A Guide to Car Insurance


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By Grace Hickman

on Tuesday 11 September 2018


Paper car on desk with hands protecting it

In the event of a road traffic accident, a fire in your vehicle, theft or anything else that may cost you financially (like vehicle repairs) and physically (such as a personal injury), car insurance is there to help you.

If the accident wasn’t your fault and another driver or a defect in the road caused your accident, then contacting us at Non Fault claims to help get you a replacement car and manage your claim would be the best option.

This way, we can help you avoid any costs of your excess and any impacts on your no claims bonus, which would otherwise be affected should you go through your own insurer.

Our guide will explain the ins and outs of car insurance including how it works, the different types, excess, no-claims bonus, the costs and ways to save on your premiums.

Sections on this page:

Car Insurance and the Law

What is Car Insurance and How Does it Work?

Types of Car Insurance

What is a No-Claims Bonus?

What is Excess?

How Much is Car Insurance?

How to Save on Your Premiums

 

Car Insurance and the Law

Just as it is a legal requirement in the UK to have a valid MOT test certificate, it is also the law that you have car insurance in place, as stated in the Road Traffic Act 1988.

The least amount of insurance you are legally required to have is third-party insurance, which we will explain in more detail later on.

If the vehicle is insured, but you do not have the correct car insurance policy in place to drive it, you could still face penalties. This includes a minimum fine of £300 and up to 6 points on your licence.

Some cases may end up in court, meaning that you could face being banned for driving for a certain amount of time, having an unlimited fine or your car seized or destroyed, depending on the situation.

Car Insurance: What is it and How Does it Work in the UK?

Whether you are buying or leasing a car, you must arrange your car insurance yourself before receiving the vehicle.

After deciding on the right insurer for you and taking out an insurance policy with them, you will pay the insurer a premium every month.

The cost of the premium is based on a number of factors, which will be explained later. Alternatively, you can skip to the section How Much is Car Insurance?

What Happens in an Accident?

The car insurance policy is like financial back-up in the event of having a car accident, damaging your car in any way, having it stolen or anything else that has financial implications.

Even if you have an accident that is minor, there will still be costs (potentially thousands), which someone is responsible for.

Usually, after an accident that was caused by you, your first port-of-call is to make a claim with your insurance company. After explaining the details of the event, they will cover you accordingly, depending on the incident and the policy you have.

If you didn’t have insurance, you would have to pay for all the damage yourself, which can be particularly costly, so it’s a good thing car insurance is a legal requirement.

On the negative side, you could lose your excess and no-claims bonus after making a claim, meaning that your insurance premiums will probably increase.

In the event of a non-fault accident, however, we can help you. With us at Non Fault Claims, claiming for an accident that wasn’t your fault is simple and means you can protect your no claims bonus, which you wouldn’t be able to do with your own insurer.

Types of Car Insurance

A common question asked is ‘What Does Car Insurance Cover?’ – this all depends on the type of car insurance policy you take out.

Generally, there are three main types of car insurance:

1. Fully Comprehensive Cover

This policy is the most popular kind of car insurance cover, for the main reason that it covers you for a significant amount.

It has you covered for other drivers who are injured in an accident, their car, their passengers, uninsured losses, and even any pets in the vehicle.

It covers you for any injuries you sustained in an accident, including your passengers and any damage done to your car.

If your car is stolen or damaged by fire, you are also covered.

Many people ask if fully comprehensive cover is more expensive than other policies. Usually, it is. This is due to the amount of things it covers you for (as mentioned above) – with some fully comp. policies, you can also be covered for any damaged items in your car, medical expenses, driving abroad, and you can drive other vehicles.

It all depends on your policy, however, so be sure to check all of this).

2. Third Party Car Insurance

Third party is a simple type of insurance and usually the cheapest you can get to be able to drive legally in the UK.

When looking at third party vs fully comprehensive, the former is cheaper as it covers you for less in an accident.

Third party insurance only covers other people (third parties) in an accident. That means the driver you hit, their passengers and car.

