How to choose the right car insurance policy

If you’ve never bought your own car insurance policy before, it can be daunting and confusing trying to navigate all the policies and technical jargon.

Every motorist in the UK needs a basic car insurance policy to meet the legal requirements, but what if you’re better off with a more extensive policy?

We’re here to help you figure out which policy would suit you best in terms of what is covered, as well as price.

What types of car insurance policies are there?

There are three main types of car insurance policy on offer, each offering different levels of cover, with prices (on the whole, but not always) increasing accordingly:

  • Third party
  • Third party, fire and theft
  • Fully comprehensive

Third Party

If your car is not registered as off the road with the DVLA via a SORN (Statutory Off Road Notice), then third party insurance is the bare minimum you will need from a legal standpoint.

Third party policies cover other road users (other drivers, pedestrians, and even passengers in your car) but do not cover you or your car. So if you are involved in an incident, your policy will cover the cost of injury to others or damage to their property, but won’t cover any injuries you sustain or damage to your vehicle.

Third Party, fire and theft

These kind of policies cover all the same things that a third party policy would cover, but also cover damage to your car as a result of fire or theft.

Fully Comprehensive

Fully comprehensive policies will offer the most extensive cover. These policies cover damage to your car that is your own fault (including accidental damage, such as reversing into a wall), and some even provide cover if you were to drive someone else’s car (with their permission).

Interestingly, it’s not always the case that third party cover is cheaper than fully comprehensive, so when you’re looking for policies, shop around between the different types of policy and don’t just assume that a third party policy will save you the most money. Drivers most likely to make a claim usually opt for basic third party cover in an attempt to reduce their premiums, so insurers have begun to bump up the cost of third party cover.

What is a policy ‘excess’?

While the premium cost will be the headline price of any policy, this can be greatly affected by the voluntary excess.

The excess charged is made up of two parts: a compulsory excess (which is the minimum amount the insurer expects as part of the policy) and a voluntary excess (which is an additional amount you can choose to pay in order for your initial premium to be lowered).

This cost has quite a considerable effect on your insurance policy as your insurer will charge you this amount each time you make a claim. Insurers set their policies out this way so that you won’t make a claim unless it’s for something considerable, instead of every nick and dent your car picks up.

So in the case that your car picks up £1,000 of damage, if your insurer has a compulsory excess of £250, you will only receive £750 from them for the cost of repair. If you’ve chosen a voluntary excess of £150 when you took out the policy, you’ll receive even less (£1,000 minus the £250 compulsory excess and then minus a further £150 for the voluntary excess). However, the higher you set your voluntary excess, the lower your premium will be, so it’s all about finding a balance.

What are policy extras?

Most insurers will allow you to tack various extras onto your policy. Any extras you choose to add to your policy will increase your premium, so you’ll need to decide whether they are worth the extra costs. Some examples of extras you can add to your policy include:

  • Cover for legal expenses
  • Personal accident costs
  • Breakdown costs
  • Cover for personal belongings
  • Cover for the use of a courtesy car

For some people it would be worth the added cost for access to a courtesy car if their job depends on it, but for others it may not be such a big issue is they don’t have access to their car for a short while.

What else?

Finally, when comparing car insurance policies, you should consider if you would benefit from a black box or multi-car policy. Black box (or telematics) policies monitor how safely you drive in order to calculate the cost of your premiums – particularly useful for new drivers who’d otherwise face much higher costs. People with two or more cars at the same address should check to see if a combined policy for all vehicles would cost less than taking out separate policies on each vehicle.

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