Car insurance protects you and your family financially if you ever have a motor accident, be it your fault or not. Vehicle insurance is a necessary expense which all motorists must take into account. You need a good car insurance policy for the financial protection it will afford you in the event of an automobile accident.
Not all insurance policies cover you against damage to your own vehicle, or liability for property damage or legal fees. Bolt-on niche insurance products such as inconvenience cover, gap insurance and even legal protection insurance can prove to be invaluable additions to your comprehensive car insurance to ensure an accident does not end up costing you more than you can afford should the worst happen.
Choosing the right car insurance product will protect you, your vehicle, and other parties in the long run. You must prove that you have bought car insurance if you plan to drive in the UK. Your insurance company will cover you at a level determined by the type of policy you choose.
WHY YOU SHOULD SHOP AROUND FOR NEW CAR INSURANCE
Shopping around for car insurance is very important for several reasons:
• You may find better quotes
• Depreciation will affect the value of your car
• Your circumstances may have changed
• Car financing could put you and the car in a higher risk category
• It may be possible for an insurer to cover the loss of certain personal effects
• You may find a policy which includes breakdown cover
• Some insurers may offer you legal cover included in your policy
• You may find an insurer covering your second car
• You may be offered an introductory discount
Just because you have used the same insurance company or insurance broker for several years, does not mean you are getting the best deal. It really only means just that – you have used the same insurance company or insurance broker for the past several years.
If your broker manages your entire insurance portfolio then he is in the best position to get you the best deal, as he already has information about your demands and needs. They may be able to consolidate those demands and needs into a package which often will only be available via a broker.
The value of your car will depreciate according to the amount of use as well as it’s age. Car depreciation starts as soon as you drive it away from the car dealership. The value of your car will decrease every year. You should get a reduction in your premium to reflect this. This is logical but often people can overlook the obvious. For this reason you should make sure that you have your assumed car’s value checked against its current blue book value as opposed to against the purchase price. This is because even fully comprehensive policies will only cover a vehicle to its blue book value rather than it’s purchase price. So make sure that that is what you declare the car’s value to be. It will usually cost more to insure a more expensive car. The exceptions to this rule may be when an insurance company offers to replace your car in the case of the accident for the exact same car or new car of same specification, but this is rare and the chances are that this will not be the case. There is however an insurance product called Vehicle Replacement Insurance which does just that! Finding out more about vehicle replacement insurance is easy, just click on the link.
Your car insurance could be affected if your circumstances have changed since your last renewal. You may have switched jobs and not drive as many miles per year or have paved the front lawn and turned it into off-street parking. Change your insurance details to reflect these changes in circumstance. You can get a significant discount from your insurer if you are a low mileage driverYou can add additional drivers to your policy for relatively little expense, especially if you wait until it’s time to renew. Adding additional drivers mid-year often incurs administration fees which could be avoided if done at inception or renewal time.
WHICH LEVEL OF CAR INSURANCE IS THE BEST CHOICE?
Insurance cover in the UK falls into three different categories.
1. You must by law have the minimum of Third Party Insurance in many countries, including the UK. It provides coverage to any third party involved in an accident with the insured vehicle including passengers. This type of insurance covers your liabilities in the event of damage to another vehicle or person in an accident. This does not cover any damage to the vehicle or the driver of the vehicle. This type of insurance will not cover repairs to your vehicle.
2. Third Party, Fire and Theft Insurance will cover the benefits of third party insurance and includes any financial loss to the insured vehicle caused by fire or theft. For a vehicle that does not have a high market value, this is often the best cover for the average driver. A car which has been either leased or financed must have a fully comprehensive insurance policy.
3. “Fully Comp” will give you the widest insurance cover for your vehicle.It provides the basic insurance of third party, fire and theft and covers damage to the insured vehicle and any bodily injury suffered by the policyholder in an auto accident. A fully comprehensive policy is a better choice if the value of the car is more than you could afford if you needed to replace it. There are specialised insurance products like Finance Gap or Vehicle Replacement Gap which can top up the gap between what your insurance company will pay out and the cost of getting a new car – you can find out more online by doing a simple search.
