Comprehensive insurance
Comprehensive insurance covers third party, fire and theft risks,
plus:
- accidental damage to your vehicle
- malicious damage to your vehicle
- personal accident
- medical expenses, up to a certain limit
- loss of, or damage to, personal property inside your vehicle,
to a certain limit
- new for old replacement in the first year
- glass replacement (windscreen, sunroof and windows).
Third party only is the minimum legal requirement. However, more
and more people are opting for Comprehensive cover. A Comprehensive
policy gives much more cover in unforeseen events.
Check the cover that is relevant for your needs. If you have
children, child car seat cover can be important to you. If you do
not have access to alternative transport, a courtesy car is
invaluable while your car is being repaired.
There is also the chance that when you are out shopping, you
come back to find your car damaged by another car or by vandalism.
These incidents are frustrating and upsetting. This is where having
Comprehensive cover means that the associated costs are covered by
your insurance.
Unfortunately, there is also the risk of being involved in an
accident with an uninsured driver. Unless your policy provides
Comprehensive insurance, the damage to your car is not covered and
you will have to pay for the repairs.
One thing to watch out for is the excess that you may have to pay
towards the cost of repair to your car. For example, if you
have a £500 excess, you have to pay £500 towards the cost of
repair. When looking to purchase your policy, pay particular
attention towards the policy excesses. This ensures that if you
have to claim, there are no nasty surprises for you.
These are just some of the considerations that you want to check
when looking for the right insurance. Remember “Buying Car
Insurance on price alone can be the most expensive purchase you
make”. Always check the cover that is relevant to you. We
have given some examples of typical covers under a Car Insurance
policy. By using our Compare tool, you can check what each
Comprehensive Car policy covers. Always check with your insurer to
confirm the exact cover provided by the policy.
Third party insurance
Third party is the minimum level of compulsory car insurance.
The first two parties are the insurance company and the driver.
Third party insurance covers your liabilities in respect of:
- injuries to others (ie to your passengers and individuals
outside your car).
- damage to someone else’s property (for example, a third party's
car, but not your own vehicle).
Third party, fire and theft covers the third
party risks mentioned above, plus theft, and damage to your own
vehicle caused by fire and attempted theft.
New for old insurance
Many comprehensive policies provide
'new-for-old' insurance that replaces your car with a new vehicle
of the same make and model, if it is written-off, or stolen and not
found. Your car must be under 12 months old and you must be the
first and only registered owner.
When you buy a new car, the dealer will
probably offer you 'gap insurance' for (typically) three years. The
'gap' is the difference between the value of the vehicle as new and
its written-down value immediately prior to the accident, which
would be the basis of an insurance company's settlement.
While gap insurance will overlap with
new-for-old cover in the first year, it may be worthwhile if the
value of your car is likely to depreciate considerably in the first
three years.
How are premiums calculated?
The premium level depends on the type of cover selected (i.e.
third party, third party fire and theft or comprehensive), the
proportion of each and every claim you are prepared to pay (the
'excess'), the value of the vehicle and your risk profile as a
driver.
Factors which will influence the level of
your premium are:
- driver's age
- driver's experience and driving record
- driver's occupation
- age, experience and record of others who will be allowed to
drive the vehicle
- value of the vehicle and its insurance group
- intended level of usage of the vehicle (e.g. daily commuting,
business, commercial traveling, social domestic and pleasure, night
time driving)
- where the vehicle is kept at night (i.e. on the street, in a
driveway, in a garage)
- fitted security devices (e.g. steering wheel lock, immobiliser,
alarm, tracker).
In recent years, premium setting has become
much more sophisticated, with some insurers rating car owners
according to their post code and annual mileage.
Compulsory and voluntary excess
The 'compulsory excess' is the portion of a claim that you must pay
for each and every claim. For example, if your claim is for £500,
you might have to pay the first £100 as excess, while the insurer
pays out £400. Insurers set the compulsory excess according to the
type of car and your age.
Glass replacement (windscreen, sunroof and
side windows) is subject to its own compulsory excess (typically
£50) and these claims have no effect on your No Claims
Bonus.
One way of keeping premiums down is to agree
to a 'voluntary excess' over and above your compulsory excess. For
example, you agree to a voluntary excess of £50 on top of a £100
compulsory excess. This means that you agree to meet the first £150
of each and every claim.
No claims bonus
A motor insurance policy is an annually renewable contract. A No
Claims Bonus is a reward for not claiming on the policy during the
past 12 months. The bonus level rises for each consecutive 12 month
period in which you have not made a claim, and is transferable if
you switch to another insurer.
The bonus is received as a discount on the
basic premium at annual renewal. You usually need to be claim-free
for five years to receive the maximum discount which varies between
insurers, but is typically around 65 per cent.
