Motor Insurance Made Simple
Should you ever have an accident, your car insurance is there to give you a degree of financial protection. Vehicle insurance is a necessary expense which all motorists must take into account. If you have an accident in your car, you will be glad that you invested in good car insurance for the financial protection that this will give you.
Not all insurance policies cover you against damage to your own vehicle, or liability for property damage or legal fees. 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 plan to drive, you must be able to prove that you have purchased car insurance. 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
• Effects of car depreciation
• Your personal circumstances may be different
• Car financing could put you and the car in a higher risk category
• You could find a policy which includes cover for loss of personal items
• Breakdown cover may be included in some policies
• You may find inclusive legal cover offered by some insurers
• You may find an insurer covering your 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.
If your broker manages your entire insurance portfolio then he is in the best position to get you the best deal, as he already has information about your demands 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. No sooner than you have driven your new car off the showroom floor the car begins to depreciate. The value of your car will decrease every year. Make sure that your insurance policy reflects this reduction in value. This makes perfect sense. Check the value of your car against its blue book value rather than the price you paid – your broker can do this for you. The reason is that even fully comprehensive car insurance policies do not cover a vehicle to the purchase price, but rather the blue book value. Ensure you declare the vehicle’s value accurately. It will usually cost more to insure a more expensive car. In rare cases the insurance company may offer a replacement car of the exact model or spec after an accident. There is however an insurance product called Vehicle Replacement Insurance which does just that! Click on the link to find out how it works in more detail.
Your personal circumstances may be different that at your last renewal. 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. Get insured accordingly. Insurance companies lower their prices for low mileage drivers and discounts can be significantIt’s not always as expensive as you may think to add additional drivers to your existing policy – particularly if you wait until renewal time. By waiting until renewal time you may be able to avoid the administration costs of adding extra drivers.
WHICH LEVEL OF COVER SHOULD I CHOOSE FOR MY CAR INSURANCE?
Insurance cover in the UK falls into three different categories.
1. In many countries including the UK, Third Party Insurance is mandatory. If you are involved in an accident, this type of cover will protect you financially against damage to the other vehicle or its occupants. Third Party Insurance acts as security against liabilities for damage to another person in a vehicle accident. The insured is not protected against bodily injury or damage to their own vehicle with this type of policy. You will not be reimbursed for repair costs with a third party only insurance policy.
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. The average driver may find this the best type of cover, especially for a vehicle which doesn’t have a very high market value. 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. “Fully Comp” will give you the widest insurance cover for your vehicle.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 the vehicle value is higher than the insured can afford to pay to replace it, then fully comprehensive is the preferred choice. Search on-line for products like Vehicle Replacement Gap insurance or Finance Gap – these will close the gap between what your payout would be and the cost of buying a new car in the event of an insurance write-off.
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
• Gender of the policyholder
• Your marital status
• As a policy holder your address affects your premium
• How big the car is
• How much your car will cost to replace
• 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. If you live in the country or in a low crime rate location you are likely to get a lower premium than if you are a city-dweller.
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.
Modifications are more likely to alter the vehicles safety; performance is improved, and handling may be compromised making the vehicle more unpredictable. The insurance company therefore sees these factors as an increased risk and will increase their premiums as a result.
2. Driver History
• Years of driving experience
• Claims made in previous years
• If you have points on your licence
• 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. The number of insurance claims made in the previous five years will either confirm or deny these assumptions. Most driving convictions negatively affect motor insurance premiums for drivers. Parking violations are not included.
Your annual mileage is a factor too. Your chances of being involved in an accident are increased the more time your car spends on the road.
3. Vehicle History
• Current vehicle value
• Owned, leased or financed
• Make and model of the vehicle
• Engine size and performance
• 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. Additional benefits to your policy can often be added at little extra cost when buying on-line. Fully comprehensive insurance cover will be required for leased or financed vehicles. You need to be able to reimburse the leasing or finance company for any damage to the car. Comprehensive insurance will cover this.
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
• Legal assistance
• Windscreen replacement
• NCD protection
• 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. An easy to follow quote engine will get the right quote quickly and easily. A good place to start is on an insurance aggregator website. They are fairly easy to use. You only need to answer the questions once, and then they will select products to show you based on your answers. After the site has collected the quotes, you can then compare different policies, as well as being able to save your quote, amend your requirements if necessary and if you are happy you can then buy on-line. Before you buy on-line, call your broker to see if you can get a better deal based on your findings. The most important factor about buying on-line is that you compare like for like quotes. It could be more complicated than you at first think. Good luck on finding the best policy for your needs.