For drivers in the UK, having car insurance is a legal requirement. Finding the best prices and cover needed for you can be an arduous task. Here is our guide to finding the best car insurance.
What types of cover can I get?
Car insurance policies in the UK can be divided into three categories. These are third party, third party fire and theft, and fully comprehensive cover.
Third party insurance is often believed to be the cheapest option, as it only covers the cost of repairing other people’s vehicles or property, or any costs resulting from an injury to another person. Third party insurance does not cover the costs of any damage to your own car.
Third party, fire and theft policies give you the same cover as third party insurance, but also cover the costs of replacing your car if it is stolen or damaged by fire.
Because drivers who take out third party policies are considered higher risk by many insurers, it can actually sometimes be cheaper to choose the fully comprehensive option. This type of insurance provides you with the most protection, as it not only covers the costs of repairing other peoples’ vehicles but also your own.
What you should do is shop around and compare prices from different insurers, as each company will offer different premiums depending on your situation. It is not guaranteed that a third party policy will be your cheapest option.
You should also consider what type of cover would be most beneficial to your certain situation. If your car is only worth a few hundred pounds, it may not be economical to cover the costs of repairing or replacing it after an accident, and so third party insurance could be a good option for you. On the other hand, if you write off your brand new Porsche in a high speed crash, you may regret not paying that little extra for fully comprehensive cover.
Choosing the right excess
The excess is the amount you will initially have to pay when you make a claim. Almost all policies will include a compulsory excess, but you can also choose to increase this with a voluntary excess.
In theory, the higher your excess is, the cheaper your premium should be. However, you should be careful how high you set your excess, as if it is too high it may become unaffordable to make any claims.
You should try to avoid making smaller claims as this will affect your no-claims bonus, and will mean you will be paying higher premiums in the future. When setting your excess, you should consider your circumstances and what you would be able to afford. If you set your excess too high, you may struggle to have any damage covered.
No-claims bonuses lead to lower premiums
For every year that you drive without making a claim on your car insurance, you will receive a no-claims bonus, or discount. The amount that you will save on your premium will vary depending on your insurer. However, the general rule is that the longer you last without making a claim, the more money you will save on the cost of your premium.
The price of your car insurance depends on your personal circumstances and your level of risk. By making no claims on your insurance, you are proving to your insurer that you are a competent and safe driver, and thus lowering your risk resulting in lower premiums. If you make a claim, this will usually result in you losing some if not all of your no-claims bonus.
How will my premium be calculated?
Your premium is the amount you pay for your car insurance. Everyone has a different premium, and it depends on a number of factors including the type of car, your personal circumstances and your previous driving records. Young drivers are usually faced with the highest premiums, as they are seen as inexperienced and higher risk. On the other hand, if you’re an older driver, with a smaller car and years of no-claims bonuses, you will usually have to pay much less on your premium.
Each provider will calculate your risk in slightly different ways, so it is essential that you shop around and compare car insurance policies when looking for cheap car insurance.