Insurance

car insurance the facts

Insurance facts
There is a lot of data written about car insurance and I have written these notes to help you understand some of the more common terminology a little more clearly. First of all you need to understand that you have to have your car insured by law if you intend to drive it on the public roads. This is for two main reasons

Should you run into a pedestrian or another vehicle (moving or parked) then the insurance company you are with can pay out compensation Should you damage your car then you could claim damages through your insurance company There are many different types of insurance you can have for cars, here are the ones that concern you as a new driver.

3rd party -
this is the minimum type of insurance you need to have by law. What it means is if you are involved in an accident, the person you hit (vehicle, goods, or person themselves) can claim money from your insurance.

3rd party fire and theft -
this covers your costs as shown in item 1 plus if your car catches fire, or is stolen, then you can recover some of the costs involved in replacing or repairing your car.

Comprehensive -
this means that you are covered for items 1 and 2, plus you could have your car repaired at the insurers cost. The first type of insurance mentioned i.e. 3rd party does not cover you for repairing your own car.

Some conditions that influence your
insurance price quote

Your age
Your driving record
Where you live
Is your car garaged or off the road at night?
Your car make and model
Does your car have an immobiliser device fitted
Have you passed your driving test?
Do you smoke?
Are you male or female? (males under the age of 25 pay more than females)
Your job
Do you use your car to go to work?
Do you use your car for your work?

Buying your first car
When you buy your first car the natural tendency is to find something cheap, just in case you have an accident, but this ´cheap´ car can be false economy as far as insurance goes.The cheaper the car the less chance it will have the right type of security and safety measure to impress an insurance company.

It is more likely to be stolen or ´written off´ (completely scrap) in an accident. Some of my students have bought cars for £800 and paid over £2,000 for insurance. Motto: Do your research.

You are probably best for your first car to be priced around £2,000. As part of your research take a look at New to eBay? . Here you will find a large selection of cars and it will help you in your research to check out a general price range for the car you want. ebay has further guidelines for you and built in safeguards when you purchase your car online.

As a new driver once you have passed your driving test you can take a further six lessons which will include motorway driving. After these lessons you will be issued with a certificate which you can use at any insurance company who has registered for the Pass Plus scheme. This certificate will entitle you to a discount on your first year insurance premium. It acts as a no claims bonus.

A no claims bonus is a yearly discount you receive on your insurance premium if you have completed a years driving without making a claim.

Any year that you do make a claim on your insurance policy may lose you all or part of any bonus you have already earned.

What is a no claim bonus?

The no claims bonus discount
You would normally get a 30% discount on your yearly premium if you don't make a claim within that year. Your Pass Plus discount could cover your first years premium. Your no claims insurance bonus increases to 65% after four or five years. Not all companies are the same though, you should shop around. Some may go up to a 70% maximum.

Insurance companies now offer the opportunity for you to pay more on your annual premium to insure you against loss of your no claim bonus. The different insurance companies have different rules, so check before you buy.

Sometimes you are allowed to make one claim every 3 years without it affecting your bonus. Protecting your bonus will not stop your insurer from increasing your renewal premium following a claim. Your no claim bonus though will be unaffected.

Making a claim does not necessarily mean you lose your bonus. It depends whether the claim is your fault or the other persons fault.

Just because the accident was not your fault, still doesn't mean you are in the clear. If the insurance company cannot recover it's costs then you seem to lose out.

Example; if you are driving along a country road and a wild deer runs into your car, you obviously cannot claim off the deer. So who pays? Most of the time it would be you, one way or another. Either directly to a garage to fix your car or by the loss of your no claim bonus. Either way you are out of pocket on a non-fault accident of this type.

Should another driver be involved in your accident and it can be shown without doubt that the other driver was to blame, both insurers would often settle a claim on a 50:50 or 80:20 basis. This means you will both lose some of your no claims bonus. A lot of insurance companies, make you lose two years off your no-claim bonus if the accident was your fault.