car insurance guide

If you run a car you have to insure it - that's the law. The type of insurance you get varies according to the extent of protection it provides and how much it costs you.

The options

Fully Comprehensive is the most expensive and covers everything - damage to your car, personal injury costs and any third party's vehicle and property.

On very old, cheap cars, annual comprehensive premiums can cost more than the car is worth. But it's a must if you are buying a car using a credit agreement or a loan because if the car is a write-off or stolen you still have to continue paying the finance.

Third Party insurance is the minimum legal cover allowed and is comparatively cheap. 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. Third Party can be beefed up using add-on insurance such as Fire and Theft.

The costs

The price of insurance can add a lot to the cost of motoring so it's worth knowing the factors that affect the premium you are quoted. Shop around and compare quotes from different insurers. They base their premiums on their claims experiences, which naturally differs.

One company may see your area as higher risk than others. One may charge more because of your occupation. Shopping around on the internet makes it even easier because you can quickly see the effect of, for example, accepting a larger excess.

The starting point is the type of car you want to insure. There are many different insurance categories, with price, performance, and the cost of replacement parts the main factors that dictate the one your car falls into. Driving a smaller car is the best way to cut the cost of insurance.

Your age, sex and address all affect the price you are quoted. Young male drivers generally are charged the most, while women in their 50s pay the least. And you will usually pay more if you live in a city rather than in a rural area. Parking your car on the street overnight, rather than in a garage, will also mean higher premiums.

High risk categories

Your age, sex and address all affect the price you are quoted. Young male drivers generally are charged the most, while women in their 50s pay the least. And you will usually pay more if you live in a city rather than in a rural area. Parking your car on the street overnight, rather than in a garage, will also mean higher premiums.

Some insurers might class you as higher risk if you are a sports professional, entertainer, barman, chef or builder, among other occupations. But you may be able to avoid having your premium loaded by shopping around. Some insurers specialise in covering people traditionally regarded as higher risk, or non-standard. Even if you can't avoid having your premium loaded, the extra you are charged is now typically in the region of 10%-15%, down from 30% or 40%.

If you suffer from a health condition that could affect your ability to drive, including epilepsy, vision impairment, certain heart conditions or sleeping disorders, or if you are taking any medication that could do the same, you must inform the DVLA. If you don't, you could be charged with a criminal offence.

How the no claims discount works

You typically get a 30% discount after one year of claim-free driving, rising to 65% after four or five years. But companies vary. Some go up to a 70% maximum while others specialising in younger drivers will give higher discounts at an earlier stage.

Many insurers now offer the opportunity to pay a bit more to protect your no claims bonus. The rules vary but you may be able to make two claims in three years, for example, before your bonus is affected. Protecting your bonus will not stop your insurer from hiking up the premium at renewal following a claim. But at least you won't lose your no claims bonus on top.

Making a claim does not automatically mean you lose your discount. It depends whether the claim is a 'fault' or 'not fault' claim.

This is not just a question of whether or not you were to blame for the accident, but depends on whether your insurer can recover all its costs from someone else.

For example, if you skid on black ice and hit a wall, your claim would be classed as 'Fault', even though you were not to blame, simply because your insurer can't recoup the cost of fixing your car from anyone else.

Where another driver is involved, unless it can be proved beyond doubt that the other driver was to blame, the two insurers will often settle a claim on a 50:50 or 80:20 basis. This means both drivers will lose some of their no claims bonus. With most insurance companies, you will lose two years of no claims bonus if you have a fault claim.

Making a claim

If your car is stolen, report it to the police first and then your insurer. You will have to wait a while because many cars are stolen by joyriders and later recovered.

If it is never found or is a write-off, then you may face another problem. Your car may have been in good condition with a low mileage, and the amount the insurer gives you may not allow you to replace it with an equivalent machine.

In that situation, get hold of a car buyer's guide - Glass's Guide is the most frequently used. If its tables support the insurance company, you'll find it hard to get a better offer, even if the car was in good condition.

If you have been in an accident and the other driver was uninsured, personal injury claims and some damage claims will be met by the Motor Insurers' Bureau - (01908) 240 000).

This is financed by a levy on all insurance companies and was set up to compensate victims who would otherwise lose out through no fault of their own.

It will also pay out if you are hit by a driver who has bought insurance from one of the fly-by-night unauthorised companies that offer cheap insurance. If you find yourself in this position, tell the police.

Best Way To Determine The Insurance For Your Car

Auto insurance can be confusing and mind boggling sometimes and it's hard to determine exactly why some individuals are receiving rates which are lower than others. There are many factors which contribute to the rate of auto insurance, some you have control over and others you don't.

