Generally there are three basic types of car insurance policies. These are as follows:
Third Party Cover: This type of insurance offers only the bare minimum cover for a car. The liabilities that it covers are as follows:
Injuries suffered by other individuals involved in the accident.
Property damage suffered by other individuals.
Accidents that may be caused by passengers.
Accidents due to trailers or caravans attached that may be attached to your car.
Third party cover is recommended only for those individuals, who can only afford to buy an inexpensive car.
Third Party, Fire and Theft Cover: Third party, fire and theft cover or the TPFT, is a level higher from the above third party cover. Along with the liabilities covered by the above policy, TPFT also offers cover against theft of your car and any damage it may suffer in case of a fire. It will not pay the expenses of car repairs; if it is proven that you were the cause of the accident.
This type of cover is recommended for cars that are moderately priced i.e. those whose cost of repairs will be more than the premiums you pay for your policy. Young drivers may also prefer this insurance policy, as they may not be able to afford the fully comprehensive one.
Fully Comprehensive Cover: This policy covers almost all the liabilities that you may have to pay for your car. It offers all of the covers mentioned above and along with them, offers cover for the following as well:
Damage to your own car during an accident.
A benefit, in case of personal accidents.
Medical expenses that you may incur.
Damage or loss of the personal belongings that may be present in your car.
Fully comprehensive insurance may differ from policy to policy, as it contains a number of optional covers and features. Such features include courtesy cars in case your car is stolen or suffers from an accident, no-claim bonuses etc.
Other options such as free cover all over Europe, possible legal advice etc. can also be availed at an extra cost.
Cutting the Cost of Car Insurance
Shopping around for car insurance on a regular basis (once every year or two), is one of the ways of reducing the cost of your car insurance. However, often the people pay according to the amount of cover that they get. Also, the cost of car insurance increases depending on the number of gadgets you add to it.Thus, you should be able to decide, which of the following facilities you need in your car insurance: • The car insurance companies may not always provide a courtesy in case of a car breakdown or theft. You can pay some amount of money and obtain the service.• Do you feel the need for legal protection? Such protection can come in handy, if you are involved in a car accident, in which the fault is not yours. Thus, you can claim all the uninsured losses from the other driver responsible for the accident. For this, you may be provided with legal protection of £50000 to £100000. However, such protection is provided, only if your car insurance firm is reasonably sure, that you have a good chance of winning the dispute.• Immediate assistance in case of car breakdown, or cover all across Europe can add significantly to your insurance cost.• Some car insurance companies can ask you to pay an added amount of money, to cover overseas liabilities.• The amount of excess that the policy asks you to pay also determines the cost of your policy to some extent. Some of the companies make it mandatory for the individual to pay some excess. This refers to the amount that you will have to pay in case of an accident. Thus, the greater the excess, the lower is the insurance premium.• Insurance for loss of personal belongings, car locks etc. adds to the premium.• The counseling that the companies offer over telephone may also add to the cost of the insurance.• You should also have a look at the way, in which your no-claims bonus works. Is it affected by an accident that is proven not to be your fault?• Is it possible to transfer the no-claims bonus that you may have accumulated while driving using a policy belonging to some other individual?• Is it possible to transfer the no-claims bonus to some other car?• How many claims can you make before affecting the no-claims bonus that you may have generated?• Does direct debit on a monthly basis affect your car insurance premium?
Get Yourself The Best Car Insurance Deal
Among all insurance products, car insurance is the one that is the most popular among the people of the UK. This does not come as a surprise, as car insurance is mandatory, if you drive any vehicle.
Thus, you may imagine that every individual is an expert as far as car insurance is concerned. However, most individuals continue with the same insurance policy for a number of years and thus, end up paying an unnecessarily large amount of money. People have a tendency to change their insurance policies, only when their insurance companies start charging excessively large premiums.
Others may find a cheap car insurance deal, where the insurers refuse to pay off the claims that they have made. They may claim the damage your car suffered was not covered by your particular insurance policy.
The first step while buying a car insurance deal is, searching for an insurance policy that is right for you. The comparison tools we have for car insurance, allow you to compare the policies offered by the top 60 car insurance companies in the UK.
However, getting some knowledge of how car insurance works will always help you in choosing the right policy. This knol has been specially designed to serve the very purpose.
All the typical questions such as, how do the companies arrive at a quote for your car and the way, in which you can reduce your premiums, the procedure to be followed while making the claims etc. that a car owner may have, are answered in this knol.
