In the majority of countries it is a legal obligation to take out car insurance, unless your car is officially declared to be off the road. Choosing the right car insurance to suit your needs can be difficult as there are three main types of car insurance to choose from, and a number of different add ons on offer. Prices can also vary quite dramatically between providers, so it is hard to know who is offering the best deal.
The three main types of car insurance are third party, third party, fire and theft, and fully comprehensive cover. Third party is the minimum type of insurance you can have by law and it covers injury to other people and damage to their vehicles, but not loss or damage to your own car. Third party insurance, although basic, is not always cheaper than the other types of car insurance that are available. It is, however, worth considering if you are struggling to find reasonably priced comprehensive cover, you live in an area that is considered to be ‘high-risk’ with regard to crime, you have not earnt a no claims bonus, or your car is worth a relatively small amount so you could afford to replace it out of your own pocket should you have an accident.
Third party, fire and theft is very similar to standard third party insurance in that it covers damage and injury caused to other people, but, in addition, it also covers the cost of repairs or replacement of your own car if it is damaged by fire or it is stolen.
Fully comprehensive cover is the highest level of cover that you can buy. It features all the benefits of third party, fire and theft insurance, but it also covers you against damage to your own car even if the accident was entirely your fault. If you take out a fully comprehensive car insurance policy you can claim for accidental damage, vandalism, and repairs after an accident. You might also be covered to drive another person’s car with their permission (although in this case the cover is limited to third party only).
When choosing the right car insurance check the policy carefully to see exactly what it covers before you buy. Fully comprehensive insurance usually includes cover for windscreen damage, cover for the theft of personal belongings that are stored in the car, the car stereo, sat-nav, or speakers, and the theft or loss of keys, plus it often includes vehicle recovery and transportation in the case of an accident. Other things to check are whether you can add named drivers to the policy, whether you have to use a repairer approved by the insurance company, and if you will be given a courtesy car whilst your own vehicle is being repaired.
A no claims bonus is offered by insurers to customers who do not claim on their policy. The less claims you make the higher your bonus becomes. In general, you receive a 30% discount after 1 year, a 40% discount after 2 years, a 50% discount after 3 years, a 60% discount after 4 years and a 65% discount (or even more) after 5 years. If you do have an accident and make a claim it is standard practice to deduct 2 years’ worth of no claims bonus, therefore your premiums increase.
It may be tempting to simply not make a claim for a minor accident; however, insurers stipulate that you must notify them of any accidents that you are involved in regardless of whether you submit a claim on your policy, or future claims may be refused. Another way of protecting your no claims discount is to purchase ‘no claims discount protection’. This allows you to submit one claim in one year, and two claims in three years without affecting your no claims bonus.
All insurers include an excess in their car insurance policies, and this is an important consideration when choosing the right policy for you. The excess is the amount that you have to pay towards any claim; in general, the higher the excess, the lower your premium, but make sure that this excess is set at a figure that you can comfortably afford.
When you do find a suitable car insurance policy then bear in mind that it is important to keep your insurer up to date with any changes made to your vehicle, or to your personal circumstances, otherwise you may find that your policy is no longer valid. Factors to consider are a change of address, modifications made to your car, a change in your occupation, points added to your license, if you have had an accident, whether you have started to use your vehicle for business purposes, and whether you have made changes to the vehicles’ alarm system or the place where you regularly park your car.
Choosing the right car insurance can take time, and there are many important factors to consider when taking out a policy. You can compare car insurance policies online in order to find the best deal, or, alternatively, consult an insurance broker who will take into account your individual needs and requirements, and will find you a policy that not only gives you adequate cover to suit your circumstances, but also saves you money.