Whether you’re a new or seasoned driver, obtaining car insurance can seem like a daunting prospect; there are so many obstacles to navigate in your quest to obtain a decent policy that’s sensibly priced. With a little bit of research though, and even a loose grasp on the basics, you’ll be safely on the road in no time. We’re all familiar with the flashy – and often bizarre – car insurance adverts that come flooding into our living rooms every evening, but the big companies have good reason to be gunning for your attention.

If you’re going to drive, you need car insurance – it’s that simple. While no-one wants to envisage the worst-case scenario, having car insurance means that should an accident ever happen, you’ll be financially protected. Although that’s the essential purpose of car insurance, its scope varies, with a range of cover options available to suit the needs and budget of each motorist.

The terminology may occasionally seem obtuse, but it’s actually pretty straightforward. The insurance choices available can be broken down into clearly defined categories, so don’t let the zany adverts put you off. This comprehensive guide to car insurance aggregates all the vital information, helping you become better informed and prepared to find the policy that’s right for you.

The minimum level of car insurance you are legally obliged to have – Third-Party – offers a basic level of protection. That is, if you happen to cause an accident on the road, your insurer will cover any liabilities incurred by the other party involved. So should you inflict any damage to the other party or their car, you won’t have to pick up the bill.

The next level of car insurance available to you is Third-Party, Fire & Theft. Again, this covers any financial costs that may arise from bodily injury or vehicular damage for the other party involved, but it comes with added protection. If your car happens to be stolen or damaged by fire, either through arson or accident, you’ll be financially protected. Some levels of Third-party, Fire & Theft insurance come with protection against vandalism too, though it’s worth checking this with the insurer prior to purchasing a policy.

Neither of the foregoing insurance types provide financial protection against damage that you inflict upon yourself or your vehicle. The third type of car insurance commonly available – often termed ‘fully-comp’ – will. Fully-Comprehensive car insurance covers everything that Third-Party, Fire & Theft does, but it also protects you against any financial liabilities that arise if your car is damaged in an accident that you have caused. You may also be protected if you happen to have an accident involving an uninsured driver; so when someone else can’t pay up for the damage done to you or your car, you’ll still have peace of mind. Many forms of Fully-Comprehensive car insurance come with added extras and bonuses built-in, so it’s worth checking what you’re protected against – and more importantly what you’re not.

What is third-party insurance?

Choosing third-party insurance can be the right decision for a number of reasons. Many people, when purchasing their first car, can only afford an older model, and find that any level of cover other than third-party can end up costing more than the car itself. No-claims bonuses can also play their part, for if you’re fresh out of driving school and new on the road, you’ll find other types of insurance too expensive on account of your tender years or lack of driving experience. Third-party insurance is therefore a good option when you’re on a small budget: it will cover the most basic liabilities for the lowest cost. If you happen to cause an accident and damage another car – or worse still, its driver – you’ll be financially protected against any costs that are incurred.

Many forms of third-party insurance also come with additional options available. Whether you’re keen to purchase breakdown cover or obtain protection against the costs of repairing a chipped windscreen, you can search around to find a third-party policy to suit you. Third-party insurance is a basic level of protection that allows you to build up your no-claims bonus, which will lead to reduced insurance costs in the future. Of course, the downside to third-party insurance is that neither you nor your car are protected against injury or damage, so if you’re starting out with an expensive car – or can’t afford to replace the one you have – it’s worth contemplating a more extensive level of insurance.

What is third-party, fire and theft car insurance?

Third-Party, Fire & Theft will, of course, cover you for everything that third-party does; it also offers some extra coverage however. Accidents on the road are not the only liability to think about when insuring your car: there’s also the potential for damage caused by other sources, namely fire and theft. If you leave your car on the street overnight or live in an area particularly vulnerable to car crime, this can be a wise option to consider. Third-Party, Fire & Theft will protect you against damage caused by fire, whether malicious or accidental, and provide protection if your car has been stolen, or indeed damaged in an attempted theft. Often costing scarcely more than basic third-party insurance, it’s worth considering the increased level of protection that Third-Party, Fire & Theft offers. Be aware, of course, that this level of cover will not account for any damage caused to you or your car in an accident caused by you. If you want fully comprehensive cover, it stands to reason you’ll need fully comprehensive insurance.

