How to choose a car insurance company
Under UK law, every driver needs to purchase car insurance. However, the legal requirement on insurance only covers a minimal or basic amount, third party damage. This means that the insurance will cover damage to a third party, but not damage to yourself or your vehicle. Because of this, it is often a good idea to look for additional coverage for you, your vehicle and your passengers.
Isn’t all car insurance the same?
No, not all car insurance is the same. In fact, car insurance is one of those areas where it pays to do research and compare prices to get the best coverage for the best price. However, it is important to compare exact coverage details. This process has been significantly simplified with the invention of the internet, as many websites now allow buyers to compare policies easily.
Consumers should keep in mind that you get what you pay for when it comes to car insurance. Make sure you look at certain factors, such as the limits of your insurance for example, as there may be a maximum amount paid out per accident or claim or the level of deductible or excess. These and other factors will affect the price of your insurance.
What types of car insurance are there?
As with many insurance policies, car insurance comes with different coverage and prices. The most important things to understand are the three general categories of car insurance: third party, fire and theft and comprehensive.
The minimum amount of car insurance required by law is third party, but for most drivers this is not enough coverage; many add other features, such as fire and theft. These two together are probably the minimum amount of coverage most people want, as it still does not cover your vehicle in event of an accident.
As the name suggests, comprehensive coverage covers more than just third party and fire and theft. It covers your vehicle, as well as a third party’s vehicle, in the event of an accident, and also for fire and theft. Although comprehensive insurance is usually the most expensive, it does offer the best peace of mind. However, comprehensive car insurance coverage can be made affordable by several factors, such as a high deductible or excess.
What are deductibles or excesses?
In many cases, car insurance is not only differentiated by the coverage. The cost of the insurance will also depend on the level of the deductible or excess. As a rule of thumb, a higher deductible can significantly save you money on insurance premiums. A deductible refers to the amount you have to pay out of your own pocket, before the insurance coverage kicks in.
If you have a high deductible, it means that the insurance company will not compensate you on small damages. Some insurance companies will also offer customers voluntary excess, which means you can increase the amount you pay out of your pocket even further, significantly reducing insurance premiums.