The 4 Wheels Blog

Car insurance is there to give you financial protection in the event of an accident whether or not you are responsible for it. It is a mandatory and necessary expense if you own or drive a motor vehicle. 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. Sadly not all insurances include fixing the damages to your car, protecting against liability, legal fees or damage to any other property involved in the accident. 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 are planning to drive in the UK, you are required to purchase car insurance. Your insurance company will cover you at a level determined by the type of policy you choose. 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 may be able to cover the loss of personal goods • A different insurer may include breadown cover in your policy • You may find an insurer offering inclusive legal cover • It may be possible for an insurer to also cover 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. It doesn’t always follow that the same company or broker can offer you the best deal for your insurance. An insurance broker already familiar with your demands and needs from your insurance history will probably be in a position to get you the best deal. This is also the case with car insurance as they can often consolidate your insurance needs into an all inclusive package which most insurance companies only make available to brokers. 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. You should get a reduction in your premium to reflect this. This is an obvious statement but can be suprisingly often forgotten. 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. So make sure that that is what you declare the car’s value to be. It will usually cost more to insure a more expensive car. It’s possible that your insurance company may offer you a like-for-like replacement after an accident – but this is uncommon. 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 car insurance could be affected if your circumstances have changed since your last renewal. 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 accordingly. If you drive fewer miles your insurance company will recognise the decreased risk and your premium will be reduced accordinglyIf you wait until renewal time it probably won’t be that expensive to add additional drivers to your car insurance policy. Adding additional drivers mid-year often incurs administration fees which could be avoided if done at inception or renewal time. SO WHICH IS THE BEST CHOICE OF CAR INSURANCE COVER? Insurance cover in the UK falls into three different categories. 1. Third Party Insurance is mandatory in the UK. It gives you cover against a claim against you for damage to another car, its driver, or passengers should you be in an accident. This type of insurance covers your liabilities in the event of damage to another vehicle or person in an accident. The insured is not protected against bodily injury or damage to their own vehicle with this type of policy. There is no reimbursement of repair costs with this type of insurance. 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. “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 your car is worth more than you could afford to replace it, then you should opt for a fully comprehensive insurance policy. Finance Gap or Vehicle Replacement Gap Insurance are additional insurance products available to top up the gap between your payout and the cost of paying off a new car, so go online and find out more about these insurance products. 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 • Insurance companies favour woman policy holders • Your marital status • Where the policyholder lives • 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 catagory. The location or area of residence can have a massive effect on insurance premiums. Motorists living in rural locations and in areas with a low crime rate are more likely to get a lower insurance premium than those living in cities. 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. These factors translate to increased risk for insurance purposes, and premiums will increase as a result. 2. Driver History • Years of driving experience • Claims made in previous years • 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. Certain assumptions and associated levels of risk are made according to the number of claims made in the previous five years. Driving convictions such as speeding, dangerous driving or drink diving will affect the premium. This does not include parking violations. Your annual mileage is a factor too. The more a vehicle is on the road, the higher the risk for an accident. 3. Vehicle History • Current vehicle value • Owned, leased or financed • Vehicle make and model • Engine capacity 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. A named driver with several years of insurance cover and no claims against his or her name could find that fully comprehensive car insurance costs almost the same as a lesser level of cover, but with additional benefits such as a free courtesy car etc. Additional benefits to your policy can often be added at little extra cost when buying online. 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. The leasing or finance company will require reimbursement from the policyholder for 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 • Breakdown assistance • Some insurers may offer you legal cover included in your policy • Cover for your windscreen • 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. The right car insurance price is easy to find when you’re on a great website. A good place to start is on an insurance aggregator website. Aggregator websites are easy to use. You’ll only need to fill out one questionnaire so that the market can be searched on your behalf. Once they have collected all the quotes, you will be able to compare insurance policies against each other, save and email your quote to your personal email address, go back and change your options to include or reduce the benefits you may be considering and – when you’re happy – buy online. It’s always a good idea to find out if your broker can get you a better deal first, so keep him posted on your findings. When comparing quotes online, remeber to do so on a like-for-like basis. This may not always be as simple as you at first think. Good luck with finding the best possible car insurance policy.