If you drive, by law you are obliged to take out insurance cover. In other words, you must hold a current insurance policy that at least protects other drivers and the general public in the event of an accident or injury.
What are the types of car insurance available?
There are several types of car insurance, including temporary insurance and learner driver insurance. The main types of continuous insurance are:
Third party
This very basic insurance policy is the absolute minimum continuous insurance you can have for your vehicle, and is designed to protect other people, not you.
Third party, fire and theft
Again, this is designed mostly to protect other people, and is another fairly basic policy, but one that also offers you a little protection.
Fully comprehensive
This is the top rate of insurance and covers both other people, property and you as the driver.
What car insurance cover do I need?
With so many different types of insurance on offer, it can be tricky to know which policy to go for. In the past, third party was the cheapest form of insurance and was the most popular form of cover selected by young and newly qualified drivers. However, because of inexperience, so many claims were made on these basic forms of insurance that it is now more economical to arrange fully comprehensive insurance. In some cases, the most basic policies can cost up to two or three times as much as fully comprehensive insurance.
Young and newly qualified drivers tend to pay high rates for insurance because statistically, they are involved in more accidents. Black box insurance allows providers to monitor your driving by satellite through a system installed in your car. If they judge you to be a safe driver, you may qualify for lower premiums despite your inexperience.
Named Driver or Additional Driver Insurance is the practice of adding another driver to your car insurance policy so that they are covered to drive your car. This is useful in some circumstances, for example if you are a student and want to drive the family car during vacations, but if the named driver is responsible for an accident, the car owner may lose their no claims bonus. It’s a particularly good way of saving money for young drivers who have their own car. By adding an older, more experienced driver to your policy, you can reduce the cost of your car insurance.
Take care though, because the practice of stating that the named driver is the main driver is called “fronting” and is against the law. If you own the car, you must insure it in your name.
In addition to the three main continuous forms of car insurance, there are policies that offer short-term insurance cover, though these must not be used in place of continuous cover for your own car.
Temporary insurance is a short term insurance intended to cover you in the event that you don’t need a full year’s insurance cover. For example, if you borrow a car from a friend or family member, or want to share the driving on holiday or a long trip. It provides fully comprehensive insurance for a period of time from one hour up to 90 days, and many policies will protect the owner’s no claims bonus, but be sure to check that is the case.
Lastly, learner driver insurance is a short-term policy specifically designed for learners so that they can practice driving in someone else’s car while supervised by a qualified driver. Like temporary insurance, they offer fully comprehensive cover and protection for the owner’s no claims bonus. This type of policy generally carries conditions, which may include a ban on driving at night or driving high-power vehicles or cars over a certain monetary value. They can also specify that only people over a certain age may supervise you, generally insisting on drivers over 25 years old, though some may permit supervisors as young as 21.
What car insurance covers
Car insurance will cover theft of or damage to your car and any accidental damage you or your passengers may cause to other people, their property or their cars. It can also offer optional extras, such as breakdown assistance and recovery, insurance for personal belongings and medical expenses.
Most providers include an “excess” on the policy. This is the amount you need to pay towards any claims on your policy. For example, if your excess is £200 and you claim £800, the company will pay £600 towards the costs. Compulsory excess is set by the provider and cannot be altered, but you can offer to pay a voluntary excess over and above this, which may bring down your premiums. There is also a no claims bonus, which you receive for every year in which you don’t make a claim.
The excess and the potential loss of the no claims bonus is designed essentially to deter multiple claims, or claims for minor repairs such as damage to a wing mirror.
Third party insurance pays for any damage you accidentally cause to another driver’s vehicle, to property such as damaging a fence or the wall of a house, and pay compensation to anyone who is injured as a result of an accident caused by you. It won’t compensate you for any injuries you suffer, nor will you receive any money to repair or replace your vehicle. Also, you won’t receive anything if your vehicle is stolen or damaged by fire.
Third party, fire and theft insurance will pay out for any damage or injury resulting from an accident judged to be your fault, but it also offers you a degree of protection. With this policy, you are covered for and will receive compensation if your car is stolen or damaged by fire.
Fully comprehensive is the top rate of insurance and covers both other people and you, including loss of or damage to your car by theft and fire. Some fully comprehensive policies cover you to drive your car abroad or to drive other people’s cars, but don’t assume this to be the case. You need to check the small print.
Can car insurance companies deny coverage?
Car insurance companies can refuse to insure you for a number of reasons.
When assessing your insurance risk, the company will take into account your gender, age and experience. In general, young people under the age of 25 have less driving experience and are involved in more accidents than older motorists, and this applies particularly to young men. Your postcode is a factor, as it might be associated with an accident black spot or have a high incidence of car theft. Your occupation may affect your risk, with owners of mobile discos paying the highest rates because they drive distances at night and carry expensive equipment. At the other end of the scale, airline pilots get very good rates because they are in the air more than on the road.
Reasons for an insurance company to refuse to insure you, or cancel your policy, include:
Non-payment of premiums
Just like everything else, if you fail to pay for a service, the service is withdrawn. If you have difficulty paying the premiums, speak to the insurance company. You may be able to come to an agreement other than the loss of your car insurance, such as downgrading to a less inclusive policy or increasing your voluntary excess
Non-disclosure of relevant information
When you apply for car insurance, you’ll need to fill in a form declaring any claims you have made or accidents you have been involved in. The insurance company will check the information using a central database known as CUE, which will reveal any previous claims. Of course, non-disclosure can occur simply as a lapse of memory, so take your time filling in the forms.
You must also declare any penalty points on your licence, any driving convictions, and any previous cancellations or refusals to insure you.
Fraud
A check with CUE will also show the registered owner of the car, so if you’ve been found guilty of “fronting”, as mentioned previously, this will be revealed. Fraud also includes making false claims by, for example, pretending your car has been stolen or setting fire to it in order to make a claim, known as “vehicle dumping”.
Honesty is the best policy, so it’s best to declare everything. Usually, there is a way to improve the situation and some companies offer a specialised service for drivers who have been refused car insurance or whose policy has been cancelled.
What car insurance is best for me?
The best car insurance for you depends upon your personal circumstances. It is the one that provides you with the maximum protection for the cost which you find most reasonable. That doesn’t necessarily mean you should go for the cheapest. You can get an insurance quote right here on Car.co.uk.