Also, the car owners may encounter some terms in their insurance policy that they are unable to understand. These too, have been explained here.
How Do Car Insurance Firms Utilise The Premiums?
Many individuals find car insurance expensive. But, often they are unaware about the way, in which the money is utilised.
The companies do not merely set aside the money they receive from you. Rather, the entire sum they receive from all individuals is grouped together and then, it is divided into three parts:
The claims you make are paid off by 50 percent of the money.
25 percent goes into the legal and administrative works.
The remaining 25 percent is used to run the company.
There may be some variations in the above figures depending on the firm. From among the money set aside to pay off claims, a large percentage is paid as a liability for damage to property. Damage due to collisions requires over 50 percent of the money spent by the company.
This amount is however, far less than the cost of personal injury claims and other medical expenses. The companies always pay the 'fair market value' for your cars.
The money the companies spend on processing claims and then settling them is also high. Apart from the above, money is also required for the payment of salaries of the employees, commissions, advertisements etc. Usually, the cheapest car insurance quotes are available online.
Legal Technicalities Involved In Liability Payment
According to the rules in the UK, any car that is 3 or more years old should have a valid MOT certification. Without it, the tax for the vehicle cannot be paid. It is a criminal offence, not to have the MOT certificate or proper insurance for your car.
According to the Road Traffic Act, every individual should have an insurance covering the liability for injuring other individuals or damaging property.
All the details with your car insurance firm should be updated regularly including any damage to the car, penalties, any claims that you have made etc. This practice is known as 'utmost good faith' that requires you to provide the insurer with all the details of the changes you have made, that you deem important as far as the insurer is concerned. If you fail to do so, then you may not receive the pay off for any claim that you may make in the future.
The practice of adding your teenagers to your own policy, in order to cut costs may not always be acceptable. Especially, if your child himself owns the vehicle he drives. Thus, even when the child himself primarily makes use of the vehicle, he is named as the driver of the vehicle.
Always be sure to tell the insurer, who is the main driver of the car.
Procedure to make a Claim
The payoffs by car insurance companies come up to millions of pounds each year. What if you face a similar situation, where you are involved in a car accident? How can you make a car insurance claim?
Here is a guide that will help you through the procedure.
Information about the damage to your car should be sent to the car insurance company as soon as possible. You can make use of the 24 hour helpline that many of the companies provide. It is also advisable to write down all that has occurred in case you need to refer to it in the future.
In case the damage to the car involves a criminal occurrence, you should ensure that the same is reported to the police. After that, you can inform your insurance company about the same. Be sure to note the incidence number when you inform the police, as the insurance company will ask for the same later.
You should ask your car insurance provider about the exact procedure to be followed to make the claim. Accordingly, you should gather the information that you will require.
Your narration of the events should be consistent, as variations in the same will make your case doubtful.
All the documents concerning the claim should be kept safely and also, you should ensure that the car insurance firm staff can get in touch with you whenever required.
You should keep a record of all the correspondence with the firm and also note down the things that were spoken about during phone calls. You should keep a photocopy of the documents related to your car at hand.
The car insurance company usually recommends a particular garage, where the car is to be taken for repairs. You should go to the same in order to have the cost reimbursed.
You will have to pay for any repairs done before the company agrees to pay the cost for car repair. Thus, before you proceed with them, you should ensure that you have a confirmation from the company about the repairs.
Why Do Car Insurance Companies Refuse To Pay Some Claims?
Sometimes, the car insurance companies may refuse to pay off one of your claims or may agree to pay only a percentage of the total expenditure.
Some among the various reasons for the same are as follows:
In case of theft, the insurers may think, that it was entirely your fault.
The policy does not include a clause to pay off that particular claim. The same may be covered under another policy.
The information that you provided about the claim or the policy is false.
You may not have receipts supporting the possession of some of the expensive devices that you have lost. For example, a laptop.
There may be a significant reduction in the claim, if the car is classified as the one costing only a few hundred pounds, even when it had a historic value.
The car insurers expect you to follow the policy of 'utmost good faith' i.e. you should inform the insurers about every details of any modification in the car that may be of some importance to them. They will not make any separate request asking for the information.
To prevent such a stance from the company, you should remember the following:
The small print in your car insurance policy may have various interpretations. The company may modify the same to suit their needs at a later instance.
