What is Car Insurance?
It’s all very well thinking about getting a car, but what do you know about insurance? For one thing, it’s illegal to drive without it, so what’s it all about?
Welcome to the party
Often people talk about buying a car as being the second most expensive purchase you will make in your life. If you are buying from new and going upmarket, then yes, quite possibly it is, but most of us don’t spend that much on our cars. And if it’s the first you’ve ever had, then it’s likely the vehicle you will buy will cost a few thousand pounds, or may be it will be a present from a parent.
No matter how you get your car there are a lot of things that can now happen to it. It might be vandalised, you may have an accident and run into another vehicle, or you may hit an immovable obstacle or an animal, it may catch fire, it is vulnerable to theft and unless it’s sitting inside a garage, it is also vulnerable to the elements.
But, if it’s fully insured, then all these things can be coped with. If anything happens to your car you’ll receive the money from the insurance company to deal with the damage or loss.
How does it work?
Fundamentally, insurance companies offer two levels of cover for drivers. These are known as either Fully Comprehensive insurance or Third Party, Fire and Theft insurance.
With Fully Comprehensive car insurance you will be covered for every eventuality. If somebody runs into your vehicle and causes damage even while it is parked in the street and then they drive off, you can still get payment from the insurance company to do the repairs.
If you are involved in an accident with another vehicle and it was your fault then your insurance company will pay for repairs to the other driver’s vehicle as well as those caused to yours.
Third Party Fire and Theft
If you take out this cover you will find that it is cheaper, but the reason for that is it covers less: it is not as comprehensive. Third party means that you are covered for causing damage to another person’s vehicle. This is the element that it is illegal to drive on the roads without. Fire and theft are self-explanatory. So if you have this cover and say, you accidentally drive into a tree then you will not be covered for the damage. In order to repair the car you will have to pay for it all yourself.
You can just take out Third Party insurance on its own and this is even cheaper, but with obvious disadvantages on what it covers too.
Car insurance can start to appear complicated when you look at all the different variations of cover on different policies provided by the many different companies.
You will see there are things called an ‘excess’. For instance, you may be quoted from one company that the cover will include a £100 excess on the windscreen. This would mean that you would have to pay the £100 and the insurance company would pay the difference between £100 and the total bill.
There will always be a basic excess on the whole cover, so you may have to pay the first £250 or £500, or whatever is agreed when you take out the policy. It will always be clearly stated what this limit is on the Insurance documents and it is one way in which some insurers appear to offer lower premiums.
No Claims Discount
Different companies will also treat the No Claims Discount differently. A No Claims Discount is what it says: if you make no claims for a year then you get a discount on the next year’s premium. This NCD builds up until it can save you quite a sum. This is why some companies offer a No Claims Discount protection package, which means the NCD will remain as it was even though you have to make a claim.
Insurance is essential for stress-free motoring. Once you’ve been driving for a few years without any claims you will find the premiums will start to drop to sums that are more manageable and hopefully you will be able to remain safe with careful driving and keep them that way.