Car insurance guide

Comprehensive car insurance

The main benefit of comprehensive car insurance is that it includes cover for accidental damage. Cover is also provided for damage caused by fire or theft as well as bodily injury or damage caused to someone else’s property. There are also many other common features which are included in comprehensive car insurance policies, such as:

• glass replacement (windscreen, sunroof and windows);
• ‘new for old’ replacement for vehicles less than 12 months old;
• loss of, or damage to, personal property inside your vehicle, up to a certain limit;
• medical expenses, up to a certain limit; and
• personal accident, which pays out a small sum if you or someone in your car is seriously injured or killed.

Comprehensive car insurance offers greater cover for unforeseen events and greater piece of mind, given the inclusion of cover for accidental damage to your own vehicle.

Third party car insurance

Third party car insurance is the minimum level of cover available, and covers the following liabilities:

• Injuries to your passengers and people outside your car.
• Damage to someone else’s property.

Third party, fire and theft

Third party, fire and theft cover provides the above as well as cover for your vehicle in the event of it being stolen or damaged by fire or by attempted theft.

Choosing third party fire and theft over a more basic third party policy will still result in lower premiums than comprehensive car insurance, but will provide greater cover in case of a real emergency – giving more peace of mind than third party insurance alone.

Policy excesses

Policy excesses are the costs you may have to pay towards the repair of your car. For example, if your policy has a £500 excess, you will have to pay £500 towards the cost of a repair. Some insurers will also apply compulsory excesses according to car type, driver age or driver experience.

Also be aware of the excess you have to pay if you have your windscreen replaced. The typical windscreen replacement excess ranges from £50-£75. A number of insurers also charge an excess for glass repair.

For third party, fire and theft insurance, be aware of the excess that is applicable for fire and theft claims. Some insurers apply different level of excess, typically ranging from £100-£150.

Car insurance features

There are a number of benefits offered by car insurance policies, irrespective of whether you have comprehensive or third party, fire and theft cover, although the level of cover provided may differ.

For example, loss or theft of the vehicle’s keys would mean that the locks would need to be changed. While cover for the replacement of the vehicle’s locks is usually provided, there are varying limits between policies.

‘Foreign use’ cover can also be provided, a useful feature if you intend to drive your car abroad. All policies will provide the legal level of insurance required when driving abroad in the EU, but it is not as comprehensive as when driving domestically. Including foreign use cover means that you are entitled to exactly the same level of cover that you have in the UK when you take your car overseas.

Some of the more common features to be found either as standard or as optional extras within car insurance policies can include:

‘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. Typically, for cover to apply your car must be under 12 months old and you must be the first and only registered owner. The damage to the car will be assessed and if the cost to repair the damage is over a certain percentage of its UK list price the insurer may replace the car with a new model. The relevant percentage varies between policies but this is typically around 60%.

Personal belongings cover

Personal belongings cover is usually only provided within a comprehensive policy. Your clothing and personal belongings, such as coats, handbags, CDs and MP3 players are typically covered up to £150, against loss or damage by fire, theft, attempted theft or damage caused by a car accident, while you are in your car not.

No claims discount (NCD)

A motor insurance policy is an annually renewable contract. A no claims discount (NCD) is a reward for not claiming on the policy during the previous 12 months. The discount 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. You usually need to be claim-free for five years to receive the maximum discount, which is typically around 65%.

If you manage to accrue the maximum no claim discount, an insurer will generally offer the chance to protect it for a small fee. This feature is known as ‘protected no claims discount’ and means that you will not lose your no claims discount if you make a claim under your policy that is deemed to be your fault or where your insurer cannot recover the costs of the claim. However, you should be aware that there will be a limit on the number of claims allowed over a certain period and therefore, it is important to check the details of a policy.

Some insurance providers also offer ‘guaranteed’ no claims discount protection, which means they will not reduce your NCD, irrespective of the number or type of claims made under the policy.

Uninsured loss recovery

Uninsured loss recovery (ULR) cover (sometimes sold as ‘legal expenses’) is usually provided as an optional car insurance feature, although there are a number of policies that include cover as a standard benefit. It allows you to seek legal representation to recover losses not covered by your policy, for example personal injury or the excess that you may have to pay when you car is repaired.

An uninsured loss recovery policy will provide you with cover, typically up to £50,000, to employ a solicitor to recover your uninsured losses.

Breakdown cover

Many car insurers now include breakdown cover as part of their policies, either as an optional extension or as a standard benefit. The most common covers available include: ‘roadside assistance’, ‘recovery’ and ‘home service’.

‘Roadside assistance’ provides help and assistance at the roadside to get your car repaired so that you can continue your journey. ‘Recovery’ services will recover your car if it cannot be repaired at the roadside, towing it to the nearest garage or your home address. ‘Home service’ includes cover should your car breakdown at your home address. European breakdown cover is also available with some car insurance policies and will provide breakdown insurance when you take your car abroad.

Courtesy cars

One of the main benefits of a comprehensive policy is the provision of a courtesy car. Courtesy cars can be extremely useful, particularly if you rely heavily on your car.

Most insurers will provide a courtesy car when yours is being repaired following an accident, fire or theft of your vehicle. Cover is either provided as a standard policy benefit or as an optional extra. However, there are various restrictions that apply. For example, the majority of policies will provide a courtesy car for the duration of the repair of your own car, but there are policies that restrict the use of a courtesy car to 14 or 28 days.

Another area to consider is the provision of a courtesy car in the event of a ‘total loss’. The majority of insurance policies will only provide a courtesy car as long as your own car is repairable. This benefit is generally removed if your own car is declared a write-off or is stolen. However, there are a number of policies available that will include a ‘total loss’ courtesy car, possibly as a standard benefit, but more likely as an optional extension. Where cover is given, the period of time that a courtesy car is available can vary from 7 to 28 days, which allows more time to find alternative arrangements.

Whichever courtesy car option you choose, the type of courtesy car provided is usually a small hatchback, which could be unsuitable for some drivers. Insurance providers have recognised these problems and some policies now include an option to enhance the courtesy car they provide. Some policies will also provide a ‘prestige’ type car, for those policyholders that may require a courtesy car of similar standing to their own car.

How can I reduce my car insurance premiums?

There are a number of ways that you can reduce your premium. Some of these will not cost you a thing, while others will mean a little bit of investment in your vehicle:

• Many new cars have an alarm or immobiliser installed. Check with your car manufacturer whether these are Thatcham approved as insurers will provide discounts for Thatcham approved alarm and immobilisers;
• Similarly, if a tracking device is fitted to your car, an insurer may provide a discount.
• If you are able to park your car in a garage or car park, your premium may be lower.
• Request a voluntary excess.
• If you are married and your spouse can drive, add them to your policy, as typically the premiums charged are lower than for just yourself driving.
• If you have more than one car, check whether the provider offers a discount for insuring the second car.
• Similarly, if you have other insurance (such as your home insurance) with the same insurer, ask if they provide a discount.
• Many insurers will provide a discount if you feel comfortable with purchasing cover online, but be careful, as insurers often compensate the loss in premium by applying a higher compulsory excess.
• Shop around as insurers are always willing to provide better deals.

Tips for buying car insurance

• Make sure that you get the right policy for you, by waying up the car insurance features that you will need.
• Choose the type of car insurance that will suit your situation. For some people, third party car insurance may be the best option.
• Use our tips to get a competitve premium.

This car insurance guide offers an introduction to the features and levels of cover available, but the best way to get a product that suits your needs is to shop around. You can weigh up the benefits of different car insurance policies using our compare tool.