CHOOSING the right type of car insurance can be a challenging process, even when it’s not your first time.
We understand how intimidating this process can be, whether you choose to shop for car insurance online or meet with an agent to go over the details. While having access to so many online resources makes the process much simples, as you can compare prices and read about various companies, there are still a lot of new words to learn before diving into the pool of options that insurance companies offer.
Choosing the right type of insurance often seems difficult due to the many myths that prevail over how insurance companies actually determine their prices. For example, some people even go as far as to not purchase a red car because they think it would be more expensive to insure. In reality, the fact that your car is red, black, or blue has no bearing on the amount of insurance you will pay.
Sure, there are multiple variables taken into account by insurance providers when determining premiums for a specific vehicle. For example, aspects such as previous accidents, speeding penalties, age, make and model, engine capacity, and average repair expenses are much more important when it comes to insurance costs.
With so many things to consider, it is only natural to be a bit confused when purchasing car insurance, particularly if it’s your first time, but as you get more familiar with the process, things will start to make much more sense.
But worry not, because we got you covered, with a list of questions insurance buyers always have, but often avoid asking, and the answers to them.
Do I absolutely need to buy car insurance?
While in some American states is not mandatory to buy car insurance, it is illegal to drive without one in the UK. Every car needs to have insurance if you are using it on UK roads, and you could get some nasty penalties for not having one. The fine can end up costing you as much as £5000, and you’ll also get penalty points on your driver’s license.
Besides the legal obligation, car insurance can help you in very uncomfortable situations. If you are involved in an accident, your insurance will help you cover the damage. How much of the damage will be covered depends on the type of insurance you have, but in any case, it will be of tremendous help.
Insurance costs differ for every driver, based on aspects such as the type of vehicle they drive, years of experience, and so on. There are some ways to cut down on insurance costs. In the US, for example, veterans can get cheaper car insurance through USAA. In the UK, some insurers apply a similar type of discount for NHS workers, so it may be worth doing some research if you fit the criteria.
What are car insurance groups?
If you’ve been researching car insurance, you probably heard about insurance groups and are wondering what they are. Cars in the UK are placed in insurance groups starting from 1 to 50, with 1 being the cheapest to insure and 50 being the most expensive. When you buy insurance, the group in which your car fits influences the premium.
Groups can change periodically, and your car will be ranked based on factors such as repair time, car performance, security features, and cost of repair. Next to the group number, you will also find a letter, which represents the security level of your car. They go as follows:
- E – exceeds security requirements; insurance group becomes lower
- A – acceptable level of security
- D – does not meet security requirements; insurance group becomes higher
- U – unacceptable levels of security; insurers may not agree to cover before upgrading car security
- P – provisional; not enough data to classify the car
- G – grey import; evaluated at a price set by the insurer
Are there multiple insurance cover levels I can choose from?
Insurance comes in many levels to provide divers with the type of coverage they need. In the UK, there are three types of insurance you can choose from, and we are going to explain all three of them below:
Comprehensive insurance
Comprehensive insurance, sometimes called fully comprehensive, covers any type of damage done to your own car, regardless of whose fault it was for the accident. You can usually customize it and add benefits, as for example, windscreen protection.
While policies can differ from insurer to insurer, comprehensive insurance usually covers damage done to third-party property, damage done to your car, damage done due to fire or theft, and many other options that can be added to the policy.
Third-party insurance
This is the minimum type of insurance required by the law. This type of insurance covers damage done to another person’s property, as well as compensation for passengers that suffer injuries while being in your vehicle. Third-party insurance does not cover damage done to your car.
Third-party, fire, and theft
A more comprehensive type of third-party insurance, as the name implies. This type of insurance covers the bare minimum that third-party insurance does, plus damage to your car if it was caused by fire or theft.
Multi-car insurance
There is a fourth type of insurance that you can get, designed for families or people that have multiple cars. The insurer will group all car insurance pertaining to the same owner so that they can renew it all at once and deal with the situation easier. While some providers do offer discounts for multi-car insurance, it is not always guaranteed to be the cheapest.
No-claim bonuses, what are they?
No-claim bonuses are the best method to cut down on insurance costs. Each year, if you don’t make a claim on your insurance, your insurance provider will reward you with a discount.
The discount is accumulated year after year, provided that you do not cause any accident that involves insurance claims. This is a positive feedback loop and helps low-risk drivers reduce costs when they renew their policy.
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