What is fully comprehensive insurance?

If you want to be covered for every possible eventuality, fully-comprehensive insurance is a must. Not only are you covered for any damage caused to another driver and their car, but you’re protected against any financial costs that you or your own vehicle may incur in the process. Understandably costing more than third-party, or third-party, fire and theft, fully comprehensive is the right choice for anyone seeking to protect an expensive or new vehicle against potential damage.

With Third-Party or Third-Party, Fire & Theft, there are a myriad of optional extras that can be added on to the monthly costs; with fully comprehensive however, most of these services are included in the price. Whether it’s windscreen cover, protection against breakdown costs or even a courtesy car you may need, fully comprehensive insurance affords you the peace of mind in any given situation. If your car happens to be written off in a traffic collision, you’ll find that most insurance companies will offer you a replacement or refund to the value of the car itself. You’ll also be fully protected against vandalism. Whilst Fully Comprehensive will cover you for such eventualities, as well as the financial burden of personal injury, you should always check the policy details. Make sure you know exactly what’s included before purchasing any type of insurance.

All companies essentially price their car insurance policies based on how much of a risk you and your car may pose. The more of a financial risk you pose, the more the insurance policy will cost. It therefore follows that the best way to save on your car insurance is to lower that risk, and there are a number of ways to do so.

Firstly, you can actively protect yourself and your car. If you’re able to park in a garage or driveway, rather than on the street, insurers will take into account the reduced potential of theft or vandalism. If you complete an approved driver training course, you’ll immediately pose less of a risk to others, too. There is always the option of adding a named driver to the policy, as if you share the car with an experienced motorist, you’ll find that the price of the policy will decrease. This is because the insurer presumes that you will spend less time on the road, and consequently cause less potential accidents. If you happen to have more than one car, it is also advisable to insure them with the same company: insurers will often provide multi-car policies, which can dramatically reduce your premium.

There are also simpler ways of lowering the price of car insurance: you only need to shop around to find that prices vary hugely, so compare the quotes to find the best cover at the best price. You can also work on your no-claims bonus, and even tweak your insurance excess; the most effective way to lower your insurance costs is simply to drive safely.

No claims bonus 

So what happens once you’re on the road and have avoided an accident for the first year? You’ll receive a reward of course; a no-claims bonus. If you haven’t made a claim on your insurance in the first year of driving, the insurer will reward you with a discount on your second year’s renewal. The insurer will continue to do so for every year that you don’t make a claim, until – usually – the fifth year. This is often transferable to other insurers, so it’s definitely worth researching when you’re thinking of swapping policies.

Regardless of who your policy is with, no-claims bonuses can lead to some pretty substantial savings, so it’s certainly worth being careful on the road for financial, as well as for safety, reasons. Recognise and follow speed limits, stay focussed on the road and make sure your car is in good health: by ensuring you adhere to these simple guidelines, you’ll not only be protecting yourself and others, but your car too. If you manage to avoid causing any accidents, you’ll soon be racking up those years on your no-claims bonus and saving some cash into the bargain.

Insurance Excess 

In the event that you cause an accident, the amount of insurance excess on your policy is the amount you will have to pay towards the financial cost of the damage. This figure is usually a combination of voluntary excess, which you can adjust when taking out the policy, and a compulsory excess, that the insurer will determine according to your credentials. Voluntary excess is optional: if you choose to take it out when applying for insurance, you’ll find the cost of your premiums will decrease as the voluntary excess increases. Compulsory excess is, of course, obligatory, and will often be higher for younger and less experienced drivers. The insurance excess will be deducted from the company’s payout if you happen to have an accident, so if the damage incurs a fee of £2000 and your insurance excess is £200, the company will only pay £1800 towards the financial cost and leave you to pay the rest. If the fault of an accident is disputed, the insurer will often take the insurance excess to pay for the damages; if it is determined that you were not at fault, the company will usually refund this amount.

