We understand that car insurance can be a complex subject and searching for the right cover for you can be a daunting task. Take a look at the below information that provides a basic understanding of car insurance and the different types that may be available to you.
We would suggest you do plenty of research when it comes to getting the right cover for your new set of wheels.
What is car insurance?
Vehicle insurance is insurance for cars, trucks, motorcycles, and other road vehicles. Its main use is to provide financial protection against physical damage or bodily injury resulting from traffic collisions and against liability that could also arise from incidents in a vehicle.
Why do I need car insurance?
The most important thing to note is that it is illegal to drive on the UK roads without insurance.
If you drive without car insurance, you could face a fine of up to £1,000 or have your vehicle seized and destroyed.
Car insurance covers you against financial losses, but the level of protection depends on what type of policy you choose to take out.
Car insurance is available in different levels, and the level you choose will determine how much of the costs are covered by your insurance company.
Do I need car insurance for car finance?
Yes, car insurance is a mandatory requirement for owning a vehicle. As a Go Car Credit customer, you will need a fully comprehensive insurance policy. This is not included in your car finance agreement with us, this will need to be taken out independently.
Gap insurance is to protect you when you buy a new car. It is designed to cover the difference between the amount your car insurer would pay out if your car was stolen, or written off, and the price you paid for your car.
This is not a mandatory requirement and only a suggested insurance. For more information on GAP insurance check out our blog post.
Different types of car insurance available
There are 3 levels of car insurance cover that you can purchase. It would be a good idea to familiarise yourself with what each one includes as the low-cost option might be appealing at first but in the event of an accident it may not be cost effective at all.
This is the highest level of cover you can get. On top of the basics of third party, fire and theft, it’s the only type that covers you if you damage your own car, even if the accident was your fault. This type of cover can give you piece of mind that even if you do cause damage to your own car you are covered and don’t have to worry about a substantial repair bill.
You can claim for repairs after an accident, accidental damage, or vandalism, say if someone deliberately scratches your car.
You may also be legally able to drive other people’s cars if you have their permission – but usually you’ll only have third party cover, which means you have no cover if you damage the car you’re driving.
Third party, fire and theft
Third party, fire and theft covers other people. So, in that respect, it’s like third party. But if your own car is damaged, you have to pay for it yourself.
The difference is that it does cover repairs or replacement if your car is stolen or damaged by fire.
Third party only
Third party insurance covers other people (third parties), but not you. If you injure someone or damage their property, they’re covered but if your own car is damaged or stolen, you have to pay for the damage yourself.
Are you a new driver who may have a few little accidents whilst you are building your driving experience? Think about the potential costs to repair your car if you do have a few bumps. It may be better to get comprehensive cover so you can avoid hefty bills.
Don’t always assume it’s the cheapest. You can sometimes get more cover for less. Remember to do your research and compare prices to make sure you are getting the best deal.
What are car insurance groups
The Group Rating System is administered by Thatcham Research, on behalf of the Association of British Insurers (ABI).
Members who make up the Group Rating Panel, meet every month to set new car models to an insurance group.
There are 50 different car insurance groups – those in insurance group No.1 are the cheapest cars to insure and those in insurance group 50 are the most expensive.
The Group Rating Panel considers a range of factors when establishing UK car insurance groups. As stated by Thatcham, the affecting factors include the following:
- Damage and parts costs
This covers the likely amount of damage to each car and the cost of the parts used to repair. Cheaper the cost, the more it’s likely to be in a lower group rating.
- Repair costs and times
Longer repair times increase the cost, resulting in a higher group rating. Types of paint finishes are also an important factor as they affect the price.
- New car values
The prices of new cars are taken into account, as they’re a good guide to the cost of replacement and repair.
- Parts prices
A standard list of 23 common parts is used to compare the cost of parts from manufacturers. The lower these costs, the more likely a lower group rating.
- Car performance
Acceleration and top speed are important factors. Insurance claims statistics show that high performance cars often result in more frequent insurance claims so would result in a high group rating.
Cars fitted with AEB (Autonomous Emergency Braking) as standard will have a lower insurance rating, as they help reduce the chance of low-speed accidents.
- Car security
Security features fitted by motor manufacturers can help to reduce insurance claims costs. Features include high-security door locks, alarm or immobilisation systems, and glass etching.
What is excess on car insurance?
Car insurance excess is the amount that you have to pay if you make a claim. There are two types of excess:
Compulsory excess – this is a fixed excess, set by the insurance provider, which you’ll have to pay if you make a claim. The amount varies depending on your circumstances.
Voluntary excess – this is the amount that you agree to pay, in addition to your compulsory excess, if you make a claim. People agree to a voluntary excess in return for a smaller premium.
What is a premium in car insurance?
Car insurance premium is the amount you pay for car insurance cover. You can pay your premium annually or monthly. They will usually charge you more for the option to pay monthly. Once you’ve paid your premium, your insurer will pay for coverages detailed in the insurance policy, like collision damage and legal expenses.
Every insurance company determines its rates differently, but your premium is typically based on details about you, the type of car you own, and the coverages you require.
What is personal accident cover on insurance?
Every personal accident policy works somewhat differently – but they’ll all cover you against injuries or fatalities while you’re driving. It can also cover you if you become totally and permanently disabled. Personal injury insurance policies usually pay a fixed amount of money for specific injuries.
How much does car insurance cost?
In 2022, the average cost paid for car insurance in the UK was £419 a year according to the Association of British Insurers (ABI).
There are a number of factors that can affect how much you pay for car insurance. It’s a good idea to use comparison sites when looking for car insurance to make you sure you can get the best price for you and your circumstances.
Some factors that can affect the price of your car insurance:
- Type of car
The type of car you drive affects your price. If an insurer’s data says that drivers with your vehicle’s model have been in more accidents or filed more claims, then your rates will be higher. The availability of spare parts and approved mechanics are key factors for determining car repair costs, and subsequently car insurance premiums.
- Driving experience
Learner drivers typically pay more, which often compounds the effect of age on premiums. Occupation can affect the cost too, professional drivers, whether behind the wheel of a race car or a delivery van, can expect significantly higher premiums because of more time spent on the road.
- Your age
Young drivers under 25, as well as seniors, will pay more for car insurance. Drivers under 25 are believed by the insurance industry to be at higher risk for car accidents. This means the older you get, the lower your car insurance rates will tend to be, until you reach a certain age when they are likely to increase again as you may be seen as a risk.
- Claims history
The more car insurance claims you have made in the past, the higher your premiums will generally be.
A good way to find the best price for your car insurance is to use comparison sites such as Go Compare, Money Supermarket and Confused.com. These websites enable you to compare like for like car insurance products that may be suitable for you.
Does Go Car Credit provide car insurance?
No, here at Go Car Credit we don’t provide car insurance. We provide hire purchase car finance for people who may have been declined in the past.
If you take out a finance agreement with us, you will need to purchase car insurance separately.
We require you to have fully comprehensive car insurance cover to ensure maximum protection if you have an accident.