Car Insurance Guide

Category: Car insurance
Date: 9/18/2008

What is Car Insurance?

Car insurance is a legal requirement for anyone who drives on a public road. This is so that other drivers are not faced with a bill if they are involved in an accident which is not their fault, or if they are injured and can't earn the same income in the future. There are three different levels of car insurance:

• Fully Comprehensive – the highest level of cover. This provides insurance for other drivers (called third party liability) if you are at fault, and protects you against the costs involved if your car is stolen, as well as repairs to your own car if it is damaged or catches fire.
• Third Party Fire & Theft – covers third party liability and any costs associated with a fire to your car, or if it is stolen.
• Third Party Only – this is the most basic form of cover which you need to have to be legal on the roads and just provides third party liability cover.

Who is it suitable for?

Anyone who drives a car must be insured to do so. If you don't have your own policy, you need to be a named driver on someone else's policy which allows you to drive that particular car.

• Fully comprehensive cover is more expensive than third party only cover and is suitable if you want the maximum protection available. There will be a range of optional extras that you can choose from to maximise your cover.
• Third party only cover is OK if you just want to meet the minimum legal requirement. It's probably also adequate if you drive a car that's worth very little.
• If you want just a little more protection than the basic level but can't afford fully comprehensive, third party fire & theft may be for you, but remember it won't cover any costs associated with fixing your car if you are at fault in an accident. It's worth getting a quote for fully comprehensive because you may find that there is little difference between the two, as it's the third party liability element which costs the most.

What should you look out for?

When selecting car insurance and comparing prices, you need to make sure you are comparing like with like. The main things are:

• Level of excess –The excess is the amount you need to pay towards a claim. The higher the excess is, the cheaper the premiums will be. You can opt for a higher excess to reduce premiums.
• Assumed mileage – the more miles you do, the more your insurance will cost you. If you are a low mileage driver you should benefit from lower premiums

There will be a number of extra types of cover which you can opt for. When you get an insurance quote (particularly online) the insurer or comparison site will make assumptions about whether or not to include the various optional extras as default. So your cheap premium may add up if you add other covers in after your initial quote, or an expensive quote may be more attractive if you remove unwanted extras.

These optional extras typically include:

• Protected no claims discount – if you have earned a full no claims discount (typically a period of 5 years without a claim) you can elect to protect this by paying an extra premium. This can be a really valuable extra as your no claims discount can save hundreds of pounds in premiums.
• Legal Expenses Cover – you can be insured for the costs of taking a case to court if you need to and to recover any expenses you incur if you're hit by an uninsured driver, or other uninsured losses (such as your excess). This can also include cover for loss of earnings and legal advice.
• Breakdown cover – such as roadside assistance in the event that your car lets you down.

What to do next?