It is worth mentioning that although voluntary excess will reduce the price of your insurance policy, you should always exercise caution. Don’t get carried away with increasing the amount you’ll voluntarily pay in order to get a cheap quote: an insurance policy is a legally binding contract, and the company will expect you to cough up the price you’ve stated.

The most important legal requirement to be aware of with car insurance is that you have to have it! In 1930, a car insurance law known as the Road Traffic Act was passed in the United Kingdom, which stipulates that all drivers must possess at least third-party car insurance. This holds you responsible for any damage you may cause while driving and protects others against the financial costs of damage to their person or car.

There are, of course, other legal requirements to consider before purchasing your preferred car insurance. Firstly, your car must be registered: it’s illegal to drive any car that has not previously been registered with the DVLA. Secondly, you must keep your car roadworthy: if your vehicle is over three years old, you must produce an MOT certificate when purchasing or renewing your car insurance. Lastly, your road tax on the insured car should be up-to-date: insurers won’t provide you with a policy unless you provide them with proof of payment.

Further to this, there are legal requirements pertaining to the policies themselves to take into account. When providing information to the insurer about who you are and the car you’re driving, you must be honest: if something isn’t quite right, the policy becomes null and void. This also applies to any changes that occur whilst the policy remains active, so you must pass such information on to the insurer to ensure that any claim you make is upheld.

Finally, always make sure that your car insurance policy is close to hand. Failing to produce the necessary documents to the police upon being ordered to do so is a legal offence. If you can’t come up with the policy within a stipulated period of time, you could end up being prosecuted.

The cost of car insurance will primarily be determined by the choices you make when purchasing a policy: if you want extra coverage against potential liabilities and their financial costs, you’ll end up paying more. However, there are also factors pertaining to you and your car that will affect the price you ultimately end up paying.

The type of car you want to insure is naturally of prime importance. Needless to say, the more expensive your vehicle is, the more you’ll generally pay to insure it. Of course, if you’re opting for breakdown cover when insuring a time-honoured ‘old banger,’ this will drive up the price of the policy too. The location of your car is another aspect to take into consideration, as insurance companies are likely to charge you more if it’s being kept in a neighbourhood prone to crime. If you live in the city, you could end up paying more for your insurance than if you lived in the countryside.

If your car is likely to be clocking up a lot of mileage, you could pay more than if it were only being treated to the odd Sunday outing. Furthermore, younger or less experienced drivers will pay more for coverage than those with documented proof of their skill: typically, young males will pay more than any other group for their car insurance. Drivers who complete an accredited scheme such as Pass Plus can reduce their premium however. Needless to say that if you cause an accident, you’ll pay more for your insurance the next time you renew it; driving safely definitely has its financial rewards.

The cost of car insurance will primarily be determined by the choices you make when purchasing a policy: if you want extra coverage against potential liabilities and their financial costs, you’ll end up paying more. However, there are also factors pertaining to you and your car that will affect the price you ultimately end up paying.

The type of car you want to insure is naturally of prime importance. Needless to say, the more expensive your vehicle is, the more you’ll generally pay to insure it. Of course, if you’re opting for breakdown cover when insuring a time-honoured ‘old banger,’ this will drive up the price of the policy too. The location of your car is another aspect to take into consideration, as insurance companies are likely to charge you more if it’s being kept in a neighbourhood prone to crime. If you live in the city, you could end up paying more for your insurance than if you lived in the countryside.

If your car is likely to be clocking up a lot of mileage, you could pay more than if it were only being treated to the odd Sunday outing. Furthermore, younger or less experienced drivers will pay more for coverage than those with documented proof of their skill: typically, young males will pay more than any other group for their car insurance. Drivers who complete an accredited scheme such as Pass Plus can reduce their premium however. Needless to say that if you cause an accident, you’ll pay more for your insurance the next time you renew it; driving safely definitely has its financial rewards.

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