Hond Financial

Car insurance is there to give you financial protection in the event of an accident whether or not you are responsible for it. In the UK, car insurance is a compulsory as well as a necessary expense. A car insurance policy will provide you with much needed protection against financial losses incurred because of traffic accidents.

Unfortunately, not all policies will cover damage to your car, or protect you against liability, legal fees or property damage. Bolt-on niche insurance products such as inconvenience cover, gap insurance and even legal protection insurance can prove to be invaluable additions to your comprehensive car insurance to ensure an accident does not end up costing you more than you can afford should the worst happen.

Choosing the right car insurance product will protect you, your vehicle, and other parties in the long run. If you want to drive a vehicle in the UK, you must prove that you have a valid car insurance policy. There are different levels of cover which are determined by the type of car insurance policy you choose to take out.

WHY YOU SHOULD SHOP AROUND FOR NEW CAR INSURANCE

Shopping around for car insurance is very important for several reasons:

• You may find better quotes
• Depreciation will affect the value of your car
• A change in personal circumstances
• Car financing could put you and the car in a higher risk category
• You could find a policy which includes cover for loss of personal items
• Some insurers may include breakdown cover
• Some insurers may offer you legal cover included in your policy
• It may be possible for an insurer to also cover a second car
• You may be offered an introductory discount

Just because you have used the same insurance company or insurance broker for several years, does not mean you are getting the best deal. It really only means just that – you have used the same insurance company or insurance broker for the past several years.

An insurance broker already familiar with your demands and needs from your insurance history will probably be in a position to get you the best deal. They may be able to consolidate those demands and needs into a package which often will only be available via a broker.

Your car will depreciate in value according to both age and usage. Car depreciation starts as soon as you drive it away from the car dealership. Your car’s value will decrease every year. You should insure accordingly by getting the same coverage at a lower price. This is an obvious statement but can be suprisingly often forgotten. Check the value of your car against its blue book value rather than the price you paid – your broker can do this for you. The reason is that even fully comprehensive car insurance policies do not cover a vehicle to the purchase price, but rather the blue book value. Your declaration concerning the value of the car should be as accurate as possible. It will usually cost more to insure a more expensive car. In rare cases the insurance company may offer a replacement car of the exact model or spec after an accident. There is however an insurance product called Vehicle Replacement Insurance which does just that! Click on the link to find out how it works in more detail.

Your personal circumstances may be different that at your last renewal. You may have switched jobs and not drive as many miles per year or have paved the front lawn and turned it into off-street parking. Allow your insurance policy to reflect these changes by renewing accordingly. Lower mileage drivers can get significant discounts from insurance companiesIt’s not always as expensive as you may think to add additional drivers to your existing policy – particularly if you wait until renewal time. Insurers may charge you an administration cost for adding additional drivers, but if you wait until it’s time to renew you may not incur this fee.

WHICH LEVEL OF COVER SHOULD I CHOOSE FOR MY CAR INSURANCE?

In the UK, there are three types of vehicle insurance.

1. Third Party Insurance is mandatory in the UK. This type of cover insures a vehicle and driver against damage to another person’s car, driver or passengers if involved in an accident. Third Party Insurance acts as security against liabilities for damage to another person in a vehicle accident. Third party insurance will not cover any damage inflicted on your own car or to your person. Third party insurance will not cover any necessary repairs made to your car.
2. Third Party, Fire and Theft Insurance will cover the benefits of third party insurance and includes any financial loss to the insured vehicle caused by fire or theft. If your car has a low market value, you may find this to be the best type of vehicle insurance. You must have a fully comprehensive policy for a leased or financed car.
3. Fully Comprehensive Insurance offers the widest coverage. As well as providing basic cover as in third party, fire and theft, it will also cover vehicle damage and bodily injury sustained in an accident. If the vehicle value is higher than the insured can afford to pay to replace it, then fully comprehensive is the preferred choice. Finance Gap or Vehicle Replacement Gap Insurance are additional insurance products available to top up the gap between your payout and the cost of paying off a new car, so go online and find out more about these insurance products.
There are lots of factors affecting car insurance and most insurers offer secondary products which can meet any specialised needs of the policyholder.

FACTORS AFFECTING CAR INSURANCE

1. The Policyholder

• Age of the policyholder
• Whether you are male or female
• Marital status
• Your postcode is a factor
• The size of the car and engine
• The cost of replacing the vehicle
• Any modifications that have been made to the vehicle by its owner

A younger less experienced driver will pay a higher insurance premium than someone with several years driving experience.

A married person is considered more responsible for their actions than a person is with no commitments. It stands to reason that a married man with children has more responsibilities and the insurance companies will therefore consider this person a lower risk than a single male in his early twenties driving a WRX.

Where a person lives also affects the insurance cost. If you live in the country or in a low crime rate location you are likely to get a lower premium than if you are a city-dweller.

A powerful car is more likely to lose control at the hands of younger drivers: expensive cars cost a lot to replace if scrapped and should they simply require repairs the sum of the replacement parts often costs more than the used car’s value, making more powerful cars very expensive to ensure.

Modifications are more likely to alter the vehicles safety; performance is improved, and handling may be compromised making the vehicle more unpredictable. An increase in insurance premiums should be expected with car modifications, as these represent an increased risk to the insurer.

2. Driver History

• Years of driving experience
• Previous claims
• If you have points on your licence
• Annual mileage

The number of years a person has been driving suggests their understanding of the rules of the road, shows the driver has built up experience of driving under varied driving conditions and has attained a certain level of confidence while behind the wheel. Insurance companies base these assuptions on the poliyholder’s claims history over the last five years. Most driving convictions negatively affect motor insurance premiums for drivers. Most parking violations are not taken in to account.

Your annual mileage is a factor too. Your chances of being involved in an accident are increased the more time your car spends on the road.

3. Vehicle History

• Current vehicle value
• If you own the vehicle, or is it leased or financed
• Vehicle make and model
• Performance level and size of engine
• Modifications to the vehicle

If the vehicle has a low book value, it may not seem to be cost effective to pay for comprehensive insurance; however this is not necessarily the case. A named driver with several years of insurance cover and no claims against his or her name could find that fully comprehensive car insurance costs almost the same as a lesser level of cover, but with additional benefits such as a free courtesy car etc. Additional benefits to your policy can often be added at little extra cost when buying online. If you are leasing a vehicle or have acquired it via a finance company, then you will need to provide fully comprehensive insurance for the vehicle. The leasing or finance company will require reimbursement from the policyholder for damage to the car. This will be covered if you have fully comprehensive insurance.

There may be other benefits included in your car insurance policy, which are not always necessary but sometimes advisable:

• Breakdown insurance
• Provision of a courtesy car while yours is in the garage
• Breakdown assistance
• Specialist legal advice/assistance with legal fees
• Repair or replacement cover for windscreens
• Protecting your no claims bonus
• Compulsory or voluntary deductible amount

Choosing the correct insurance and getting the best quote can be daunting as there are so many variables to consider. The right car insurance price is easy to find when you’re on a great website. Consider using an insurance aggregator website for your initial quotes. Online insurance aggregator websites are generally very easy to use. You only need to answer the questions once, and then they will select products to show you based on your answers. Once they have collected all the quotes, you will be able to compare insurance policies against each other, save and email your quote to your personal email address, go back and change your options to include or reduce the benefits you may be considering and – when you’re happy – buy online. Think about first giving your current broker a call and asking them to get you a better deal based on your findings. The most important factor about buying online is that you compare like for like quotes. This is more difficult than you may initially think. Good luck on finding your ideal car insurance.

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