January 11th, 2010 | 
Author: Should you ever have an accident, your car insurance is there to give you a degree of financial protection. 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.
Sadly not all insurances include fixing the damages to your car, protecting against liability, legal fees or damage to any other property involved in the accident. 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 will protect not only you, but your vehicle, and third parties in the long run. If you are planning to drive in the UK, you are required to purchase car insurance. Your level of protection will depend on the type of car insurance policy you choose to take out.
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
• Effects of car depreciation
• Your circumstances may have changed
• Financing could place your car in a greater risk banding
• You could find a policy which includes cover for loss of personal items
• Breakdown cover may be included in some policies
• You may find inclusive legal cover offered by some insurers
• You could find a policy which includes cover for a 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. All it really means is 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. This is also the case with car insurance as they can often consolidate your insurance needs into an all inclusive package which most insurance companies only make available to brokers.
Car depreciation occurs as a result of the age and usage of a vehicle. No sooner than you have driven your new car off the showroom floor the car begins to depreciate. Your car’s value will decrease every year. You should therefore insure accordingly by adjusting your car’s declared value at renewal time. This is an obvious statement but can be surprisingly often forgotten. So always ask your broker to check the value of your car against its blue book value, rather than 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. It is therefore important that this is what you declare the car’s value as. The more expensive a car is the more it can cost to insure. You may be lucky enough to find a policy which offers to replace your car with the same of similar following an accident, but this is not usually the case. There is however an insurance product called Vehicle Replacement Insurance which does just that! Click on the link to find out how it works in more detail.
Your car insurance could be affected if your circumstances have changed since your last renewal. Perhaps you do not drive as far or often as you did, or perhaps your children have grown and want the keys to the car. Get insured according to any changes in circumstances – no matter how small you think they are. You can get a significant discount from your insurer if you are a low mileage driverIt’s not always as expensive as you may think to add additional drivers to your existing policy – particularly if you wait until renewal time. By waiting until renewal time you may be able to avoid the administration costs of adding extra drivers.
WHICH LEVEL OF CAR INSURANCE IS THE BEST CHOICE?
There are three different types of cover available in the UK.
1. You must by law have the minimum of Third Party Insurance in many countries, including the UK. If you are involved in an accident, this type of cover will protect you financially against damage to the other vehicle or its occupants. Third Party Insurance acts as security against liabilities for damage to another person in a vehicle accident. This does not cover any damage to the vehicle or the driver of the vehicle. There is no reimbursement of repair costs with this type of insurance.
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. If your car has a low market value, you may find this to be the best type of vehicle insurance. A leased or financed vehicle will require a fully comprehensive insurance cover.
3. The widest coverage is provided by a Fully Comprehensive insurance policy – or “fully comp”.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. If the vehicle value is higher than the insured can afford to pay to replace it, then fully comprehensive is the preferred choice. The gap between what your insurance payout would be and the cost of buying a new car can be bridged with specialised insurance products like Finance Gap Insurance or Vehicle Replacement Gap Insurance – you can easily find out more about these products by going on-line.
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
• Gender of the policyholder
• Your marital status
• Inner city, suburban or rural residential locations
• The size of the car and engine
• 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 personis considered more responsible for their actions than a person is with no commitments. It stands to reason that a married man with children has more responsibilities and the insurance companies will therefore consider this person a lower risk than a single male in his early twenties driving a WRX.
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. Car modifications therefore equate to increased risk for insurance companies, and will result in increased premiums.
2. Driver History
• Years of driving experience
• Claims made in previous years
• 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. This is confirmed or denied by the number of insurance claims made during the previous five years. Driving convictions such as speeding, hazardous driving or driving while intoxicated will affect the premium. This does not include parking violations.
Your annual mileage is a factor too. The more time the car is on the road, the greater the risk of having 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
• Size of engine and performance category
• 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. A named driver with several years of insurance cover and no claims against his or her name could find that fully comprehensive car insurance costs almost the same as a lesser level of cover, but with additional benefits such as a free courtesy car etc. Many on-line insurance buyers find that for just a small premium increase, many additional benefits can be included. Leased or financed vehicles require comprehensive insurance. The leasing or finance company will require reimbursement from the policyholder for damage to the car. This will be covered if you have fully comprehensive insurance.
There may be other benefits included in your car insurance policy, which are not always necessary but sometimes advisable:
• Breakdown insurance
• Provision of a courtesy car while yours is in the garage
• Roadside or breakdown cover
• Some insurers may offer you legal cover included in your policy
• Cover for your windscreen
• No Claims 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. The right car insurance price is easy to find when you’re on a great website. An insurance aggregator website is a good place to get you started. They are fairly easy to use. As the buyer you only need to answer the questions once and they will search the insurance market for you. 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. It’s important to remember that you should compare like-for-like quotes when looking at different insurers. This is more difficult than you may initially think. Good luck.
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