Q Is motor insurance compulsory and to what extent?
A It is an offence to use a car on public roads without having insurance to cover your legal liabilities if you damage other people's property or worse, injure others. It is compulsory under the Road Traffic Act to take out a minimum level of cover, although you may decide to take out a more comprehensive cover to safeguard yourself.
Q What types of motor policy can I choose from?
A There are three broad types:
Third party
This is the legal minimum cover insuring against damage and injuries caused by you or your passenger to another person or person's property. It does not cover any injury or damage to you or your car.
Third party, fire and theft
In addition to third party insurance this will also pay for replacement or repair of your car if stolen or destroyed or damaged by fire.
Fully comprehensive
A Fully Comprehensive policy extends the third party, fire and theft by covering damage to your own car in the event of an accident caused by yourself. There may also be extra benefits to taking this level of cover e.g. car windscreen and window damage, use of a replacement car while yours is being repaired and the ability to drive another's car.
Fully comprehensive insurance covers the car for social and domestic pleasure, and includes trips to and from place of work.I If the car is also used for occasional or regular business use it is advisable to have additional cover for this purpose. Accidents that happen while on route to and from a business venue other than your regular place of work may not be covered under a policy unless specifically mentioned. In addition, some insurance companies will include cover for you to drive other cars with the drivers' permission. However, be careful, as this type of extended cover will only be third party.
Q How do I decide which policy to go for?
A Fully comprehensive cover is obviously better, but can prove very expensive for some drivers. You will need to take account of what your car is worth according to the insurer. Find out the maximum they would pay out if the car were stolen or became a write-off, taking account of any excess you'd have to pay. You may discover that based on your particular circumstances, this cover isn't actually that much more expensive.
Q What is a no-claims discount?
A A no-claims discount (NCD) means you have a reduction on the premium, based on your driving experience and claims history. This can be anything from 30% up to 65%, making a substantial saving for customers who have remained claim free over a period of years.
However, your entitlement to a no-claims discount can be reduced if a claim is made and the policy does not have a protected no-claims discount.
Q What is a protected no-claims discount?
A For a small extra premium you have the option to protect any no-claims discount you may have built up. This additional protection means that should you have an accident and need to claim against your policy, your insurer will allow the claim without it affecting your no-claims discount at renewal. The number of claims and the period in which these claims can be made varies from insurer to insurer.
Q What is Uninsured Loss Recovery (ULR)?
A In many cases where accidents occur, there are costs that have to be incurred by yourself, even if you were not to blame. These costs include any excess related to your policy, or claiming against someone who does not have insurance. ULR is the legal service that claims back these sums on your behalf, which means you receive back most, if not all, of any costs you may have incurred. The service also covers the pursuit of any damages to yourself should you be injured in an accident.
Q Why are car insurance premiums so high for a younger driver?
A Premiums are based on age and experience and a younger driver has to build up both in order to qualify for lower premiums and NCDs. However, newly qualified drivers do have an opportunity to reduce these premiums by increasing the amount of voluntary excess and gaining driving experience not covered by the standard Road Driving Test e.g. night and motorway driving. Taking a Pass Plus course, run by the Driving Standards Agency can reduce the premium by the equivalent of one years no-claims discount. It is also possible to take an Advanced Driving Test (run by the Institute of Advanced Motorists) which some insurance companies will take into consideration when calculating premiums.
Q How can I keep the premiums down?
A There are a range of possible options, depending on which insurer you use.
Limiting the policy to named drivers only and paying a voluntary excess i.e. paying the first £250 of a claim, instead of the first £100. The installation of immobilisers, car alarms, low annual mileage and parking the car in a garage overnight all contribute to reductions in a premium. Although the amount of the reduction may vary depending on insurer.
Q The number of companies offering car insurance is increasing daily, how do I choose between them?
A Most of the cheapest quotes come from the new style direct insurers. However, as in most things, the cheapest is not always the best. Quality service and convenience can be as important as price, especially if you have to make a claim.
Look for a company who can offer you the full range of channels (i.e. branch, telephone and internet access). This allows you to choose how and when to hunt for quotes. Alternatively you could use either a broker, or a company that offers the services of a panel of insurers. Both will find the cheapest quote matching your needs and saving you the effort of several telephone calls or tramping the streets.
Some brokers now offer freephone and 0345 facilities, and may have recently joined forces under the banner of "Brokerline", where some 500 registered insurance brokers are now linked to one local dial number.
Q Am I covered if I take my car abroad on holiday?
A You'll find that most UK car insurance policies extend to the European Union countries and possibly a few others. However, you may find that this cover is for a limited time and you will need to notify your insurance company if you wish to extend this period. Occasionally, an additional premium is required but this varies depending on insurer. You will also need to check the level of cover while abroad as your policy may state that the policy only extends to the minimum required by each country. You may wish to increase this to fully comprehensive cover.
Q What information should I give my insurer?
A It is vitally important that you tell the insurance company anything that might affect your policy. It is always better to pay slightly more in premium than to have an accident and have your claim disallowed through failure to disclose information. Always notify changes in circumstances e.g. change of address or car, as failure to do so would, again, invalidate you're policy.
