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After years of rising prices, car insurance premiums are finally starting to come down a little, but motorists still need to remain savvy in order to cash in on the best deals. Insurance premiums can still be very steep, particularly if you’re a young driver or you own more than one vehicle.
In order to find the right car insurance policy for you, at the right price, it pays to have a solid understanding of the car insurance market and to be able to identify the different policies on offer, to make sure that when it comes to signing up, you get the right policy at the right price.
Take a look below at Trusted Dealers’ guide to car insurance, to learn everything you need to know.
Car insurance is a legal requirement if you own and drive a car. Driving a car that is uninsured is against the law and you will automatically receive a fixed penalty notice if you are found driving without a licence. Furthermore, your car could eventually be seized and destroyed. The only exception to the law is if the vehicle has been declared off the road through a Statutory off Road Notice (SORN).
Insurance is dependent on a number of factors to include your age, what type of car you drive and how much experience you have on the road. Based on statistics, the younger the driver, the more likely he or she is to have an accident, therefore younger drivers are charged a higher insurance premium. However, there are a number of ways to bring down car insurance for younger drivers, which we will cover below. Men are also considered more of a risk than women behind the wheel. However, the ECJ gender ruling from 21st December 2012 meant that insurers were no longer able to discriminate on gender when calculating premiums.
Insurers put cars into 50 different insurance groups, with vehicles in the highest groups obtaining the highest premiums. A number of factors are taken into consideration when deciding which insurance group a car should be put in, the of the main factors include the price, performance and the cost to service and repair the vehicle.
No claims discount
Safe drivers are rewarded, and for each year a driver does not make a claim, they will be issued with a no claims discount which will bring down the overall cost of their car insurance. Some premiums reduce by as much as 75 per cent over a five year period if no claims are made, and you can transfer your discount from one insurer to another. There is also the option to protect your no claims discount which means you’ll pay a bit more but will be allowed to make a certain number of claims within a year without affecting your bonus – this does not however stop your premium from increasing at the end of the year.
If you have previously been convicted for a number of motoring offences, you may struggle to find an affordable car insurance quote. If this is the case, it is worth looking for a specialist car insurer. You may also require a specialist policy if the car you drive is particularly unusual. Many of the comparison websites will offer lists of specialist car insurers so you can compare and contrast what each one offers and find the best deal.
Types of cover
There are three different types of car insurance designed to suit motorist’s individual needs. Below is an explanation to each one:
Third Party – is the most basic and the minimum legal requirement. The insurance policy will pay for any damage you might do to someone else’s car, but it will not pay out for repairs to your own vehicle.
Third party fire and theft – in addition to above, this also include cover if your car is lost, stolen or damaged by fire. In this case, you and your car are also covered for any injuries or damage, even if the fault was yours.
Fully comprehensive – this is the most popular option because it gives motorists full cover and therefore extra peace of mind. Fully comprehensive car insurance is not always the most expensive cover, so if you are considering a third party insurance, it is worth checking the cost against fully comp to ensure you are not missing out.
There are plenty of options that will be offered to you when you take out a new insurance policy so it is well worth taking a detailed look at exactly what is covered as standard in the policy. What one insurer is offering may be substantially different to another. Most insurance companies will include windscreen cover as standard, but options that are commonly excluded include legal expenses, a courtesy car and breakdown cover. You will need to purchase these as add-ons to your policy, but remember not to pay for anything you don’t need as it will all affect your final policy total.
If you make a modification to your car, you must always contact your insurer as any change to your vehicle could affect your premium. Failure to notify an insurer could result in the company refusing to pay out.
Insurance for business
A standard car insurance policy will usually only cover you for social, domestic and pleasure use unless you specify otherwise. If you drive your car for business purposes, you must declare it to the policy holder.
All car insurance policies will carry an excess, which is the amount you have to pay towards any claims. The excess comes in two parts, the compulsory excess and the voluntary excess. You can choose the level of voluntary excess, and if you choose to pay a higher amount, you may be able to negotiate a lower premium. However, remember that whatever you agree to, you’ll have to pay it out if you make a claim. If you have a minor accident, it might be worth paying for the damage upfront rather than making a claim, to protect your no claims bonus.
There are thousands of car insurance policies available, so it pays to shop around to make sure you find the right policy to suit your individual needs. You can purchase insurance direct from an insurer, through a broker, or visit one of many comparison websites which will often do the hard work for you. Comparison websites will allow you to compare and contrast a number of different policies that are suited to your lifestyle. You’ll fill out an information form, and they will come back to you with a list of the policies best suited to your needs.
Before you can make a successful application for car insurance, you will need have a number of key details ready to supply to the insurer. We’ve listed the most common ones below:
How to pay
You can pay for your car insurance in one of two ways – annually or monthly. If you choose to pay annually, you will need to have the full amount of money readily available, or you can spread the cost over the year to make payments for manageable. However, paying monthly will mean that your insurance premium will go up slightly to account for the interest you’ll be charged.
Black box or ‘telematics’ insurance has revolutionised car insurance for younger drivers and those struggling with higher premiums. Black box insurance involves the insurer fitting a satellite, tracking device or ‘black box’ to your car so they can monitor your driving. Some of the main areas which the black box is designed to track include, where a person drives, how they drive and at what time of the day they drive.
Certain perimeters will be set by the insurer, for example, if you are a new driver, you may be required to only drive during daylight hours when it is deemed safer. Some insurers will fit the black box device for you, or you will be sent the device through the post with clear installation instructions.
Black box policies are designed to reward careful drivers, so if you are prepared to follow the rules set, you will save money. Some firms even claim to save drivers as much as 50 per cent on premiums if they adopt black box insurance.
Ways to reduce your premium
Nobody likes to pay over the odds for an insurance premium, and there are many ways that motorists can actively bring down their insurance policy. We’ve listed some suggestions below of wants to reduce your premium:
Car insurance fraud
Fraudulent claims push the price of car insurance up for everyone else, with official figures stating that around £380 million a year or £30 is placed on top of every premium. As a result, the government banned referral fees in personal injury claims in April 2013 in an attempt to curb the “compensation culture” to stop insurance companies selling personal injury details to lawyers.
To further reduce a car insurance policy, you can add an older, more experience motorist to the policy as a named driver. For example, a younger driver might add one of their parents to the policy to reduce the premium as they will more likely have increased levels of driving experience. However, you should never add an additional driver as the main driver on a policy unless they are the main driver of the vehicle. This practice is known as fronting and is a form of insurance fraud.