Car Insurance
Checking the small print
It can be tempting to buy the cheapest insurance you can find but it may not cover your needs. Here's what to look for in the small print.
Cheap deals will have strings attached. If you have an accident, the company may charge you a big 'compulsory excess' – that's the amount you have to pay if you make a claim.
You may find the insurance doesn't cover certain things, or the policy might pay out less than other companies.
Make sure the company is authorised and regulated by the Financial Services Authority (FSA). The FSA is the independent watchdog that regulates financial services.
Questions to Ask When you Shop Around
- What's the difference between third party and comprehensive insurance?
- Third party is the minimum cover you can buy and it only covers damage or injury to other people and their property, caused by you. You will have to meet the cost of damage to your own car
- Third party, fire and theft (TPFT) cover is like third party, but you are covered if your car is lost in a fire or is stolen. This is particularly suitable for young drivers and drivers of older cars that aren't worth much
- Comprehensive cover includes damage to your own vehicle as well
- Am I limited to a certain mileage?
- On average, UK drivers do just over 8,300 miles a year. When you take out insurance you will be asked how many miles you do each year. It's best to be honest – if you have an accident and the mileage recorded by your car suggests you drive a much higher mileage than you disclosed, your insurer could reduce the claim.
- What other strings are attached?
- Depending on your personal circumstances (such as your age and driving experience) and the sort of car you drive, some companies may make you pay a bigger contribution towards the cost of a claim. This is known as an excess – see below.
- Some companies may have strict limits on how much you can claim for personal belongings, too, so it's worth making sure your home contents insurance covers personal property outside your home. If you leave things on view in your car and they are stolen, they might not meet your claim at all.
- What is an excess?
- An excess is the amount your insurance company will withhold from any claim. Typically, it's £100 but many insurance companies increase this to drive down the price of their policy
- Apart from this compulsory excess your insurance company may invite you to agree a voluntary excess. While this will bring down your insurance premium it increases the amount the insurance company will withhold in the event of a claim.
- What's the limit for legal and medical expenses?
- Cover varies. Make sure it meets your needs. Some companies don't charge for such cover, others do
- Will I get a courtesy car if I have an accident?
- Not everyone offers a courtesy car. Some companies offer it as an optional extra. If you have to shell out for a hire car, at around £120 a week, it can add up if your car's off the road for a while.
- Look out for companies that give you a courtesy car for as long as you need it, if yours is off the road after an accident, or if it has been written off or stolen.
- Am I covered for driving in Europe?
- Every insurer must by law provide the minimum cover in all EC countries – third party (in other words, simply the cost of meeting a claim for damage to someone else's car or property, or injury caused by you – leaving you to meet the cost of damage to your own car out of your own pocket).
- If you want fully comprehensive insurance for Europe, you may have to pay extra. Look for companies that automatically provide the same level of cover throughout the EU and associated countries. Some insurers won't offer cover outside the UK at all. If you drive to countries outside the EC you may need a 'Green Card' which confirms that you have cover to drive in the country you are visiting. So check with your insurer first!
- Will my premiums be affected if I have driving convictions and points on my licence?
- Depending on the conviction, most insurers will impose an additional premium if you have points on your licence and you must by law tell your insurer about any convictions, at the very least when you renew your insurance.
- While many will ignore a first or even a second speeding offence, they may add an additional premium if you have a second or third one and that additional cost will remain for three years.
- If you change insurers, your record goes with you.
- Some insurers won't insure drivers with six points on their licence or more.
- Drivers with offences for drink–driving or dangerous driving will find it difficult to get cover at all and if they do, it will be very expensive.
- But if you don't tell your insurer and it subsequently comes to light that you do have a driving offence, your insurer could invalidate your policy
- What is the maximum no–claim bonus I can get?
- This is a bonus awarded to you by your insurer if you don't make a claim. The longer you go without a claim, the higher your bonus and thus the less premium you will pay. Typical maximum bonus is 60 or 65 per cent, some will offer up to 70 per cent. If you make a claim you may lose some, or all of your bonus. If your claim isn't very large, it might well be worth swallowing hard and paying it your self – if you lose some of your bonus it might cost more in the long run while you re–build you no–claim bonus.
- Many companies allow you to protect your no–claim for an additional premium. So if you have an accident, you won't lose your no claim bonus
- If you are a former company car driver and haven't ever made a claim through your company's insurer, get them to give you a statement to that effect. The insurer of your private car may accept this as proof and give you a no–claim bonus (but not all companies will do this).
- How can I get other discounts on my insurance?
- If you park your car on your drive or in your garage, you will get a cheaper premium than if it is parked in the road
- If you are a member of the AA or the Institiute of Advanced Motorists, you could get a discount
- If you have retired you will no longer need your car for commuting. Get this element taken off your insurance
- Stick the speed limit – no points means cheaper premiums
- If you significantly reduce your annual mileage, you might well attract a lower premium