You, however, are not covered. So any injuries you sustain or any damage done to your car will have to be covered by you. Hence why third party is usually the cheapest option.

3. Third Party, Fire and Theft

This policy is similar to third party insurance, but with the added protection of you being covered if your car is stolen or damaged by fire.

Some other types of car insurance you may need are:

  • Business car insurance
  • Short-term car insurance (when leasing, for example)
  • Multi-car insurance
  • Black box insurance

Depending on the insurer, your policy may include courtesy car and breakdown cover – be sure to check this with them.

Your insurer can help you decide exactly what insurance policy you need, depending on your specific needs and circumstances.

In the event of a non-fault accident, we can help you with a replacement vehicle and managing your claim for compensation.

One of the many reasons why people come through us is that victims of a non-fault accident find that doing it themselves and through their insurer can be a hassle or find that their insurer doesn’t provide the services they promised to you when you signed up to their policy.

What is a No-Claims Bonus?

A no-claims bonus, also known as a no-claims discount, is something you accrue every year that you don’t have an accident and make a claim with your insurance company.

Driving carefully year after year will give you a better no-claims bonus every time, making your premiums lower.

The reason for improving your no-claims bonus and decreasing your premiums is that the insurance company will see you as a low-risk driver who is reliable; therefore they don’t have to worry so much about you costing them money.

If you decide to change your insurance company, your no-claims discount will carry over, so you don’t need to worry about that.

What is Car Insurance Excess?

When you sign up to an insurance policy, you will have to pay an amount for the excess, which will be agreed by you and your insurer.

In the event of an accident, you will have to pay this ‘excess’ amount towards the cost of any damages, like repair costs, for example. The insurance company will then pay the rest.

As an example, if the total amount of damage was £2,500 and your excess was £500, you would pay the excess of £500 and your insurer would pay the remaining £2,000.

Looking at another example, if the cost of damage was £400 and your excess was £500, you would be responsible for the full amount. In this type of case, many people avoid contacting their insurer and just pay it themselves, so that they don’t lose out on their no-claims bonus and excess.

Usually, the higher the excess you set at the beginning, the cheaper your insurance premiums will be.

How Much is Car Insurance?

Car insurance premiums are calculated based on a number of factors. Some include:

  • Whether you’re a new or experienced driver (new drivers are seen as a high risk, so premiums are more expensive until you start building up your no-claims bonus).
  • If you’ve had accidents or driving offences before.
  • The type of car you own.
  • Where you keep it when you’re not driving it.
  • Your occupation.
  • The amount you set your excess.
  • Your no-claims bonus.

Other factors may be taken into account when determining your car insurance premiums.

To evaluate how much of a ‘risk’ you are out on the roads, the insurers will evaluate as much information about you as deemed necessary, so be prepared to answer a variety of questions when arranging your car insurance.

And most importantly, make sure you’re asking questions too, so you know exactly what you’re covered for.

How to Save on Your Car Insurance Premiums

There may be certain policy add-ons available with your insurance policy, such as adding another driver who is also a low risk to the insurer, which could help reduce your insurance premiums.

Also, the more valuable your car is, the more expensive premiums are likely to be.

Some other ways to help reduce premiums are:

  • Paying premiums yearly rather than monthly.
  • Fitting a black box to your vehicle.
  • Doing research online and shopping around to find the best car insurance deals (make sure that if they are the cheapest, they still match your exact needs).
  • Parking in a good location to ensure your car is as secure as possible.
  • Setting a high excess amount at the start.
  • Having a no-claims bonus.

Why Claim with Non Fault Claims?

Claiming for a non-fault accident with your own insurer may prove difficult and it could mean you losing your no-claims discount and excess.

At Non Fault Claims, our no win no fee lawyers make the process of claiming for damages or injuries straightforward, giving you more time to get over the accident and recover while we sort everything out for you.

Making your personal injury or car damage claim through us also means you avoid losing your no-claims bonus and paying the cost of your excess.

If you’ve been involved in an accident that wasn’t your fault, don’t hesitate to contact us today to see how we can help you get the compensation you deserve.

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