Below you will find valuable information regarding the factors which are compiled in order to determine the rate of your car insurance. These will help you understand important aspects of auto insurance and why some individuals receive higher rates than others. Here are the top five factors which auto insurance companies will consider when determining your rate of insurance:

1. Age - Your age will greatly affect the rate of your car insurance. Teenagers and individuals who are just beginning to drive will have higher rates for no reason other than their age. There is nothing you can do about this, as you get older and become a more experienced driver your rates will go down. Although they will go down, they will not stay down. When you reach a certain age your car insurance rates will go back up because you are an elderly driver and your eyes and coordination may not be as effective anymore.

2. Auto Insurance Companies - This is a factor which you have control over. Some car insurance companies offer lower rates than others for many reasons. It is up to you to choose which one will benefit you the most both now and in the long run.

3. Gender - Whether you are male or female will also affect the rate of your car insurance. This is yet another factor which you have no control over. Females generally have lower car insurance rates because according to insurance companies men are seen as potential dangerous and careless drivers who are more likely to be involved in car accidents.

4. Type of Vehicle - As much as we would all love to be driving a shiny silver Porsche Boxter all around town, the insurance rates for these types of vehicles are unreal. If you want your auto insurance rates to be low, I would suggest driving a car with a lower price tag. The more money your car is worth, the higher your car insurance rate will be.

5. Driving Violations - This is another factor which you have control over. I know how tempting it is to race your friends the moment you get your license for the first time, but the amount of money you will pay in the long run hardly seems worth it. Any form of ticket you receive can potentially raise the rate of your car insurance. If you want to pay less for car insurance I would suggest abiding by the rules of the road.

Although these are the most important factors in determining your rate of car insurance, there are many other factors which also play a part in how much you will pay. Auto insurance is something we all have to pay for, but by researching and understanding the aspects of this form of insurance you are learning how to reduce your rate to your best ability.

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Guide To Car Insurance

The first thing to note is that over 100 insurance companies offer motor car insurance in England, Scotland and Wales and each companies' policy wording can be different - so always take advice and, if in doubt, make sure you ask!

This is meant as a general guide and is by no means a definitive, legal guide - so please ensure that you use it for information only. We will briefly cover the following questions:

What is 'Third Party Only' Car Insurance Cover?
What is 'Third Party Fire & Theft' Car Insurance Cover?
What is 'Comprehensive' Car Insurance Cover?
What type of car insurance cover is best for you?
Why do costs of motor insurance cover vary so much?
Any other things I should be aware of when choosing my motor insurance?
And finally, shop around…
There are three main types of motor insurance policy, namely:

Third Party Only (often referred to by the initials,TPO)
Third Party Fire & Theft (often referred to by the initials,TPF&T)
Comprehensive (often referred to as Fully Comp.)
Each of these different types of cover can be briefly explained as follows:

What is 'Third Party Only' Car Insurance Cover?
This covers the policyholder against damage to a third party's property or to the third party themselves.

In other words, if you run into another car and cause damage to that car and injure the occupant(s) of that car, a Third Party Only policy will pay for the repair to that other vehicle, and will pay for any medical claims or injuries suffered by the occupant(s) of that other car and any passengers in your car other than you. A Third Party Only policy will not pay for the costs of repairing your own vehicle nor will it pay anything toward your medical expenses if you are injured.

In addition, if your vehicle is stolen or catches fire, a Third Party Only policy will not make any payment toward the theft or repair of the vehicle.

What is 'Third Party Fire & Theft' Car Insurance Cover?
This is exactly the same as the Third Party Only policy, set out above, however a Third Party Fire and Theft policy will pay out in the event that your vehicle is stolen or sets on fire.

What is 'Comprehensive' Car Insurance Cover?
A comprehensive (normally known as a "fully comprehensive") policy will pay-out for third party damages and injuries, will pay-out in the event of your vehicle being stolen or set on fire, and will also pay for any damage to your own vehicle (regardless of whose fault the accident was).

What type of car insurance cover is best for you?
This is a more difficult question to answer than you might think at first sight. Obviously, everyone's circumstances are different and again, you should take care to make sure that you ask the right questions to get the right cover for you.

