Car Insurance Explained

We know it can be confusing sometimes understanding what all of the different policies and ‘add on’s mean, so we have put together some information that should break it down easily to understand.

Fully Comprehensive

Fully comprehensive insurance is normally the most expensive type of insurance but it does cover everything, including; damage to your car, damage to any third party’s vehicle, damage to any third party’s property and any personal injury costs. On very old and cheap vehicles, sometimes the annual comprehensive premiums can cost more than the car is worth. However it is certainly worth having if your car is stolen or a write off if you have paid using a credit agreement or loan because otherwise you will still have to continue paying the finance.

Third Party Cover

Third Party Insurance is basically the minimum legal cover allowed and is normally much cheaper than any other types of insurance policies. It covers damage to the other driver’s car or compensation but if your own car is stolen, burnt, damaged or written off you are not covered for anything. You can alter your policy using an add-on insurance such as Fire and Theft which will cover you in case your car is burnt or stolen, prices on this vary depending on insurance companies. Although Third Party Cover insurance is usually cheaper than fully comprehensive insurance, the price has risen significantly in recent years as younger drivers tend to purchase this type of insurance over fully comp, so the insurance companies see this as a greater risk, thus increasing the price. It is an idea to shop around and do some price comparisons of both types of policies before deciding.

No Claims Discount

If you have had no accidents (therefore no claims) within your first year of your insurance policy, most insurance companies will offer a discount which can be anything from up to 25%-35% on your next annual insurance premium. After four to five years if you have had a further no claims this can rise from anything up to 60%-70%. This is because your insurance company will see you as a low-risk, safe driver therefore your insurance premiums will reflect this in your annual policy renewal. Some insurance companies will offer the opportunity, if you pay a little extra, to protect your no-claims bonus. Some offer you the chance to have up to 2-3 claims per your annual policy which will not affect your no-claims bonus, this is useful as you never know when accidents are going to happen and it is always good to be protected.

Add-on’s to your policy

Insurance companies often offer add-on’s to your policy, costing a little extra, but they are there to protect you and some can ensure that you are able to get transport should you be involved in a car accident. The available add-ons are:

Protected no claims

As mentioned before, you can pay a little extra to protect yourself if you have to make a claim within your policy year which will not affect your no-claims bonus. This is normally around £40-£60 depending on your insurance company and current cost. By getting this add-on it means that if you do make a claim you do not lose your important no claims discount. It usually protects you against the first one or two claims in a year or over a longer period (again it varies depending on your insurance company’s policies).

Legal Protection

This is an added extra that is designed to cover most legal costs if you are involved in an accident and it wasn’t your fault. It covers the cost of solicitors going after compensation for you, for either an injury, the loss of your car for a period of time, or the cost of your public transport. It adds about an extra £20-£30 on to your policy. To be honest, there are plenty of no-win, no-fee solicitors out there for injury claims, you must have seen the copious amounts of adverts for them on the television, so whether it really is worth this extra add-on is a very grey area. However for an extra £2 - £3 a month (what it would work out to approximately), it might be worth putting your mind at ease knowing you are covered should anything go wrong.

Courtesy Car / Car Hire

If you are in an accident and your car is written off or needs repairs, this will provide you with a car for a while. Most of the time there is a time limit on how long you can have a courtesy car, anything up to 1 week – 1 month (a month is quite rare). It is worth considering if you think you would not be able to manage without a car if you were involved in a car accident.