A Beginner’s Guide to Buying Car Insurance

Insurance can be very frustrating to buy because there are so many variables. In general, the newer, more expensive and more powerful the car and the younger the driven the more you pay. But where you live, what you do for a living, whether you are married and what sex you are all have an effect on premiums.

If you already have insurance, get a quote for the car you are planning to buy to see how much more or less it will cost than your current one. That gives you an idea of whether it is affordable, but seek quotes from other companies when you do buy the car because you may get better deals elsewhere.

car accident - buy insurance

Do not assume that because the car is the same insurance group as your current one it will cost the same, the fact that it is newer has a bearing on how much you pay.

Top tip: If this is your first car, get a couple of quotes to help decide if it is affordable before you choose the car. Most insurers won’t mind if you explain what you are doing and ask for quotes for two or three different models.

There are two main types of insurance: comprehensive and third party, fire and theft. The former covers everything so if your car is damaged the insurance company pays for the repairs to it even if nobody else was involved: this is the cover to have if the car is a decent one.

Third party, fire and theft only covers what the name suggests – if you have an accident the insurance company pays for repairs to the other person’s car, but not yours so it is only cost effective if the car is a cheap one you can afford to write-off if repairs are expensive. Whatever insurance you buy, read the policy so you know what you are covered for.

Broker or direct?

Brokers

Buy car insurance from broker

The simple way of getting insurance is to use a broker who should get the best quote from a number of insurance companies. However, the fact that you can get different quotes from different brokers shows they are not always as thorough as they claim.

You may also find brokers do not give the best quotes if you are young, have a poor driving record, if you want to insure something unusual or if you have an unusual job or one they consider high risk (anything from pop star to a professional like a doctor or journalist).

If you are a young pop star with license points wanting to insure a Ferrari, this is probably not the best way. The many online instant quote: websites often become far from instant in these circumstances, usually asking you to ring them after filling in many pages of questions.

Direct

If there is anything unusual about you or the car, you are often better off seeking quotes direct from insurers. If you have a specialist car, check adverts in magazines for that marque or type or join an owners club to look for favorable rates. If the problem is your job, look in your trade magazines for adverts from insurers.

New drivers taking the Pass Plus course (ask your driving instructor) can get discounts, as can members of the Institute of Advanced Motorists. Some car manufacturers have set up insurance schemes for their cars which can provide cheaper quotes especially for unusual marques, though, again, your individual circumstances can erode the preferential rates.

Making comparisons

When comparing quotes, make sure you compare like with like. A policy that gives you a loan car in the event of an accident, does not require a big excess or includes additional cover on certain items, may be worth paying more for. Glass cover that does not affect no claims bonuses is also worth having, especially when a stone thrown up by another car can mean replacing a windscreen costing several hundred pounds.

If you have accrued a no claims bonus, especially a long one, make sure the policy includes protection for it which means you won’t lose a big reduction in annual premiums for making one claim.

Cutting Costs

There are many, sometimes surprising ways to keep premiums down:

  1. Volunteer to pay a higher ‘excess’, which is the first few hundred pounds of a claim. You may be able to claim this back from another driver’s insurance if you were not to blame.
  2. Limit the drivers to named people.
  3. If you do unusually low mileage you may be able to get a discount but check what happens if you go over the mileage limit set by the premium. You don’t want to be worrying if, say, you have to make frequent long journeys to see a sick relative.
  4. Have a relationship: young men putting a woman on the policy as a second named driver can sometimes get a reduction because it suggests the stabilizing influence of a long-term relationship. Likewise, married couples usually pay less than singles in similar circumstances. There may eventually be an insurance company that does the same for gay couples who have entered civil partnerships.
  5. Be a woman: some companies offer discounts for cars driven only or mainly by women because, as a group, they have fewer and less serious accidents.
  6. Get a driving qualification: new drivers taking the UK’s Pass Plus additional tuition course can get discounts, as can those who pass advanced driving tests like those run by the Institute of Advanced Motorists and the Royal Society for the Prevention of Accidents.

GAP Insurance

If you are buying a new car seek Guaranteed Asset Protection (GAP) insurance. Cars are insured for their market value but a new car’s depreciation is high in the first year, especially as you lose all the VAT, so there may be a substantial difference between market value and what you owe on finance or what it would cost to replace it.

GAP insurance promises to pay the full replacement cost during the first year or 18 months. It is included in some comprehensive insurance policies but can also be bought as part of some finance packages.

Tell the Truth

Whatever you do, don’t lie to the insurers about yourself or the car. These days they have many databases on which to check information and you may also have forgotten what you said by the time you have an accident. Lying is classed as fraud and can render your insurance void.

Parents should not be tempted to insure a child’s car putting one of the parents as the main driver especially for a student living away from home. This, again, is defrauding the insurers and it means the young person is not building up their own no-claims bonus.