Every motorist needs to have car insurance in place as a legal requirement and it can be an expensive cost to cover each month. Despite this, many motorists do not have a strong understanding of their car insurance and how it works. This post will teach you everything that you need to know about car insurance.
Policy Types
First, it is helpful to know the three types of policies that are available and what they cover.
Third-party: Third-party is the most basic level of cover and often the most affordable (but not always). This will cover damages to third parties by you or your passengers.Third-party, fire & theft: Covers the same as above along with protection against damage caused by fire to your vehicle and theft. Fully comprehensive: In addition to all of the above, fully comp also includes repair or replacement of your own vehicle even if the accident was your own fault (you may want to speak with a car accident lawyer before you decide). This is the highest level of car insurance that is available.
How Car Insurance is Calculated
You will notice that everyone pays a different amount for their car insurance policy even if they have the same level of cover. This is because there are numerous factors that determine how much your policy costs. A few of the main factors that determine car insurance cost include:
Essentially, car insurance companies use all of the above and more to determine your car insurance price based on risk. The higher risk that a driver is, the more expensive their car insurance premium will be. All vehicles in the UK are assigned a car insurance group from 1-50 (50 having the most expensive premiums), so this is another key factor that determines cost. While some of these factors are outside of your control, you will also find that there are some that you can control which could help you to make savings.
Gap Insurance
In addition to your car insurance, you should also know about gap insurance. This is not a legal requirement, but it is worth considering as it could save you a huge amount. So, what is gap insurance? Even a comprehensive insurance policy would only pay the current market value of a vehicle if it were to be written off. Due to depreciation, this could leave you short by thousands of pounds. With gap insurance, you will receive the shortfall between the payout and the amount originally paid/outstanding on a finance agreement.
Hopefully, this post will be educational and help you to gain a stronger understanding of your car insurance. Car insurance is important and also a major expense, so it is important to understand your policy and know how you could save money.