The insurance company may offer you a
'protected' no claims bonus once you have been claim-free for a
given number of years (typically four), for a small extra premium.
This means that any claims made during the policy year will not
affect your No Claims Bonus at renewal.
Partial protection is also available, whereby
you are allowed a limited number of claims (for example, two claims
in five years) before you lose your No Claims Bonus.
Personal belongings cover
Your clothing and personal belongings, such
as coats, handbags, CDs and tapes are typically covered up to
£150, against loss or damage by fire, theft, attempted theft or
damage caused by a car accident, whilst in, or on, your car.
Tips on how to keep your car premiums low
- drive a smaller and less powerful car
- park your car overnight in a garage or on your driveway
- fit a steering wheel lock, alarm, immobiliser or tracker
system
- keep your mileage low and avoid night time driving. High
mileage motorists and those who drive at night are more likely to
have accidents
- keep a record of your mileage so that you don't overpay
- keep additional named drivers to a minimum
- increase your voluntary excess.
- Don’t make small claims which might damage your no claims
bonus.
- drive carefully!
Finally, disclose all relevant information on your application
form or you could invalidate your policy.
TIP
If you are a young driver, you may be able to reduce your
premiums by completing a Pass Plus course.
TIP
When buying a new car, try to negotiate a year’s free insurance
which could save you hundreds of pounds, especially if you are a
young driver.
Market segmentation
Insurers like to segment the market into
different categories such as young drivers, women drivers, older
drivers, parents, students and so on.
Certain groups may benefit from their low
claims record. Women of all ages, despite all the sexist jokes
about them being poor drivers, make fewer claims than men. The same
applies to older drivers of both sexes.
Parents are another group that insurers like
to segment, with some providing cover for child car seats and other
children’s equipment.
Young drivers, particularly the under 25s, are
likely to the steepest premiums because of the higher level of
claims they tend to make, particularly for serious accidents.
That said, some insurers are starting to treat younger
drivers on an individual basis, rather than tarring them all with
the same brush.
Shopping online
Half of all car insurance is now sold online
which has served to drive down premiums as internet sales are
easier to make and cheaper to administer.
TIP
That said, make sure the quotation you saw
online is the same as the one you receive in the post –
definitions, the premium and the period of insurance cover may have
changed, so be sure to check the small print carefully before
signing up.
What extras are on offer?
Some insurers provide lock replacement as an
extra. You may also want to see whether your insurer will add
overnight accommodation cover in case you are involved in an
accident or have your car stolen, when you are a long way from
home.
If you are likely to do a lot of overseas
driving, you should alert your insurance company to this and see
what cover it can provide.
The majority of car insurers offer a courtesy
car if you have an accident or if your car is stolen, but you can
sacrifice these extras for cheaper cover.
Making a claim
If you need to make a claim, there is normally
a hotline you can call to obtain advice and authorisation for
repairs to be done. An insurer’s recommended repairers will usually
do the work straightaway.
With a straightforward claim, an insurer may
pay out immediately. But for more expensive or complex claims, it
may send an inspector from the company to investigate, or a third
party ‘loss adjuster’ to handle the claim on its
behalf.
If you wish to appoint someone to negotiate
with the insurance company on your behalf, you will need to appoint
a ‘loss assessor.’
Legal cover
You may be offered legal cover to pay legal
bills of typically £25,000-£50,000 if you became involved in
litigation due to a car accident.
By taking this option, a firm of solicitors
(usually of your insurance company’s choice) will defend you in
personal liability cases (where you have caused injury to someone
else or their property), or help you claim compensation for
personal injury.
Breakdown insurance may also be on offer
(particularly important if you drive abroad), although if you are
buying a new car, you may have one year’s roadside assistance cover
thrown in for free.
TIP
If you are accident prone, legal cover may be
worthwhile.
TIP
If you have high mileage, breakdown cover is
essential, but check that you don’t have cover already under
another financial product. A number of premier bank accounts and
platinum/gold credit cards provide roadside cover as a freebie, but
check that what’s on offer is sufficient for your needs.
How can I reduce my premiums?
There are a number of ways that you can knock
hundreds of pounds off your premiums. Some of these will not cost
you a thing, while others will mean a little bit of investment in
your vehicle:
- install an alarm
- don’t go over the top with the extras. Stylish features mean
higher premiums
- if you don’t think you will need a courtesy car or you
have roadside assistance already, ask for these to be removed and
the premium reduced accordingly
- avoid driving at night
- keep your car in a garage or off the street at night
Courtesy cars
If your car is going to be in the garage for a
while, will you have a courtesy car throughout that time?
Similarly, if your car is written off, will a courtesy car be
available until you get a new one?