How to choose car insurance
* Everything you need to know about car insurance * All types of policies explained * How to get the right policy for you...
Every driver knows that car insurance is a legal requirement, but a new law introduced in June 2011 which makes is illegal to own a car or a motorbike without insurance unless it is officially declared as SORN (statutory off road notice), is a less well-known fact.
However, this development puts motor-vehicle owners even more firmly in the driving seat when it comes to the getting both the right type of insurance cover and the best deal for their circumstances.
Different types of insurance cover
There are three main types of car insurance policy and each offers a different level of cover, so it's important to understand how they vary:
The most basic type of cover is known as third party. This is the minimum level of insurance required by law and, as the name promises, ensures only that any third party (which includes your passengers), the other vehicle and/or property, are covered in the event of an accident.
However, third-party insurance does not cover damage to your own vehicle. This means that if accident was your fault, you will have to pay for the repairs. If you were not to blame, you will need to make a claim on the insurance policy belonging to the driver who was.
Third-party cover is usually taken by owners of older vehicles where the value of the car is less than the cost of any likely repairs.
Newly qualified drivers also often opt for third party insurance because they think it will be the cheapest option. However, this isn't necessarily the case because insurers price for risk and claims statistics show that new drivers are more likely to be involved in an accident than those with more experience.
Consequently, the cost of third-party cover has increased significantly in recent years and it can be more expensive than more comprehensive policies.
Third party, fire and theft
A step-up from third-party insurance is third party, fire and theft. Again, as the name suggests, this covers drivers on a third-party basis but also if your vehicle is stolen or damaged or destroyed by fire. It still won't cover your costs in the event of an accident that was your fault.
Fully comprehensive motor insurance which three-quarters of UK drivers opt for covers pretty much everything, including you, your vehicle, your passengers and property, as well that of the other party/parties.
It will also provide cover if your car is stolen, damaged or set alight. Finally, having fully comprehensive cover means you are insured to drive other vehicles, usually with third-party protection.
However comprehensive cover varies significantly between insurers. Some fully comprehensive policies for example may not include a courtesy car, which for some drivers might be a crucial aspect of a policy. Legal, breakdown and even windscreen cover may also not be incorporated as standard, even if the insurance policy is clearly labelled 'fully comprehensive'.
Instead these will be considered as 'perks' that will have to be added onto the policy, which could easily load another 50 onto your quoted premium.
Peter Harrison, car insurance expert at MoneySupermarket, says: 'Motorists looking for a fully comprehensive insurance policy will find that exclusions are commonplace. Drivers should scour the small print with a fine-toothed comb to ensure they don't get caught out.'
Shopping around for the best deal
Recent hikes in motor insurance premiums means it's especially important to save money by shopping around for the cheapest deal.
Nevertheless around 7.3 million drivers in the UK automatically stay with their current insurance provider when their existing policy comes up for renewal. This is in spite of the fact that nine in 10 drivers are aware they will probably get a better deal elsewhere.
Drivers who don't switch are missing out on an extra 375 each year the average sum MoneySupermarket customers save by changing deals, rather than taking up their renewal quote (or 'auto-renewing').
Other ways to drive down costs
As well as shopping around when your car insurance policy comes up for renewal, there are other ways of reducing the cost of your motor insurance without sacrificing your level of cover.
You'll pay less if your car is parked in a garage or on a drive overnight than on a road as the insurer will regard the risk to the vehicle as lower.
Surprisingly, adding a named driver such as partner or parent can also bring down your premium so long as the individual is deemed a lower-risk driver than you. However, you will need to make sure that the policy is in the name of the main driver, or you will be guilty of the illegal practice of 'fronting' a deliberate falsifying of the use of your car with the objective of cutting costs.
Agreeing to pay a higher excess (your contribution to the cost) in the event of any insurance claim is also a bone fide way of reducing your premiums, but make sure you are certain this higher excess is affordable at all times.
If you're a light user of your vehicle ensure your insurer knows it by specifying the number of miles you drive. This can also shave pounds off your premium.
Simply driving carefully and building up your No Claims Discount (NCD) will drive down premiums with any insurer. Five years' NCD can entitle drivers to up to 75% discount on car insurance premiums.
If you are really keen, look into taking a Pass Plus course will present you as a more experienced driver and you will be offered lower premiums to match. Pass Plus is aimed at drivers who have passed their standard test in the last 12 months, but there's nothing to stop any driver from taking the course.
This article has been researched and written by whatcar.com's car insurance partner, MoneySupermarket