In many parts of the world having car insurance is a legal requirement. There are different levels of cover available, and it is important that you choose the right cover to suit your particular circumstances. All car insurance is designed to offer some sort of financial protection in the event of an accident, or in some cases, if your vehicle is stolen or is damaged by fire. Car insurance will also pay out for injuries sustained to other drivers, their passengers, pedestrians, and their property.
In recent years the cost of insuring your vehicle has fallen. Insurance providers have agreed to pass on saving from reforms in the civil litigation system in 2013. This litigation offers insurers more protection against fraudulent whiplash claims, and lawyers’ excessive costs, for example, allowing insurers to become more competitive with their premiums.
Car insurance is an essential purchase in the United Kingdom as stipulated by the Road Traffic Act 1988, although there are some exceptions. If your car is currently off the road, and you do not drive it, you can declare this via a Statutory Off Road Notification (SORN) which is authorized by the Driver and Vehicle Licensing Agency (DVLA). As long as your fill in the required paperwork and continue to keep your car off the road you will not be required to insure it.
If you are found driving your vehicle without the appropriate insurance you will most probably receive a hefty fine, and you could even be disqualified from driving. In the UK there is no top limit to the maximum fine you can receive, and you will receive either six, or eight penalty points on your license. The police also have the authority to seize and destroy your vehicle if you are driving it without insurance; so the consequences of driving without insurance can be severe.
In the UK there are three main types of car insurance available. These are: third party, third party, fire and theft, and fully comprehensive.
Third party insurance is the most basic type of car insurance on offer. It covers injuries sustained by other people, and damage to their property, but does not cover damage to your own vehicle. This type of insurance is the bare minimum required by law, although, surprisingly, it is not always the cheapest.
Third party, fire and theft insurance is similar to basic third party insurance, but it also pays out for the cost of repairs, or a replacement, if your car is stolen or damaged by fire.
Fully comprehensive insurance is the highest level of cover that you can buy. It offers protection against damage to your own car in addition to accidents involving other people. Some insurers also offer courtesy cars and cover for legal expenses, although you may be asked to pay an additional fee for these services. In addition, a fully comprehensive insurance policy also gives you the option of adding other drivers to your policy, but you must ensure that the main driver is the one who drives it most often.
The cost of car insurance varies considerably between providers, and depends upon a number of different factors namely: your age, your home address, the type of car you drive, your occupation, where you keep your car when not in use, what you use it for, and whether you have any prior motoring convictions.
If cost is a serious concern you can reduce the size of your premiums by offering to pay a higher excess. The excess is the amount that you would have to pay yourself towards any claim that you might make. Be careful though when setting the amount of your excess that you do not set it higher than you can comfortably afford. Young people, in particular, may be tempted to set the excess high to keep their costs down as their premiums are usually higher than those offered to more experienced drivers; this is because statistics show that they pose a higher risk to the insurer.
For every year that passes during which you do not make a claim on your car insurance policy you will receive a no claims bonus. This bonus leads to a discount when your policy is up for renewal, although this may not always result in lower premiums as this price can be affected by other factors such as a change in circumstances, or a change in the market. This no claims bonus will also remain valid if you make a claim for an accident that was not your fault.
If you own and regularly drive a vehicle then car insurance is a must. Not only do you run the risk of being significantly out of pocket if you have an accident, or if your car is lost or stolen, you also run the risk of receiving a hefty fine, and even of being disqualified from driving altogether if you do not have a policy in place. If you are at all unsure about the type of policy you should take out then it pays to talk to an experienced insurance broker. They often have access to the most competitive deals, and can find you a policy that best fits your requirements.