However, as a general rule of thumb, the following points are worth noting:

If you are young and driving an inexpensive first car then you will probably find the cost of comprehensive motor insurance very high (an example would be a 17 year-old living in a main city, buys a second-hand car for £1,000. The cost of a comprehensive policy could be as high as £2,500 and the cost for a Third Party Fire & Theft policy could reduce to approximately £1,700. So, the saving of £800 on the annual motor insurance policy is a large part of the value of the vehicle). If you hold a TPF&T policy and have an accident, providing that the accident was not your fault, the other driver's insurance policy will pay for repairs or offer a replacement value of your car (if it cannot be economically repaired). However, if the accident is your fault and your car is a "write-off" or is badly damaged then it is up to you to pay for the repair or replacement of the car.
If you are young and driving a more expensive car then it can make more sense for you to have Comprehensive insurance. A motor insurance premium of £2,500 for a Comprehensive policy can appear to be money well spent if you have an accident, which is your fault, and your car has a value of (say) £7,500. Your Comprehensive policy will pay for repairs to your car or will offer you either a cash sum or a replacement car of similar age and mileage (as opposed to you being £7,500 out-of-pocket).
Once you are over the age of 25 years old, and providing that you do not have a poor driving record (either by way of a number of accidents or motoring offences), the cost of obtaining Comprehensive insurance can drop quite considerably and therefore you should always look at obtaining Comprehensive insurance.
Of course, when you ask for a motor insurance quote, you can always ask for a quote on Third Party Fire & Theft terms and a quote on Comprehensive terms - that way you can look at the difference in cost of each type of cover, and make up your own mind as to which policy best suits your particular needs.

Why do costs of motor insurance cover vary so much?
Each Insurance Company employs underwriting staff who are responsible for underwriting the costs that the insurance company may have to pay out to the policyholder or third party. Underwriters have a wealth of statistical information, and it is from this that they calculate the likely (risk) cost of insuring a particular vehicle for a particular individual.

You may disagree with some of the points below. However, the cost of motor insurance in the UK is largely dependent upon the following main factors:

Your age - 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.

No Claims Bonus / Discount - Each year that you insure your car, and do not make a claim on your policy, you receive what is called a "no claims bonus" (or discount). This can allow you a discount of up to 70% off the cost of your insurance (if you have driven accident and claim free for five years). So, the more "no claims bonus" that you have, the cheaper the cost of the insurance.

You can apply to have a protected no claims bonus, so that in the event of you having an accident you do not lose your "no claims bonus". Most Insurance Companies will offer "protected no claims bonus" terms in their policies however, this will cost more (but is, in most cases, a worthwhile additional sum to pay - after all, a 40% no claims bonus on a motor insurance policy costing £2,000 before discount, is worth an £800 per annum saving. So a small additional premium of (say) £50 to protect your "no claims" bonus is often a good investment).

Insurance Group - Most motor cars are given an insurance group ranking - which is an analysis by the motor insurance industry of the level of risk involved with each car type and group (often based purely on the likely repair costs). A high-powered car will be a group 20 (the highest possible risk, and therefore the most expensive car to insure) whereas a small "mini" hatchback may only be a group 4 (and therefore a cheaper car to get insurance cover on). Most motor dealers and garages are able to advise you of the likely insurance group rating on each car.

Engine size - The more powerful a car is, the more likely it is to be involved in high speed accidents (which cost more to repair than lower speed accidents).

Your occupation and how many miles a year you drive - What you do for a living can make you a higher risk. An example would be someone who travels regularly in their car, as part of their job, is seen as having a higher risk of being involved in an accident, than someone who only uses their car at weekends.

Where you live and whether the car is garaged or parked on a road. The density of traffic in the area that you live in can dictate whether you are more, or less, likely to have an accident. In addition, theft and break-in to cars is more prevalent in certain towns and cities. Of course, if your car is simply parked on the street (rather than being put in a locked garage each evening), then this too can have a bearing on how susceptible your car is to theft or break-in.

The value (cost) of your car and the make and model - The value of your car is a factor in the risk that the Insurance Company is taking. If your car is a £50,000 "super-car" then you can expect to pay a higher premium than someone driving a £5,000 "super-mini". After all, if either car were involved in a serious accident, the Insurance Company will be left with a bill for £50,000 or £5,000. In addition, some cars are cheaper to repair than others (availability of parts, specialist body-shops for more specialist cars etc). Each of these factors plays a role in determining the cost of your motor insurance policy.

Whether you have had a history of accidents or motoring offences - Fairly obvious - if you have spent your entire driving experience careering from accident to accident (and thus costing Insurance Companies lots of money) then you can expect to pay a far higher premium than someone who has been driving for ten years without any accidents. In addition, if you have speeding fines and reckless driving fines (i.e. penalty points on your license) then the Insurance Company will charge you at a higher rate than a more "sedate" driver.

Benefits included in your motor insurance policy - Many insurance companies offer benefits that other insurance companies do not offer. The most common example is you being supplied with a free courtesy car in the event that your car is off the road due to an accident. There is a cost associated with the benefits that you receive in your motor insurance policy. The more the benefits, the higher the price that you will pay.