Keeping records of all conversations and correspondence with the company will significantly increase you chances of getting the claim paid off.
The prices decided by the car insurance company for the car itself and the various items present in it, can be haggled over.
Financial Ombudsman Service (FOS) will provide you with some help, in case other measures fail.
What determines the Cost of Insurance for your Car?
The car insurance quotes that you receive from various firms are determined by various factors. Some of them are as follows:
Postcode: If your postcode belongs to an area that is prone to accidents or thefts, you will be charged higher for your car insurance. The cost increases further, if you park your car on the street. Having various security measures installed such as anti-theft devices etc. will reduce the premium rates.
Car Cost and the Insurance Category it belongs to: Depending on their price, power etc. car are classified in to different categories. Thus, Fiat Panda gets placed in the first group, while Porsche 911 will be placed in the twentieth.
Age of Drivers and their Experience: The drivers who have got their license recently or those who are under the age of 25 are more likely to be involved in an accident. Thus, if parents want to include their teenagers in the car insurance policy, the premiums are likely to shoot up by a great extent.
Thus, if your teenagers do not drive regularly, you can add them to your policy on a temporary basis. Also, you can consider drawing out a separate policy for them. If they attend courses conducted by the Institute of Advanced Motorists, you can often avail a discount.
Claims: If you make claims frequently, you end up paying a larger amount as premium. If you have not made any claims for a significant amount of time, you can even avail a no-claims bonus. However, if you are involved in an accident that was your fault, you may end up losing the bonus for up to 2 years.
The method for calculating no-claims bonus varies from firm to firm. Some of them may offer a 30 percent discount on not making any claims for a year. This may go up to 65 percent over a period of 4 to 5 years. Others offer a large discount to youngsters at the initial stage itself.
Occupation: Your job may have a bearing on the rate of premium you pay. Thus, a pop star is likely to be charged higher rates of premium than a teacher. Similarly, journalists will not find a cheap insurance policy easily.
Excess: This refers to the amount you pay by yourself, before the insurer does his job. The more the amount of excess, the lesser are the premium rates. The average amount of excess is £200.
Reasons for Soaring Costs of Car Insurance
People may often wonder, why they are charged higher and higher premiums for their car insurance. Many factors have an influence on this rise. Some of them have been discussed below. Also, apart from these factors, you may also be charged higher premiums, if you opt for more covers from your car insurance provider.
However, apart from the above, there are factors that are not under your control. They have been enlisted below.
Increasing Litigation Cost: Most of the claims made by the car drivers today, deal with personal injuries. The costs that they have to pay for the same have increased a great deal in the past few years. Intervention by insurers has been overruled and the courts have made decisions favouring the claimants. This is a positive event for most claimants, as they are likely to receive greater amount of money, especially in severe cases such as death of an individual.
NHS Costs: According to the new rules, it is now possible for NHS to recover the cost of treatment of individuals involved in an accident including the cost for ambulance, from the insurers.
Thus, if you were involved in an accident, which was not your fault, all your medical bills are paid by the insurer of the other individuals. Also, if it is proved that the accident was your fault; your car insurance company will have to pay the bills of all other individuals. These may be expensive.
Drivers that are not insured: The statistics state, that about 5 percent of all drivers are uninsured. However, other agencies have come up with statistics saying, that these figures may be as high as 10 percent. Some of them may be uninsured only for a period of a few weeks.
Due to this, there has been an increase of about £ 30 in the annual premiums. This increasing cost of premiums results in individuals deciding against buying an insurance policy for their car. Thus, there is a rise in the number of uninsured drivers.
Fluctuating Stock Markets: Most insurance firms, invest money in the stock markets in order to pay off the claims that may be made. Thus, the money they gain by premiums, often finds its way into the stock market.
Such strategies are seen more commonly in case of home insurance. However, these tactics are prevalent in case of car insurers as well.
Thus, a plummeting stock market will always result in an increase in the premium rates.
Other Ways To Cut Car Insurance Costs
You can choose to include various optional facilities in your car insurance. Apart from that, you can cut the car insurance cost in the following ways:
Many of the car insurance firm bases their policy costs depending on the number of miles you travel per year. Thus, the renewal quote you receive is decided on the figures you have submitted earlier. Thus, if a situation arises where you need to travel a lesser number of miles, you can inform the firm about the same and get a new quote.
