Directory:A Guide To Buying Car Insurance
There are over 100 insurance companies across the UK that potentially have different cover and different prices. Information can vary from insurer to insurer and this is a guide to help you understand the world of car insurance.
It is the law to have car insurance cover - it protects you and other drivers on the roads. Insurance companies work out the chances and costs associated with any risk that they cover. These calculations give a 'premium' for each individual customer based on the likelihood that they will make a claim. If the claims happen, the insurance company pays out the amount of money they agreed to pay when they issued the insurance policy.
Make sure you read your car insurance policy carefully to check that it provides the cover you need and note any significant exclusion. Ensure that the policy is right for you and that you understand what is and is not covered. If you make a claim that is not covered or is excluded by your insurance, your insurer won't be able to pay your claim or refund your premiums.
Driving Other Cars
Many policies cover the policyholder while driving a car which belongs to someone else. However, cover will be limited to third party only, even if you have a comprehensive policy for your own car. Accidental damage to the borrowed car will not be covered by your insurance. Make sure that you have the car owner's permission to drive the vehicle and that the owner has arranged comprehensive insurance (e.g. by adding you as a driver under their policy) if they wish to do so. (If they do this, then claims involving their car, while you are driving, will be met by their policy.)
Types of Cover
There are four types of motor insurance
* Third Party Only (TPO) * Third Party Fire & Theft (TPF&T) * Comprehensive (Fully Comp) * Fire & Theft Only
Third Party - Third Party insurance is the minimum legal cover allowed so can be quite cheap in comparison to other cover types. It covers damage to the other person's car or compensation but, if your own car is stolen, burnt out or damaged, it is not covered. It also covers injuries suffered by the occupants of the other car involved as well as your own passengers but not your own injuries. Third Party can be beefed up using add-on insurance such as Fire and Theft.
In the UK, TPO has become more unpopular amongst drivers and so many insurers no longer offer it. Occasionally some insurers do limit cover to TPO on a policy that is due to renew.
Third Party, Fire & Theft (TPFT) - On older, cheaper cars, many customers still want protection if the car is stolen or burnt but feel it is unnecessary to insure the car for accidental dents and scrapes. TPFT offers the same cover as a Third Party Only policy but it will also pay out in the event that your vehicle is stolen or set on fire and will cover personal injuries to yourself.
Fully Comprehensive - Fully Comprehensive is the most expensive and covers everything damage to your car, personal injury costs and any third party's vehicle and property.
Fire and Theft Only - This cover is only given when a car is laid up and not in use. Normally therefore, it is actually only offered to existing clients for a short period. Given there is no third party cover, you are not insured to drive the car on public roads and the insurance company will normally ask for any insurance certificate previously issued to be returned to them.
Your age, sex, occupation and driving history all affect the price you are quoted and the same goes for any drivers you decide to add to your policy. For instance, young or inexperienced drivers are much more likely to make a claim so they will be charged a lot more.
The younger or inexperienced the driver is the more likely they will have an accident and make a claim. Very young drivers, people with risky occupations, and those living in high crime areas, may be better off going to a specialist broker.
Your accident history plays a factor in the pricing of your insurance policy. If you have a number of fault claims or have claimed for other things such as fire or theft then this could impact on your cover.
Driving convictions also plays a part on the cost of cover. The number of convictions a person may have and how likely they are to make a claim, and insurers will normally ask you about any convictions you have received in the last 5 years.
What you do for a living can make you a higher risk.
All cars in the UK are put into insurance groups. The insurance group is a measure of how expensive your car is to repair, how powerful it is and how secure it is and insurers take this into account when giving you a quote. The value of your car will make a difference to your premium. If your car is worth £50,000 rather than £5,000, it will cost your insurance company ten times as much to replace your vehicle in the event that it is stolen or written off. If your car is high risk for theft your car insurance company may request that you have additional security fitted.