A guide to insurance

Motor insurance guide

Personal Finance and Savings

Faced with a multitude of advertisements claiming to save you money on your car insurance, it becomes difficult to get the best deal to suit you. Don’t panic, we are here to help you on your way with that perfect policy.

What is available?

There are so many different types of insurance to choose from its difficult to find the right option to suit your daily routine. For example, if the car is only used to run the kids to school or nip to the shops then third party insurance is probably more appropriate than fully comprehensive.

Third Party insurance covers the policyholder against damage to a third party’s property or to the third party themselves. Basically, if you run into another car and cause some damage or injure the occupants, a Third Party Only policy will pay for the repair to the other vehicle and for any medical claims or injuries suffered by the other person involved or anybody else in your car that was affected.

The downside to this policy is that it won’t pay for any repairs to your own vehicle or for any medical expenses if you are injured.

It also doesn’t cover the theft of your vehicle or if it sets on fire, so if you wanted cover for these from your policy then opt for a Third Party Fire and Theft policy.

A comprehensive policy, otherwise known as ‘fully comprehensive’, will pay out for third party damages and injuries, in the event of your vehicle being stolen or set on fire, and also for any damage to your own vehicle regardless of whose to blame for the accident.

Why do the costs vary so much?

There are two main reasons why car insurance costs so much, with the first one being that drivers are more likely to claim for personal injury, like whiplash, and the payout costs are much higher than they used to be.

The second reason is the cost to the NHS. Accident and emergency departments can now claim for cost of treatment from the insurance company.

Is it possible to control the premiums?

Premiums are largely based on your postcode, and certain areas can drive up the price, for example, if you live in a city or urban area.

There are a range of possible options, depending on which insurer you use. The simple ones would be to secure the vehicle with alarms, immobilisers or steering locks and another way would be to opt for secures parking, as opposed to leaving your car on the street.

When it comes to finding that perfect policy, some personal details may be affecting the quoted prices, such as your age and gender.

The younger and less experienced a driver you are, the more likely it is that you will have an accident and make a claim on your insurance policy. Also, if you are a young male driver, the cost will increase.

It may seem unfair that women get cheaper car insurance, but according to statistics they take fewer risks than men, drive more slowly and are more cautious, resulting in less expensive claims.

However, there are some controllable ways to keep the cost down for younger drivers. Being added to a parent’s insurance policy is the best way, or alternatively, purchasing third party only insurance, buying an inexpensive/second hand car and keeping your record clean of claims and convictions can help you to drive the costs down when it comes to buying a more expensive car.

The other thing that can lower your premium is ‘excess’. This refers to the amount of money you’re willing to put towards any repairs. The more you will pay, the lower the premium will be.

The average excess is around £200, but this can be higher if you are willing to shell out that little bit extra if you have an accident.

Buying the policy.

Once you have chosen the right policy and have got the best quote from a range of insurance companies, you are almost ready to drive off into the sunset.

Before you ring the company, or log onto their website, make sure you have the appropriate documents and information, to save you calling them back.

The most important things to have are the make and model of the car and the registration number, along with details of any claims or convictions you might have had in the last three years.

Other information you will be asked for is things like the number of years of no claims discount, where the car is normally kept, what you will use the car for and your estimated annual mileage.

Make sure that you tell them the truth though, because if you have an accident and they find the documents to be false, then your policy won’t be valid.

Ready, set, go…

There are two main options when it comes to paying for your car insurance, and this again would depend on your personal circumstances.

The most convenient for most people would be to pay monthly by direct debit, although this way you may end up paying a little bit more in interest.

There is also the option to pay the amount off in full, so if you have the spare cash to do this, you will save money in the long-run.