The car insurance firms often charge more for inexperienced drivers. Thus, if you are able to prove to them that you are competent enough; your premiums can be reduced by as much as 35 percent. Passing an 'advanced driver' test will thus reduce your premiums.
The premium charged for married men is lower than that for single men. Marriage also brings along other benefits like no inheritance tax etc.
Having various security devices installed in your car such as alarms, immobiliser etc. to prevent theft will reduce the premiums. However, before installing these devices, you should ensure that your car insurance firm approves those particular ones.
Committing traffic offences such as speeding etc. will surely increase the cost of your car insurance.
Modifying your car and adding spoilers, fancy wheels etc. can increase the cost of insurance manifolds. Thus, it is advisable to make as few modifications as possible.
If you decide to pay your car insurance on a monthly basis, chances are that you will end up paying a large amount of money in excess. Monthly premiums can be 13 to 29 percent more expensive than annual ones.
If a number of family members share the car, then you should put in the name of the person who has the cleanest driving history as the main driver. Thus, the car insurance is likely to cost less.
Where To Shop For Car Insurance?
You may already be aware that using comparison websites to evaluate car insurance prices is a good practice. However, apart from this, you can use other techniques as well to find a good car insurance policy.
Some among the different places where car insurance quotes can be obtained are as follows:
A traditional broker can provide you with some quotes for policies that are unusual in nature. Thus, you can get good policies even if you have a rough driving history or have bought an expensive car etc. They will even support you in the process of making claims and in some cases, even act on your behalf. The cost of such insurances is usually higher than others. The commission that needs to be paid to the broker usually adds significantly to the insurance cost.
· Other type of brokers is the one that operate online. They usually sell policies from 10 to 20 insurers. Thus, whenever you approach them for a quote, they will scan from their list of insurers and provide you with the best policy available. However, this search will then be limited to only those insurers.
In case of direct insurers, the insurance companies themselves sell their policies. You can buy these policies directly from their websites. An advantage of such an approach is that the process is completed quickly and efficiently. On the downside, you may end up paying a larger amount of money. Also, approaching each and every company for a policy will mean entering your details on each of their websites. This process can be tedious.
Another option is that of comparison websites. These will ask you to enter your details and will then provide you with desirable options by using some software.
Third Party Cover: This type of insurance offers only the bare minimum cover for a car. The liabilities that it covers are as follows:
Injuries suffered by other individuals involved in the accident.
Property damage suffered by other individuals.
Accidents that may be caused by passengers.
Accidents due to trailers or caravans attached that may be attached to your car.
Third party cover is recommended only for those individuals, who can only afford to buy an inexpensive car.
Third Party, Fire and Theft Cover: Third party, fire and theft cover or the TPFT, is a level higher from the above third party cover. Along with the liabilities covered by the above policy, TPFT also offers cover against theft of your car and any damage it may suffer in case of a fire. It will not pay the expenses of car repairs; if it is proven that you were the cause of the accident.
This type of cover is recommended for cars that are moderately priced i.e. those whose cost of repairs will be more than the premiums you pay for your policy. Young drivers may also prefer this insurance policy, as they may not be able to afford the fully comprehensive one.
Fully Comprehensive Cover: This policy covers almost all the liabilities that you may have to pay for your car. It offers all of the covers mentioned above and along with them, offers cover for the following as well:
Damage to your own car during an accident.
A benefit, in case of personal accidents.
Medical expenses that you may incur.
Damage or loss of the personal belongings that may be present in your car.
Fully comprehensive insurance may differ from policy to policy, as it contains a number of optional covers and features. Such features include courtesy cars in case your car is stolen or suffers from an accident, no-claim bonuses etc.
Other options such as free cover all over Europe, possible legal advice etc. can also be availed at an extra cost.
