Car Insurance – The Basics Explained

Car Insurance – The Basics Explained

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.

What is the difference between the 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.

Comprehensive

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.

How much does car insurance cost?

The average car insurance premium in the UK for comprehensive cover costs £471 a year, according to Association of British Insurers (ABI) data for the third quarter of 2018. That is the equivalent of £39.25 a month.

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 since the way in which one drives these types of cars differs. If an insurer’s data says that drivers with your model vehicle 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 high 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.

SOURCES