The excess charge that applies to your policy - Insurance companies issue policies that have a "compulsory excess" (and often allow for a voluntary excess). An "excess" is the amount that you are responsible for, in the event of you making a claim on your policy. Lets take the example of you having a policy with a £100 excess. If you have an accident and the repair bill is £500 then you have to pay the first £100 and the Insurance Company will pay for the balance of £400. (Of equal importance is that if your policy has a £100 excess, and you chip the paintwork of your car, resulting in a £50 repair bill, you cannot claim from your policy as the amount of the claim is lower than the excess amount of £100). You can see that the larger the excess (i.e. the amount that you have to pay if you make a claim), the less that the Insurance Company will have to pay out. So, policies that have large excesses are often less expensive than policies with smaller excesses.

In addition, whilst most insurance company policies have a compulsory excess, you can also agree to take a voluntary excess charge, over and above the amount of the compulsory excess. If your policy has a £100 excess charge and you agree to an additional excess of (say) £500, then in the event of a claim you have to pay the first £600 of the claim, and the insurance company has to pay for any balance above this amount - a voluntary excess can often reduce the cost of your motor insurance policy however, you will have a larger amount to pay in the event of you being involved in an accident.

Car security (alarms, immobilisers etc) - It's a sad fact that car theft and break-ins are commonplace within most towns and cities. If you have fitted a car alarm and immobiliser it is less likely that your car will be stolen - you can therefore expect to pay less for your motor insurance policy than someone who has no security device on their car.

Any other things I should be aware of when choosing my motor insurance?
Yes - lots of them, lets go through the most important ones :

Motor insurance is a legal requirement - A motor insurance policy provides you with cover (and therefore peace of mind) against potentially very high costs. After all, if you cause an accident that results in loss of life or permanent injury to other people, the cost of the claim can be into millions of pounds. You cannot drive a motor vehicle without a valid motor insurance policy, and there are stiff fines and penalties (including a jail sentence) if you are found to be driving without having motor insurance cover.

Proposal Forms - written and verbal - When you arrange your motor insurance you will either: complete and sign a written Proposal Form; or you will complete the Proposal Form verbally (over the telephone with a sales operator - in which case the telephone call will be recorded and can be replayed if required). Each of the questions that you answer at the Proposal Form stage is the basis of the insurance contract. So, if you have answered any of the questions incorrectly then the Insurance Company can declare the policy null and void from inception. A worst case scenario is that you have altered the engine management chip in your car, or you have fitted high performance parts to your car - but at the Proposal Form stage you simply said that your car was a basic 1.6 GL. You then have an accident and look to your Insurance Company to pay for the cost of your car, as it is a total write-off. The Insurance Company sends an Inspector to view your car and the Inspector identifies that your car was not a basic 1.6GL but had been modified. The Insurance Company can declare your policy to be null and void from inception and can (legally) refuse to pay you any money whatsoever. So, always make sure that you answer every question accurately (and honestly).

Your motor insurance Certificate and Policy - Your motor insurance certificate is often a "shortened" one-page document and is normally accompanied by your insurance policy document (which can often run to many tens of pages). You must study your policy, as this is the document that forms the basis of the contract between you and the Insurance Company. There are many different types of policy wordings/rules (for example, your policy may not cover drivers of your car who are under 25 years old) so make sure that you read it and that you have asked about the policy conditions at the time you take it out.

Value (cost) of your car - The value that you put on your car at the time you take out the policy is not necessarily the amount that you will receive if your car were to be written-off. All cars depreciate on a monthly basis and are therefore worth less at the end of a year than at the beginning of a year. In addition, you may have paid full dealership price for your car a few years ago and the cost of buying a similar car today may be much less. So, if you are unfortunate enough to be involved in an accident that results in your car being declared a total loss (write-off), you have to be prepared to be offered less than you might think your car was worth. Most Insurance Companies will now try and find you a replacement car, with similar age and mileage to your own car, and supply it directly to you rather than settle a cash amount upon you.

Multiple policy discounts - Many Insurance Companies will offer you a discount if you have more than one policy with them (for example you may have your household insurance policy and car insurance policy with a different insurance company, as they were the two best quotes that you obtained when you took out your insurance). It's worth checking out when you next obtain a quotation.

And finally… Remember to shop around and get the best cover at the best price (if something appears to be cheap, you may well regret it if you come to make a claim and find policy exclusions, large hidden excesses, poor claims service etc.). An independent intermediary (like us), agent or broker is always worth trying, as well as one or two of the "big name" direct insurance companies. Remember, there are over one hundred companies out there, all trying to make a profit out of motor insurance - and each of them will have a different set of underwriting criteria, such that what may be deemed to be a poor (and high cost) risk to one insurance company may be seen as an acceptable (and low cost) risk to another insurance company.

The old adage about "you get what you pay for" is never more true than when choosing your insurance cover - make sure that you get the best cover at the best price.