Cutting the Cost of Car Insurance
Shopping around for car insurance on a regular basis (once every year or two), is one of the ways of reducing the cost of your car insurance. However, often the people pay according to the amount of cover that they get. Also, the cost of car insurance increases depending on the number of gadgets you add to it.Thus, you should be able to decide, which of the following facilities you need in your car insurance: • The car insurance companies may not always provide a courtesy in case of a car breakdown or theft. You can pay some amount of money and obtain the service.• Do you feel the need for legal protection? Such protection can come in handy, if you are involved in a car accident, in which the fault is not yours. Thus, you can claim all the uninsured losses from the other driver responsible for the accident. For this, you may be provided with legal protection of £50000 to £100000. However, such protection is provided, only if your car insurance firm is reasonably sure, that you have a good chance of winning the dispute.• Immediate assistance in case of car breakdown, or cover all across Europe can add significantly to your insurance cost.• Some car insurance companies can ask you to pay an added amount of money, to cover overseas liabilities.• The amount of excess that the policy asks you to pay also determines the cost of your policy to some extent. Some of the companies make it mandatory for the individual to pay some excess. This refers to the amount that you will have to pay in case of an accident. Thus, the greater the excess, the lower is the insurance premium.• Insurance for loss of personal belongings, car locks etc. adds to the premium.• The counseling that the companies offer over telephone may also add to the cost of the insurance.• You should also have a look at the way, in which your no-claims bonus works. Is it affected by an accident that is proven not to be your fault?• Is it possible to transfer the no-claims bonus that you may have accumulated while driving using a policy belonging to some other individual?• Is it possible to transfer the no-claims bonus to some other car?• How many claims can you make before affecting the no-claims bonus that you may have generated?• Does direct debit on a monthly basis affect your car insurance premium?
Get Yourself The Best Car Insurance Deal
Among all insurance products, car insurance is the one that is the most popular among the people of the UK. This does not come as a surprise, as car insurance is mandatory, if you drive any vehicle.
Thus, you may imagine that every individual is an expert as far as car insurance is concerned. However, most individuals continue with the same insurance policy for a number of years and thus, end up paying an unnecessarily large amount of money. People have a tendency to change their insurance policies, only when their insurance companies start charging excessively large premiums.
Others may find a cheap car insurance deal, where the insurers refuse to pay off the claims that they have made. They may claim the damage your car suffered was not covered by your particular insurance policy.
The first step while buying a car insurance deal is, searching for an insurance policy that is right for you. The comparison tools we have for car insurance, allow you to compare the policies offered by the top 60 car insurance companies in the UK.
However, getting some knowledge of how car insurance works will always help you in choosing the right policy. This knol has been specially designed to serve the very purpose.
All the typical questions such as, how do the companies arrive at a quote for your car and the way, in which you can reduce your premiums, the procedure to be followed while making the claims etc. that a car owner may have, are answered in this knol.
Also, the car owners may encounter some terms in their insurance policy that they are unable to understand. These too, have been explained here.
How Do Car Insurance Firms Utilise The Premiums?
Many individuals find car insurance expensive. But, often they are unaware about the way, in which the money is utilised.
The companies do not merely set aside the money they receive from you. Rather, the entire sum they receive from all individuals is grouped together and then, it is divided into three parts:
The claims you make are paid off by 50 percent of the money.
25 percent goes into the legal and administrative works.
The remaining 25 percent is used to run the company.
There may be some variations in the above figures depending on the firm. From among the money set aside to pay off claims, a large percentage is paid as a liability for damage to property. Damage due to collisions requires over 50 percent of the money spent by the company.
This amount is however, far less than the cost of personal injury claims and other medical expenses. The companies always pay the 'fair market value' for your cars.
The money the companies spend on processing claims and then settling them is also high. Apart from the above, money is also required for the payment of salaries of the employees, commissions, advertisements etc. Usually, the cheapest car insurance quotes are available online.
Legal Technicalities Involved In Liability Payment
According to the rules in the UK, any car that is 3 or more years old should have a valid MOT certification. Without it, the tax for the vehicle cannot be paid. It is a criminal offence, not to have the MOT certificate or proper insurance for your car.
According to the Road Traffic Act, every individual should have an insurance covering the liability for injuring other individuals or damaging property.
All the details with your car insurance firm should be updated regularly including any damage to the car, penalties, any claims that you have made etc. This practice is known as 'utmost good faith' that requires you to provide the insurer with all the details of the changes you have made, that you deem important as far as the insurer is concerned. If you fail to do so, then you may not receive the pay off for any claim that you may make in the future.
The practice of adding your teenagers to your own policy, in order to cut costs may not always be acceptable. Especially, if your child himself owns the vehicle he drives. Thus, even when the child himself primarily makes use of the vehicle, he is named as the driver of the vehicle.
Always be sure to tell the insurer, who is the main driver of the car.
Procedure to make a Claim
The payoffs by car insurance companies come up to millions of pounds each year. What if you face a similar situation, where you are involved in a car accident? How can you make a car insurance claim?
