The problem with car insurance is that it’s full of jargon, but you need to get to grips with it if you’re to stay legal and get the best deal you can when buying cover for your car.

One of the key things to consider with car insurance is what level of cover you want – as well as what you can afford. There are three types to consider – plus a raft of add-ons, only some of which are worth having…

Third party car insurance

This is the minimum level of cover that you can buy for your car, but it’s all you need to drive legally. As a basic policy you could be left feeling very exposed in the event of an accident – especially if it’s your fault.

Third party car insurance will only cover the costs of anybody who would otherwise be left out of pocket by your actions. So if you drive into someone or something, repairs to their property will be taken care of and so will any personal injury claims.

For some people this is enough, but don’t be fooled into thinking that it won’t happen to you. Misjudging a corner, skidding on a wet road or failing to spot someone as you pull out from a junction are all things that might just happen. And if one of these things does happen to you, the cost of repairing or replacing your car will be completely down to you.

There’s also the possibility of your car being stolen or catching fire; newer vehicles, with their high-pressure fuel systems, along with modern fuels which are incredibly flammable, mean car fires are more common than ever.

With this most basic level of car insurance you won’t be covered in the event of your car being pinched or burned out, so you could be left hugely out of pocket. So before opting for third party insurance cover only, think very carefully.

Third party, fire and theft car insurance

As the name suggests, this type of car insurance policy offers a similar level of protection to just third party, but in the event of your car being stolen or catching fire you’ll be covered.

It used to be the case that third party cover (as well as third party fire and theft policies) were always cheaper than fully comprehensive insurance, which we’ll get to a minute. But that’s no longer necessarily the case because of a foible of how insurance works.

An insurance premium is calculated according to how likely it is that the policy holder will make a claim. The greater the chances of you making a claim, the more you pay.

In the past a lot of high-risk drivers opted for third party cover only in a bid to cut their costs. But by definition these drivers were more likely to make a claim – and claim they did. This skewed things to the point where third party policies can be more expensive than the fully comprehensive alternative because those taking them out are statistically more likely to make a claim.

Fully comprehensive car insurance

If you want complete peace of mind with your car insurance you shouldn’t settle for anything less than fully comprehensive cover. And with plenty of shopping around it may be hardly any more expensive than a more basic level of cover – or perhaps even cheaper, as explained above.

Take out a fully comprehensive car insurance policy and damage to your own vehicle will be covered even if it’s your fault. Naturally any cash paid out to third parties will be covered too, while if your car is stolen or catches fire that’ll be sorted.

It always used to be the case that a comprehensive policy would also allow you to drive any car (with the owner’s permission), but this would be on a third party basis only. Not ideal but at least you’d be legal.

Some companies no longer offer this as a matter of course, so check whether or not you’re covered to drive other cars. Also, if you take your car overseas you’ll be covered but the chances are that the level of cover drops to third party only; to retain fully comprehensive cover in mainland Europe (or further afield) you’ll probably have to pay an extra premium.

However you look at it though, comprehensive insurance cover is the best option and it needn’t cost you any more than a basic level of cover. But even if you take this route there are optional extras to lighten your wallet by a few more pounds…

Add-ons

Whatever level of car insurance cover you go for, your insurer will offer an array of extras. Only you can decide which are worthwhile:

• Breakdown cover: Always worth having, but it may be cheaper to go for a separate, stand-alone policy.
• Legal costs: Lawyers cost plenty and if you get caught in a legal wrangle because of your driving you really don’t want to be liable for the potential bill.
• Courtesy car: If your car is off the road you’ll need alternative transport. Hiring a car for several weeks will be expensive, so it’s worth knowing it’ll be paid for.
• NCD protection: You can keep your No Claims Discount intact even after you’ve made a couple of claims if you take this out. However, because you’ve made a claim your premium will still go up which is why it may not be worth paying extra cash to protect your NCD.

 

Insurance buying basics

• Shop around to get the best price and deal.
• Try to price match, playing off one insurer against another.
• Read the terms and conditions before signing up to anything.
• Consider a larger excess, but make sure you can pay it in the event of a claim.
• Opt for a limited mileage policy if you’re able to and you don’t do many miles each year.
• Use a specialist insurance company if you drive something unusual such as a kit or classic car.

* Before taking out any insurance policy, make sure it’s not with a ghost broker

Richard Dredge

February 2016

www.hpicheck.com