Buying Guide

Car Insurance

Car insurance – we all wish we didn’t need to pay it right? Right! But unfortunately, if we want to be able to get from A to B in a vehicle then it is a legal requirement we buy some.

Buying car insurance can be mind-boggling, stressful and tedious to say the least. In this car insurance buying guide, we want to try and cancel out the confusion and help it be a smooth ride for you.

Why do I have to have car insurance?

The simple answer, it is a legal requirement.

Don’t be tempted to go without it, even if it was just for a little while. In an attempt to clamp down on the number of uninsured vehicles on the road, the government introduced Continuous Insurance Enforcement in 2011. This basically means that if you own a car, it must be taxed and insured, unless it has been declared off the road through a Statutory off Road Notice (SORN).

Anyone who is caught going against these rules will be issued with a fixed penalty notice and could eventually have their vehicle seized and destroyed.

Motorists who drive without car insurance push up the price for everyone else. Official figures put the total cost at about £380 million a year, or £30 on top of every premium.

Fraudulent claims add to the cost burden, pushing up the premiums of honest customers by about £50 a year. It is thought that 7% of car insurance claims in 2011 were fraudulent, up from 5% in 2010. Experts blame the increase mainly on the rise in the number of fraudulent whiplash claims.

What types of car insurance policies are there for me?

Car insurance cover comes under 3 categories: Third party, Third Party Fire and Theft, and Fully Comprehensive. Let’s break these down for you:

Third Party – This is the most basic of cover that insurance companies can provide you with for the minimum legal requirement. It essentially pays for any damage sustained by a third party, their vehicle or their property if you are at fault. As an example, if you reverse into someone’s car, the policy would cover the damage to their car. It would not, however, pay for any repairs to your own vehicle.

Third Party Fire and Theft – This is slightly one step on from third party where it includes cover in case your car is stolen or damaged by fire, as well as the same protection as third party only.

Fully Comprehensive – Basically as you can imagine, fully comprehensive cover covers you for all of the above and more. It includes cover for you and your car for any injury or damage, even if the accident/damage was your fault. Most drivers on the UK’s roads today opt for “fully comp” cover. It is the most expensive out of all three but due to the extra cover and peace of mind it gives, it is the safer and possibly cheaper option in the long run.

Younger drivers often opt for third party to save money. It’s always worth checking the premiums for all levels of cover, though, because you may find that a fully comprehensive policy doesn’t actually cost you much more, in some circumstances, it can even work out cheaper.

When shopping and comparing car insurance quotes, it’s also important to look at what extras you are covered for as well as the price as different insurance companies over different things under standard cover.

While one insurer might include windscreen cover as standard, another might exclude it. Other common exclusions include legal expenses, a courtesy car and breakdown cover. You can buy these as add-ons to your policy, but some may include them.

Do I need to tell my insurance company everything?

Yes. As they say “honesty is the best policy”.

You must provide your insurance company with the most up to date information about yourself. Even when the policy has started, any changes to your circumstances, e.g. job, address, mileage, needs to be updated with your insurance company.

Any modification could affect your premium, even if it’s a minor tweak, such as a spoiler or tinted windows. If you keep quiet about any changes to your vehicle and subsequently made a claim, the insurer could refuse to pay up. Failure to tell the insurer of such changes is classed as insurance fraud.

To point out, not all modified car policies will be more expensive. With security enhancing modifications, for example  the addition of alarms and/or immobilisers, making it less likely that your car will be stolen, and hence reducing the chances of you making a claim could benefit your insurance cost.

Another factor to keep on top of is if you drive your car for business, even if you only use it to visit clients, a standard policy will usually only cover social, domestic and pleasure use, occasionally covering commuting to one place of employment, unless you specify otherwise.

I can’t afford my policy payment all in one go, what are my options?

Most car insurance policies run for 12 months, and paying for the premium in one go can cause a dent in your finances. However, most insurers give you the option to pay in monthly instalments, so you can spread the cost over the year and make the payment more manageable. A point to remember, by paying in instalments, it will cost you more as you’ll be charged interest so it is worth paying upfront if possible.

What will I need when I apply for car insurance cover?

When applying for car insurance you will need to answer a number of questions, so it’s a good idea to have the information to hand.

The insurer will want to know about you, your age, occupation, address and any previous motoring convictions as well as any accidents, if it was your fault or not.

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You will also need to provide information about the age, make and model of the car, a rough idea of the annual mileage and where it is kept overnight.

You should give details of any modifications to the car and whether you intend to use the vehicle for business. You will also need a current and valid MOT certificate if your car is more than 3 years old.

What does No Claims Bonus mean?

No claims bonus (also known as no claims discount or NCB) plays a big part in bringing your car insurance costs down.

A NCB of five years or more, as an example, can entitle drivers to up to 60%-75% discount on car insurance premiums. However, NCB is earned. In general, for every year that a driver has insurance on a car without making a claim, they will earn another year’s NCB to a maximum of 5 years.