Here is a guide that will help you through the procedure.
Information about the damage to your car should be sent to the car insurance company as soon as possible. You can make use of the 24 hour helpline that many of the companies provide. It is also advisable to write down all that has occurred in case you need to refer to it in the future.
In case the damage to the car involves a criminal occurrence, you should ensure that the same is reported to the police. After that, you can inform your insurance company about the same. Be sure to note the incidence number when you inform the police, as the insurance company will ask for the same later.
You should ask your car insurance provider about the exact procedure to be followed to make the claim. Accordingly, you should gather the information that you will require.
Your narration of the events should be consistent, as variations in the same will make your case doubtful.
All the documents concerning the claim should be kept safely and also, you should ensure that the car insurance firm staff can get in touch with you whenever required.
You should keep a record of all the correspondence with the firm and also note down the things that were spoken about during phone calls. You should keep a photocopy of the documents related to your car at hand.
The car insurance company usually recommends a particular garage, where the car is to be taken for repairs. You should go to the same in order to have the cost reimbursed.
You will have to pay for any repairs done before the company agrees to pay the cost for car repair. Thus, before you proceed with them, you should ensure that you have a confirmation from the company about the repairs.
Why Do Car Insurance Companies Refuse To Pay Some Claims?
Sometimes, the car insurance companies may refuse to pay off one of your claims or may agree to pay only a percentage of the total expenditure.
Some among the various reasons for the same are as follows:
In case of theft, the insurers may think, that it was entirely your fault.
The policy does not include a clause to pay off that particular claim. The same may be covered under another policy.
The information that you provided about the claim or the policy is false.
You may not have receipts supporting the possession of some of the expensive devices that you have lost. For example, a laptop.
There may be a significant reduction in the claim, if the car is classified as the one costing only a few hundred pounds, even when it had a historic value.
The car insurers expect you to follow the policy of 'utmost good faith' i.e. you should inform the insurers about every details of any modification in the car that may be of some importance to them. They will not make any separate request asking for the information.
To prevent such a stance from the company, you should remember the following:
The small print in your car insurance policy may have various interpretations. The company may modify the same to suit their needs at a later instance.
Keeping records of all conversations and correspondence with the company will significantly increase you chances of getting the claim paid off.
The prices decided by the car insurance company for the car itself and the various items present in it, can be haggled over.
Financial Ombudsman Service (FOS) will provide you with some help, in case other measures fail.
What determines the Cost of Insurance for your Car?
The car insurance quotes that you receive from various firms are determined by various factors. Some of them are as follows:
Postcode: If your postcode belongs to an area that is prone to accidents or thefts, you will be charged higher for your car insurance. The cost increases further, if you park your car on the street. Having various security measures installed such as anti-theft devices etc. will reduce the premium rates.
Car Cost and the Insurance Category it belongs to: Depending on their price, power etc. car are classified in to different categories. Thus, Fiat Panda gets placed in the first group, while Porsche 911 will be placed in the twentieth.
Age of Drivers and their Experience: The drivers who have got their license recently or those who are under the age of 25 are more likely to be involved in an accident. Thus, if parents want to include their teenagers in the car insurance policy, the premiums are likely to shoot up by a great extent.
Thus, if your teenagers do not drive regularly, you can add them to your policy on a temporary basis. Also, you can consider drawing out a separate policy for them. If they attend courses conducted by the Institute of Advanced Motorists, you can often avail a discount.
Claims: If you make claims frequently, you end up paying a larger amount as premium. If you have not made any claims for a significant amount of time, you can even avail a no-claims bonus. However, if you are involved in an accident that was your fault, you may end up losing the bonus for up to 2 years.
The method for calculating no-claims bonus varies from firm to firm. Some of them may offer a 30 percent discount on not making any claims for a year. This may go up to 65 percent over a period of 4 to 5 years. Others offer a large discount to youngsters at the initial stage itself.
Occupation: Your job may have a bearing on the rate of premium you pay. Thus, a pop star is likely to be charged higher rates of premium than a teacher. Similarly, journalists will not find a cheap insurance policy easily.
Excess: This refers to the amount you pay by yourself, before the insurer does his job. The more the amount of excess, the lesser are the premium rates. The average amount of excess is £200.
