Car insurance explained

Car insurance is a legal requirement in the UK, but do you really know how it works?

If you have an accident and you’re not covered by insurance, your car may be crushed or impounded and it makes it very difficult for anyone else involved to claim back on their policy too.

Don’t be that person. Read on to find out about the different types of car insurance available and work out which one is perfect for you.

Types of car insurance:

Third Party Only

This type of car insurance is the legal minimum. It means your insurer will pay if you have an accident that causes damage to any other person or property (including your passengers) but it does not cover the cost of repairs to your own vehicle – you are responsible for these.

Third Party car insurance is often used by owners of cheap, normally used, cars where the cost of the repair (or the car itself) may outweigh the cost of more comprehensive insurance.

It is the bare minimum available to cover your car, and it’s usually the cheapest. This often tempts young drivers in, but in the event of an accident it won’t help as much as other types of insurance and may leave you with more out of pocket.

Third Party, Fire and Theft

This policy is the upgrade from Third Party Only car insurance. It offers similar benefits as its predecessor, but your insurance company will pay out if your vehicle is stolen and/or destroyed or damaged by fire.

This is the middle ground of insurance, and its price matches this. This type of insurance policy is best for used-car drivers.

Fully Comprehensive

Also known as ‘Fully Comp’, this car insurance policy is usually the most expensive, but with good reason. Your insurer will pay for all damages to your car – even if the accident was your fault! Third-party liabilities such as injury or damage to property are also covered, and you are even insured when you’ve got a trailer attached to your car.

This policy is often put in place when you buy a brand new car. Protecting this new investment against damage, injuries, fire, theft and all other possible problems with fully comprehensive cover will give you peace of mind while you’re out on the road.

Fully Comprehensive insurance is recommended if you’re purchasing a car on finance, because you will still have the make the payments even if your car is written off after an accident. With a Fully Comprehensive policy, you can rest assured that your car will be repaired or replaced should the worst happen.

We’ve all seen the adverts telling you to look out for the best car insurance deals, and part of the best deal is the policy extras you may get. Some insurers offer courtesy cars whilst yours is being repaired and other even supply breakdown cover to help you on your way.

Car insurance jargon

Excess

Think of this as a fee you have to pay so that you can claim on your insurance policy, if an accident is your fault. Your insurers will pay what they think your car/the repairs are worth, minus your excess fee (that you will have to pay).

This is set out for you at the start of your policy, and the amount is dependent on your personal level of risk. These factors will all affect your insurance policy:

– Age
– Marital status
– Credit history
– No claims bonus
– Previous motoring convictions
– What car you drive
– How often and how far you drive
– Where you live

All of these can affect how much your excess and your overall policy is, so a way to lower the cost of your premium is by opting to increase your excess (this is called ‘voluntary excess’). This is a bit of a gamble, because if you claim you’ll have to fork out more of your own money, but for a cheaper policy you may decide it’s worth it.
Check the small print for each policy – there are sometimes different excesses for different types of damage, so make sure you’re prepared to pay. You may also have to pay your excess in a non-fault accident, but this should be reclaimed from the at-fault party by you or your insurance company.

No-claims bonus

This is always taken into account when offering an insurance product. As more and more years go by without you claiming, the cheaper your policy is likely to be. If you do make a claim, your no-claims bonus (NCB) will be reduced by 2 years. However, remember that some insurers consider 5 years as your maximum NCB, whereas you may know that you haven’t claimed in 7, so check the small print.

As you can see, getting car insurance for your new car isn’t as complex and scary as you might think. So get down to your local Perry’s dealership to take a look at our new cars today. Remember Perry’s Motability scheme offers a new car every three years, and includes car insurance, servicing and maintenance!