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Vehicle Insurance

There are lots of charges which are part and parcel of running a vehicle on the road. Fuel is perhaps the most obvious, but other costs such as breakdown cover, road tax and servicing should also be considered when you’re thinking about buying a new car. One of the most important bills any driver faces is insurance. This isn’t an optional bill, and it’s important to understand what it’s all about before you leap in and buy the first policy you come across.
Why Do We Need Vehicle Insurance?

Vehicle insurance is no different from any other insurance. The policy protects you against financial risk if something bad happens to your car. If you are insured and are involved in an accident, then the insurance company will foot the bill for repairing your car, and any other cars or property which was damaged in the accident. You may pay your annual insurance fee for years and never have to make a claim. But if you do, the insurer bears the risk and you’re not seriously out of pocket.

Vehicle insurance is a legal requirement for every vehicle driven on the public road. If you’re lucky enough to have a large country estate to drive around, then you don’t need to insure your car (or tax it either). But everyone else must, by law, have insurance.

What Insurance Covers

As we mentioned before, insurance is there to cover the costs of getting your car fixed should you be involved in an accident. It also meets the cost of fixing other people’s cars, if you caused the accident which damaged their vehicle. After an accident or incident, the insurers of everyone involved will ask for an account of what happened, photographs or dashcam footage. Insurers will then decide who was at fault, and it’s their insurance company which meets the cost of all repairs.

In addition to the cost of fixing cars and properties, most insurance policies will also cover legal costs resulting from a claim. If, for example, you are found to be at fault in an accident where someone is seriously injured, the claims for medical bills and loss of earnings can run into hundreds of thousands of pounds.

Types of Insurance Policies

Each insurance company differs slightly in what cover it offers its customers. Some policies might offer use of a car when yours is off the road after an accident, or throw roadside breakdown assistance in as an additional extra. When you’re shopping for a new insurance policy it’s important to look at all the ways in which they differ from each other, rather than just defaulting to the cheapest option.

Most policies sold through insurers in the UK are fully comprehensive, which means that the policy will cover damage to your car as well as fixing damage to any other vehicles. A cheaper option, although less popular than it was in the past, is to take “third party only” insurance. This will meet your legal obligation to have an insurance policy, but will only cover the costs of fixing someone else’s car in the event of an accident. Unless you have no other option, it’s always better to look for a fully comprehensive motor insurance policy.

Choosing a Policy

It’s always easier to get online and browse for a vehicle insurance policy online than it is to phone companies up for a quote. If you’re driving a car, motorbike, or van, then all of the insurer’s own websites and the price comparison sites will be able to provide you with prices. If you’re trying to insure something a bit more unusual such as a tractor or vintage, imported car, you might have to go through a specialist website. Whatever type of site you’re on, you’ll have to provide some basic details about the car, where it’s kept overnight and whether it’s been modified, and some details about you and your driving history. Be honest – insurers share information between themselves and if you are caught lying and have your policy cancelled, you may struggle to get any insurance at all.

Price comparison sites will allow you to put your details in just once, and see a range of different policies from a variety of insurers. Just make sure that you’re comparing like for like; does a policy appear more expensive because it has additional legal cover or benefits which you don’t need? Not all insurance companies offer policies through price comparison websites, so check any other companies which you may have seen advertised. There is no charge for getting quotes, and it won’t affect your credit record.

Understanding Excesses

One of the most important concepts when comparing insurance policies is the excess. It’s easiest to think of this as your contribution towards the costs of your claim. Many insurers have a compulsory excess, which can’t be altered. Some in addition will have a voluntary excess, which you can raise and lower. A higher voluntary excess might reduce the overall amount you pay for your policy, but on the other hand will mean that you are landed with a much bigger bill should you be involved in an accident. Most insurer websites have sliders which you can move up and down to change the excess amounts and see how this affects your premium. Settle on an amount which keeps the premium manageable, but which won’t see you hugely out of pocket if you make a claim. This amount will be different for everyone, depending on your circumstances.

Renewing Insurance

Most companies will offer attractive prices in the first year as a policy holder to encourage new customers to join them. After you’ve had the policy for a year, they’ll send you a renewal notice, with the price you’ll pay for the following year. Remember you’re under no obligation to take the price they offer. Look elsewhere for a better deal, and switch to another insurance company entirely should you wish. Just make sure that you arrange a new policy before your old one expires.