Reasons for Soaring Costs of Car Insurance
People may often wonder, why they are charged higher and higher premiums for their car insurance. Many factors have an influence on this rise. Some of them have been discussed below. Also, apart from these factors, you may also be charged higher premiums, if you opt for more covers from your car insurance provider.
However, apart from the above, there are factors that are not under your control. They have been enlisted below.
Increasing Litigation Cost: Most of the claims made by the car drivers today, deal with personal injuries. The costs that they have to pay for the same have increased a great deal in the past few years. Intervention by insurers has been overruled and the courts have made decisions favouring the claimants. This is a positive event for most claimants, as they are likely to receive greater amount of money, especially in severe cases such as death of an individual.
NHS Costs: According to the new rules, it is now possible for NHS to recover the cost of treatment of individuals involved in an accident including the cost for ambulance, from the insurers.
Thus, if you were involved in an accident, which was not your fault, all your medical bills are paid by the insurer of the other individuals. Also, if it is proved that the accident was your fault; your car insurance company will have to pay the bills of all other individuals. These may be expensive.
Drivers that are not insured: The statistics state, that about 5 percent of all drivers are uninsured. However, other agencies have come up with statistics saying, that these figures may be as high as 10 percent. Some of them may be uninsured only for a period of a few weeks.
Due to this, there has been an increase of about £ 30 in the annual premiums. This increasing cost of premiums results in individuals deciding against buying an insurance policy for their car. Thus, there is a rise in the number of uninsured drivers.
Fluctuating Stock Markets: Most insurance firms, invest money in the stock markets in order to pay off the claims that may be made. Thus, the money they gain by premiums, often finds its way into the stock market.
Such strategies are seen more commonly in case of home insurance. However, these tactics are prevalent in case of car insurers as well.
Thus, a plummeting stock market will always result in an increase in the premium rates.
Other Ways To Cut Car Insurance Costs
You can choose to include various optional facilities in your car insurance. Apart from that, you can cut the car insurance cost in the following ways:
Many of the car insurance firm bases their policy costs depending on the number of miles you travel per year. Thus, the renewal quote you receive is decided on the figures you have submitted earlier. Thus, if a situation arises where you need to travel a lesser number of miles, you can inform the firm about the same and get a new quote.
The car insurance firms often charge more for inexperienced drivers. Thus, if you are able to prove to them that you are competent enough; your premiums can be reduced by as much as 35 percent. Passing an 'advanced driver' test will thus reduce your premiums.
The premium charged for married men is lower than that for single men. Marriage also brings along other benefits like no inheritance tax etc.
Having various security devices installed in your car such as alarms, immobiliser etc. to prevent theft will reduce the premiums. However, before installing these devices, you should ensure that your car insurance firm approves those particular ones.
Committing traffic offences such as speeding etc. will surely increase the cost of your car insurance.
Modifying your car and adding spoilers, fancy wheels etc. can increase the cost of insurance manifolds. Thus, it is advisable to make as few modifications as possible.
If you decide to pay your car insurance on a monthly basis, chances are that you will end up paying a large amount of money in excess. Monthly premiums can be 13 to 29 percent more expensive than annual ones.
If a number of family members share the car, then you should put in the name of the person who has the cleanest driving history as the main driver. Thus, the car insurance is likely to cost less.
Where To Shop For Car Insurance?
You may already be aware that using comparison websites to evaluate car insurance prices is a good practice. However, apart from this, you can use other techniques as well to find a good car insurance policy.
Some among the different places where car insurance quotes can be obtained are as follows:
A traditional broker can provide you with some quotes for policies that are unusual in nature. Thus, you can get good policies even if you have a rough driving history or have bought an expensive car etc. They will even support you in the process of making claims and in some cases, even act on your behalf. The cost of such insurances is usually higher than others. The commission that needs to be paid to the broker usually adds significantly to the insurance cost.
· Other type of brokers is the one that operate online. They usually sell policies from 10 to 20 insurers. Thus, whenever you approach them for a quote, they will scan from their list of insurers and provide you with the best policy available. However, this search will then be limited to only those insurers.
In case of direct insurers, the insurance companies themselves sell their policies. You can buy these policies directly from their websites. An advantage of such an approach is that the process is completed quickly and efficiently. On the downside, you may end up paying a larger amount of money. Also, approaching each and every company for a policy will mean entering your details on each of their websites. This process can be tedious.
Another option is that of comparison websites. These will ask you to enter your details and will then provide you with desirable options by using some software.
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