Some companies offer further discounts for 6-8 years of claims-free driving, but as a general rule the maximum figure is 5 years.You can protect your NCB for a cost on your premium. You of course don’t have to; however, your no claims bonus is a very valuable asset if you want to have a lower premium.

In general, protecting your years mean you are allowed to make a certain number of claims within a year without jeopardizing your bonus. However, your basic premium could still increase at renewal. You can also usually transfer your NCB from one insurer to a new insurer, so there is nothing tying you into an insurance company.

What if I have more than one car in my household?

Many households own more than one vehicle, in which case it might be worth considering a multi car insurance policy. You can usually insure up to five vehicles (depending on the insurer), and it cuts down on paperwork as well as premiums. People who insure multiple vehicles with the same company can often save 10% or more off their premiums.

I am a little confused about policy excess…

This is the part where people can get quite confused, you aren’t the first and you won’t be the last. All car insurance policies carry an excess, which is the amount you have to pay towards any claims. The excess usually comes in two parts: the compulsory excess, and the voluntary excess.

Say a typical compulsory excess is £200, so if you make a claim for £500, the insurer would pay only £300. It’s worth bearing the excess in mind before you put in a claim. If the damage is not serious, it might be better to pay the full cost out of your own pocket in order to protect your no claims bonus. Check the small print of the policy though because the excess does not always apply to minor claims, such as windscreen repair.

You choose the level of your voluntary excess, usually starting at £50 or £100 in addition to the compulsory excess. If you are prepared to agree to a higher voluntary excess, you might be able to negotiate a lower premium. Remember that you must pay the excess in the event of a claim, so make sure it is something within your budget.

I would like to add an additional driver onto my policy…

Named drivers on your insurance can often bring down insurance premiums, if, for example you are a young driver. So, a young male might add one of his parents onto the policy to bring down the premium because their increased levels of experience will make them statistically less likely to make a claim. However, a rule to remember is that you should never put forward an additional driver as the main driver. For example, if your mum or dad rarely drives your car they should never be listed as the main driver and you as the named driver. The practice is known as fronting and is a form of insurance fraud. It can invalidate your insurance policy, making it difficult for everyone involved to get cover in the future, that person may even end up being prosecuted.

What is black box insurance?

If you are struggling with high premiums, you might want to consider telematics insurance. It does sound a bit confusing we know, but it simply means that the insurer will use a satellite tracking device or ‘black box’ fitted in your car to monitor various things like the way you drive, the way you corner, brake and your speed. It will also look at the time of day you travel, for example, during rush hour. Some insurers will fit the device for you, but you might be sent the unit through the post with easy to follow instructions on how to get it installed and working.

There are various black box insurers available, all offering many different policies that can that work in slightly different ways. But one thing they have in common is that they all reward careful drivers. So, if you drive few miles, or you are prepared to avoid driving at night or during the rush hour, you might save money with black box insurance. Some telematics firms claim they can cut your car insurance bill by as much as 50%, which is a popular choice for young or infrequent drivers.

What can make my policy expensive?

Insurance is all about risk. The higher risk an insurance company thinks you are the more expensive your cover may be. There are a number of factors insurers will look at before they quote a premium for car insurance cover, but your age is one of the key indicators of risk. Basically, older motorists tend to have fewer accidents than younger drivers.

Insurance quotes are also determined by some occupations and postcodes, for example the crime rate in your area. The type of car you drive can also affect your premium. Insurers put cars into 50 car insurance groups, with vehicles in the highest groups attracting the highest premiums. A car’s insurance group depends on a number of factors, including price, performance, the cost of its parts if it needed to be repaired and the typical repair times. And as you might expect, a high performance car is more expensive to insure than a smaller vehicle or family car.

Are there ways of reducing my premiums?

Nobody wants to pay more than what they have to for car insurance, yet many of us don’t look at ways of helping cut down the cost of our policies. A high percentage of us may stay with the same insurer for loyalty, or convenience, yet paying over the odds for the privilege. Loyalty rarely pays, so it is always advisable to shop around if you want to try and save on your annual premium.

Limiting the number of claims you make on the policy will make it cheaper for you to get insurance. Granted, this cannot be helped if you have an accident, however, if it is most cost effective for you to have the vehicle repaired without claiming on the insurance, then this will save you making a claim and prevent your renewal being more expensive. You could also try limiting your mileage. Instead of over estimating how many miles you think you may do a year, try to work out mileage based on daily commuting as well as more routine trips you make. Think too about the security of your vehicle. Have you an approved fitted alarm and immobiliser? Also, if your car is kept in a locked garage overnight, it will cost less to insure than a vehicle that is parked on the street, for example.

Another attempt of bringing your insurance policy cost down is to consider some kind of advanced driving course if one is available to you. They say courses like this can reduce the likelihood of an accident by 25%. It can also lead to a discount on your car insurance with a valid certificate.

Bobatoo.co.uk have over 70 UK based insurers on their books, with one of the largest telematic panels on the market. Our motto is simple, we help, you save.