There are lots of factors affecting car insurance and most insurers offer secondary products which can meet any specialised needs of the policyholder.
FACTORS AFFECTING CAR INSURANCE
1. The Policyholder
• Age of the policyholder
• Insurance companies favour woman policy holders
• Your marital status
Rural or Urban
• Engine and car size
• Vehicle replacement cost
• Any modifications that have been made to the vehicle by its owner
A younger less experienced driver will pay a higher insurance premium than someone with several years driving experience.
A married person is considered more responsible for their actions than a person is with no commitments. It stands to reason that married men with kids have more responsibilities than single men and the insurance companies therefore consider married men a lower risk category.
Where a person lives also affects the insurance cost. If you live in the country or in a low crime rate location you are likely to get a lower premium than if you are a city-dweller.
A powerful car is more likely to lose control at the hands of younger drivers: expensive cars cost a lot to replace if scrapped and should they simply require repairs the sum of the replacement parts often costs more than the used car’s value, making more powerful cars very expensive to ensure.
Modifications are more likely to alter the vehicles safety; performance is improved, and handling may be compromised making the vehicle more unpredictable. The insurance company therefore sees these factors as an increased risk and will increase their premiums as a result.
2. Driver History
• Years of driving experience
• Claims history
• Any convictions for driving offences
• Annual mileage
The number of years a person has been driving suggests their understanding of the rules of the road, shows the driver has built up experience of driving under varied driving conditions and has attained a certain level of confidence while behind the wheel. The number of insurance claims made in the previous five years will either confirm or deny these assumptions. Driving convictions such as speeding, dangerous driving or drink diving will affect the premium. This does not include parking violations.
Annual mileage is a factor too. The more a vehicle is on the road, the higher the risk for an accident.
3. Vehicle History
• Current vehicle value
• If you own the vehicle, or is it leased or financed
• Make and model of the vehicle
• Engine capacity and performance
• Modifications to the vehicle
If the vehicle has a low book value, it may not seem to be cost effective to pay for comprehensive insurance; however this is not necessarily the case. If the named driver has several years no claims then fully comprehensive insurance could actually cost the same as third party fire and theft cover, but with additional perks such as windscreen cover and legal assistance etc. Many on-line insurance buyers find that for just a small premium increase, many additional benefits can be included. If you are leasing a vehicle or have acquired it via a finance company, then you will need to provide fully comprehensive insurance for the vehicle. This is so that they can be reimbursed for any damage caused to the car by the policyholder. Comprehensive insurance will cover this.
There may be other benefits included in your car insurance policy, which are not always necessary but sometimes advisable:
• Breakdown insurance
• Courtesy car included
• Roadside or breakdown cover
• Some insurers may offer you legal cover included in your policy
• Cover for your windscreen
• NCD protection
• Compulsory or voluntary deductible amount
Choosing the correct insurance and getting the best quote can be daunting as there are so many variables to consider. If a website was built properly its users will find it easy to get a great price quickly and easily. An insurance aggregator website is a good place to get you started. On-line insurance aggregator websites are generally very easy to use. You only need to answer the questions once, and then they will select products to show you based on your answers. After the site has collected the quotes, you can then compare different policies, as well as being able to save your quote, amend your requirements if necessary and if you are happy you can then buy on-line. Before you commit to a purchase it’s a good idea to first tell your broker the results of your search to see if he can get you a better deal. When comparing quotes on-line, remember to do so on a like-for-like basis. This may not always be as simple as you at first think. Good luck on finding the best policy for your needs.
These are industry news from around the globe and not from Australia only. This is automated content that is provided to us. We are not held responsible for any of the content. This is for informational purposes only and should you require specific information for your case please contact a qualified adviser. For online car insurance quotes in Australia, please visit online car insurance.