discount on the cost of your cover.
Your age and experience: Newly qualified drivers under the age of 25 may be seen as risky for car insurance providers, so they might experience higher premiums. Older, more experienced drivers could see their premium costs fall.
Level of excess: This is the amount of cash that you agree to pay in the event of a claim. You'll need to cough-up this amount before the insurer pays the remaining part of the claim. The more money you are willing to pay yourself, the cheaper your car insurance is likely to be.
Security: Good security features, such as an immobiliser and car alarm, might help lower your premiums. Off road parking or a secure garage overnight can also be seen as reducing risk.
Specialist Car Insurance
If you have a specialist vehicle, a standard car insurance policy might not quite go the distance. If your pride and joy is a little different from the other cars on the road - you could benefit from a specialist car insurance policy.
If you have any of the following vehicles, you might have to seek advice from a specialist car insurance provider.
Classic Car Insurance
Your classic car will probably be a highly treasured possession. It may also have some specialist insurance needs that are not covered by a regular car insurance policy. Classic car insurance can include cover for your vehicle if it's part of a show or rally. It can also provide cover for your car during business use - such as wedding hire.
A classic car insurance policy will normally cover the 'agreed value' of the vehicle. If the car is in particularly good condition, the listed market value may not be a true reflection of the amount the car would sell for. If you choose an agreed value - a claim for total loss would be based on this more realistic amount, rather than the current market price value.
Some insurers also offer a restricted mileage policy for classic cars that are driven, for example, less than 3000 miles a year. Normally, the lower the agreed mileage the lower the premium.
Modified/Non-Standard Car Insurance
A modification refers to any addition or alteration you make to the standard factory specification of your vehicle. Modifying or tuning your car could affect the price you pay for car insurance, as well as the cover you'll need. Some car insurance providers won't deal with modified vehicles, so you might need to find a specialist insurer.
Modifications can include - a new performance exhaust system, alloy wheels, air filter or any tuning that's done to enhance the performance. Not all modifications will affect your car insurance premium, so it's worth seeking specialist advice.
Imported car insurance
Insurance for Foreign and Imported Vehicles
Car insurance for foreign, imported vehicles can be more expensive than regular car insurance.This is because some insurers see an import as more of a risk.
The vehicle may not meet EU specification and need parts that aren't widely available. Repairs could be tricky and costly or the vehicle might not be suited to UK roads. Some standard car insurance providers might not cover imported cars at all - while others attach high premiums, so it's worth looking into a specialist policy.
High Performance Car Insurance
High performance doesn't have to equal high premiums. It's true that some insurance providers are wary of high performance cars - as replacement and maintenance costs can be large. Also, these vehicles are able to accelerate faster and reach higher speeds than average cars.
Specialist high performance car insurance can give you the peace of mind that your vehicle has sufficient cover that doesn't cost the earth. There may be added discounts available for low mileage if you only use your high performance/sports car occasionally.