Car insurance is a legal requirement for drivers to protect you financially in case of accidents, theft, or damage to your vehicle. Not having it is illegal, unless there are specific circumstances, and also potentially costly. According to the Association of British Insurers, the cost of vehicle repairs jumped 32% to a quarterly record £1.6 billion between July and September 2023. In this guide, we’ll break down the essential aspects, so you can make informed decisions about your coverage.
Types of car insurance
Third-party only insurance – This is the basic level of car insurance that covers damage to other people, vehicles and property if you’re at fault in an accident. However, it doesn’t cover damage to your vehicle, injuries you sustain or liability for financial losses you may incur.
Third-party, fire, and theft – This type of insurance covers everything covered by third-party only coverage but also protects your vehicle against fire damage and theft. Comprehensive covers all the above but also damage to your vehicle, regardless of who’s at fault.
GAP insurance – If you were to write off your vehicle and need a replacement, having GAP (Guaranteed Asset Protection) insurance offers you peace of mind. Car GAP Insurance is invaluable when you need vehicle replacement. The value of a car depreciates quickly but GAP insurance pays the difference between the motor insurer’s settlement and the cost of a replacement vehicle that matches the original model’s specification.
Factors affecting car insurance premiums
Younger and less experienced drivers typically face higher premiums due to their increased risk profile. The make, model and age of your car can also impact insurance costs, with high-performance or luxury vehicles often attracting higher premiums.
Your driving history is a factor. A clean driving record with no claims or traffic offences can lead to lower premiums, while a history of accidents or offences may result in higher costs. And where you live and where you park your car overnight can affect your insurance rates. Urban areas generally have higher premiums due to the higher risk of accidents and theft.
Add-ons and extras
There are insurance extras to consider. If your vehicle breaks down, then breakdown cover offers roadside assistance, towing and emergency repairs. If you’re not covered for towing, these costs can spiral depending on how far you’re being towed, the size of your vehicle and what time of day or week it is. Legal expenses cover means you are covered if you’re involved in an accident and need to pursue or defend a claim. No-claims discount protection safeguards your no-claims discount if you make a claim, helping to keep your premiums lower.
Excess options
Finally, evaluate your excess options, as these can affect any pay out in the event of an accident. Voluntary excess is the amount you agree to pay towards a claim, on top of the compulsory excess set by the insurer that you must pay towards any claim. Opting for a higher voluntary excess can lower your premium but means you’ll pay more in the event of a claim.