If we drive a car
on the public roads we need car insurance (sometimes
known as Motor Insurance).
In the UK, you don't have to have home insurance, life insurance or health insurance, but having current car insurance is compulsory. This is to protect third parties against the financial consequences of loss, damage or injury caused by a car or car accident.
What types of car insurance are available?
The basic level of car insurance cover normally offered is usually called third party only insurance. This protects you if there is any claim against you, but doesn't protect you for any damage caused to your car that you cannot claim for against another persons insurance - e.g. theft or damage to your car in an accident in which you were at fault.
The next level up is third party fire and theft car insurance. This gives you the car insurance included in third party only insurance, but also provides insurance cover if your car is damaged by fire or is stolen.
The top level of car insurance is comprehensive car insurance. This level of insurance cover allows you to make a claim for any damage that might occur to your car.
Are there any other types? I've heard about classic car insurance for instance.
As well as standard
Comprehensive car insurance and Third Party car insurance there are other,
more specialised policies that may be available (they are in themselves
third party insurance or comprehensive insurance, but they are aimed at
particular types of car or driver).
An exciting new car insurance product that is also available is one which covers multiple cars within a household. Admiral car insurance provides such a product.
I have exactly the same car as my neighbour, but my policy costs 50% more. Why?
Many factors affect
the cost of an insurance policy. You may have exactly the same car as
your neighbour, but that doesn't necessarily mean your policy will cost
How can I get cheap car insurance?
There are various things that you can do to get cheap car insurance and reduce your insurance premium. You can elect to increase your voluntary excess. Most motor insurance premiums have a compulsary excess, but if you agree to a voluntary excess as well it usually reduces your premium. If you only travel 5,000 miles per year, tell your insurance company. Informing the insurer that you travel limited miles within a year usually makes your motor insurance premium cheaper. Don't include your 19 year old brother who has just passed his test. It might seem like the brotherly thing to do, but having a young, inexperienced driver on your insurance is a sure way to increase the cost. Garage your car overnight. A car locked away in a garage overnight is less likely to be stolen or damaged. This should knock a few pounds off your premium.
But above all, be a safe driver. A full no claims discount can knock well over 50% off your premium.
What is a "no claims" discount?
As a reward for not making any claims against your motor insurance, insurance companies will give you a no claims discount. For example, if you have not made an insurance claim for 12 months, your insurance premium may be reduced by 15%. The percentage discount will continue to rise the longer you go without a claim up to a certain limit (usually 5 years). You will then have what is known as a maximum no claims discount.
If you do make a claim
once you have built up a "no claims" discount, your discount
will usually be reduced (unless you have a protected no claims discount).
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