Car Insurance Explained

car insurance - girl behind wheel in car

It’s always a happy moment when you pass your driving test. You take that commemorative photo of your certificate and go out for a drive to celebrate. As a new driver, you want to enjoy all the aspects of driving, but there are certain things you should also think about, such as car insurance. If you’re a new driver or someone who’s been driving for a long time and would like to know more about this topic, here is an ultimate guide to car insurance.

What is car insurance and why do you need it?

Car insurance is needed for you to be able to drive anywhere. Simply put, if your car is not insured, you can’t drive.

Car insurance is an expense that needs to be paid because it’s illegal if you’re on the road and your car isn’t insured.

It also covers accidents you might get into, vandalism, theft and any damage. It also gives you protection over any harm you’ve caused to other drivers or any property.

If you don’t have car insurance and still continue to drive your car, you can face a fine of up to £1,000 and six penalty points on your licence.

What are car insurance groups?

For new drivers, you might be confused about car insurance groups. There are a variety of insurance groups and every car is placed under one group. These are groups that range from 1 (which is the cheapest to insure) to 50. Other than the value of your car, rankings also depend on other factors such as:

  • How much your parts cost
  • Your occupation and age
  • Your address
  • How long your car takes to get repaired
  • Any security features such as car alarms, immobilisers, steering wheel locks, wheel nuts, etc.
  • Your car’s performance
  • Where you park your car – this will help insurers to determine how safe your car is when you’re not driving it.
  • Your annual mileage
  • How much voluntary excess you’re willing to pay
  • How long you’ve been driving
  • Your driving history
  • Any no-claims discount
  • If you have a named driver

The security features are especially taken into consideration when thinking about which group your car belongs in. This is because car theft is one of the main reasons why people claim for car insurance. After your car has been grouped, it will show the number and a letter. For example, 12E. These letters indicate your car’s level of security and will usually be:

  • E – The car exceeds the security requirements. Therefore, the insurance group rating is low.
  • A – The car has an acceptable level of security.
  • – The car doesn’t meet the security requirements for its group. Therefore, the car is placed at a higher insurance group.
  • – The car has an unacceptable level of security and your insurer may tell you to upgrade the security.
  • – This stands for provisional, meaning there isn’t enough data available on the car.
  • – This means that the car has been imported. There are usually two groups for imported vehicles: grey imports and parallel imports.

What are the different types of car insurance?

There are a variety of car insurance types new drivers should consider.

Comprehensive 
Comprehensive insurance is also known as ‘fully comprehensive’ and will cover any vehicle damage caused by yourself or a third party. With comprehensive insurance, there will usually be a few benefits such as windscreen protection and the use of another vehicle. However, not all comprehensive policies offer this, so it’s important to do your research on the insurance company you want to go for.

Third party 
This is the minimum level of cover required by the law. It’s the most basic one when compared to others and will cover any damage caused to other vehicles, injuries you’ve caused and any damage to property. However, the third party policy doesn’t cover any damage caused on your car or any injuries you get from an accident you’ve caused.

Third party, fire and theft  
This insurance type covers everything stated in a third party policy, including protection for loss or damage due to fire or theft.

Multi-car insurance

A multi-car insurance is a policy designed for families or couples who have more than one car. This type of insurance will group all of the policies together and will be dealt with by one insurer, which will save you and your partner from having to apply for individual policies. If you go for a multi-car policy, discounts are usually offered, but it may not be a cheap option.

Black box insurance

A black box insurance is also known as a telematics insurance and is designed for young drivers aged under 21. This is when your car insurance provider monitors your driving and adjusts your premium based on your driving. Your premium is the amount you pay your provider on a regular basis.

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How to lower your car insurance

Since car insurance is so costly, especially if you’re a new driver, it’s not a surprise that many drivers want to find ways to reduce it. The following suggestions outline some of the ways you can lower it.

Adding a named driver
This is one way to lower your car insurance. If you share your car or have family and friends that use it frequently, consider adding them onto your car insurance policy as a named driver. However, make sure you let them know and ask for their permission. If your named driver has their own policy, their car insurer will need to be informed.

Drive a car with a smaller engine size
Engine size is a key factor when figuring out which insurance group your car belongs to. Here’s the gist: the lower the engine size, the cheaper it is to insure. So, if car insurance costs are a concern, consider switching to a vehicle with a smaller engine size.

Build on your no-claims bonus 
Also known as a no-claims discount, if you haven’t made a claim on your policy, it will add to your bonus. The more you don’t claim, the higher the bonus, which means you get a bigger discount.

Consider paying a high voluntary excess 
A voluntary excess is the amount you choose to pay towards any claim. If you choose to pay a higher voluntary excess, it will help to reduce your car insurance since you won’t have to pay a lot whenever a claim is made.

Consider a black box policy 
As mentioned above, a black box monitors your driving and adjusts your premium. If you’re a careful driver, this will lower your car insurance.

 

These are the basics that you need to know when it comes to car insurance. If you need help, advice, or for any enquiries, feel free to get in touch with our car services from our directory here. If you still need to learn how to drive, have a browse through our driving schools from our directory here.

For other articles on cars, have a read through our article on the 5 Tips for New Drivers, which might be a useful read.

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