Car insurance protects you and your family financially if you ever have a motor accident, be it your fault or not. You must factor-in car insurance as part of your motoring expenses. A car insurance policy will provide you with much needed protection against financial losses incurred because of traffic accidents.
Repairs to your own car after an accident, legal fees and liability for property will often not be covered by a bog-standard car insurance policy. 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 will protect not only you, but your vehicle, and third parties in the long run. If you want to drive a vehicle in the UK, you must prove that you have a valid car insurance policy. Your level of protection will depend on 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 circumstances may have changed
• Financing could place your car in a greater risk banding
• It may be possible for an insurer to cover the loss of certain personal effects
• Some insurers may include breakdown cover
• You may find inclusive legal cover offered by some insurers
• You could find a policy which includes cover for a 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. Every year that you own the same car, its value decreases. Make sure that your insurance policy reflects this reduction in value. This may seem obvious but people often neglect to do this. So always ask your broker to check the value of your car against its blue book value, rather than the purchase price. This is because even fully comprehensive policies will only cover a vehicle to its blue book value rather than it’s purchase price. Your declaration concerning the value of the car should be as accurate as possible. The more expensive a car is the more it can cost to insure. 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! To find out more about how Vehicle Replacement Insurance works click on the link.
At the time of your last renewal your circumstances may have been different. You may have switched jobs and not drive as many miles per year or have paved the front lawn and turned it into off-street parking. Get insured according to any changes in circumstances – no matter how small you think they are. You can get a significant discount from your insurer if you are a low mileage driverIt’s not always as expensive as you may think to add additional drivers to your existing policy – particularly if you wait until renewal time. Insurers may charge you an administration cost for adding additional drivers, but if you wait until it’s time to renew you may not incur this fee.
WHICH LEVEL OF COVER SHOULD I CHOOSE FOR MY CAR INSURANCE?
In the UK, there are three types of vehicle insurance.
1. In many countries including the UK, Third Party Insurance is mandatory. This type of cover insures a vehicle and driver against damage to another person’s car, driver or passengers if involved in an accident. 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. This type of insurance will not cover repairs to your vehicle.
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. A leased or financed vehicle will require a fully comprehensive insurance cover.
3. A Fully Comprehensive policy will give you the widest range of cover.It provides the basic insurance of third party, fire and theft and covers damage to the insured vehicle and any bodily injury suffered by the policyholder in an auto accident. If the vehicle value is higher than the insured can afford to pay to replace it, then fully comprehensive is the preferred choice. The gap between what your insurance payout would be and the cost of buying a new car can be bridged with specialised insurance products like Finance Gap Insurance or Vehicle Replacement Gap Insurance – you can easily find out more about these products by going on-line.
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
• Men are considered higher risk than ladies
• Your marital status
• Inner city, suburban or rural residential locations
• The size of the car and engine
• Vehicle replacement cost
• 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 married men with kids have more responsibilities than single men and the insurance companies therefore consider married men a lower risk category.
Where a person lives also affects the insurance cost. Rural areas that have less traffic and areas with a lower crime rate will mostly likely get a better premium than towns or high crime areas.
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. Car modifications therefore equate to increased risk for insurance companies, and will result in increased premiums.
2. Driver History
• Years of driving experience
• Previous claims
• History of driving convictions
• 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. This is confirmed or denied by the number of insurance claims made during the previous five years. Most driving convictions negatively affect motor insurance premiums for drivers. Parking offenses do not push up your premiums unless you incurred points.
Your annual mileage is a factor too. The more time the car is on the road, the greater the risk of having an accident.
3. Vehicle History
• Current vehicle value
• Whether you own the car or if it is 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. If the named driver has several years no claims then fully comprehensive insurance could actually cost the same as third party fire and theft cover, but with additional perks such as windscreen cover and legal assistance etc. Additional benefits to your policy can often be added at little extra cost when buying on-line. 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. This is so that they can be reimbursed for any damage caused to the car by the policyholder. 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 car included
• Roadside and/or breakdown insurance cover
• Legal assistance
• Repair or replacement cover for windscreens
• No Claims 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. Good websites make it easy to get quotes with little aggravation. It is a good idea to consider using an insurance aggregator website to get started. On-line insurance aggregator websites are generally very easy to use. You’ll only need to fill out one questionnaire so that the market can be searched on your behalf. 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 is not always a quick and easy task. Good luck on finding your ideal car insurance.
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