Everything you need to know about car insurance in the UK

Car insurance is a way to help you manage your finances.
It is difficult to keep up the budget by the end of the month with your regular expenses, and if you unfortunately meet an accident, then you will have to go way out of track on your budget to pay for the car repair, to the other party in case of damage to their vehicle or injuries, and for your injuries if you have any.
To avoid such a dent in your budget, car insurance is a must. Car insurance is also legally required in the UK, there are consequences like getting 6 points on your driving license, paying a fine as well as being unable to drive, or having your car taken off.
Car insurance is designed to prevent you from financial losses in case of any unfortunate event like an accident, traffic collision, or any other damage to your vehicle.
Some types of insurance also cover claims that arise from bodily injuries that may occur to you or the other party.
What is car insurance?
A car insurance policy is a policy that covers all the expenses that are caused to you by your car as a result of an unfortunate event, such as theft, damage by natural disaster, accident, or vandalism.
It is about making a contract with a car insurance company where you pay Premiums and in return receive protection for your car.
The car insurance policy also offers:
- Damage to the vehicle: Theft or damage to the car, meaning your car or other party’s car,
- Property damage: Physical injury or damage to other driver’s property
- Medical or funeral bills: Medical bills in case of injuries or death associated with the car accident
The conditions, requirements, and what’s included in the policy depend on the type of coverage you opt for.
Some insurance companies offer customized coverage that makes it easier and more convenient for you.
Why do you need car insurance?
If you want to drive in the UK, you must have car insurance, even if it is a minimum coverage.
Getting a car is not a piece of cake. You may have to cut the monthly budget, wait for savings to pile up, or lease a car.
All of them require patience, effort, and time. Once you have spent all that money and purchased a car, you must do something to protect that effort and money you spent buying a car.
A car insurance policy gives you that protection. If something happens to your car including vandalism, theft, or damage in an accident, all the costs and expenses will be paid by your insurance company on your behalf.
Different types of car insurance:
If you have just bought a car in the UK, and you are a first-time driver, then you might not know how important is it to have car insurance, and that it is a legal requirement before taking your vehicle to the road.
Now, if you are new to car insurance, you will find all the details in this article. Keep reading till the end. Now let’s take a look at different types of car insurance. There are 3 different types:
Fully comprehensive
Fully comprehensive insurance includes damage to your car, passengers, and third-party car as well.
It also covers theft and damage due to vandalism, yet this coverage is the cheapest.
Insurers make sure to provide the best for the people who are willing to protect themselves from taking financial hits at any cost.
Third-party only:
This is the most basic form of insurance. It only covers the damage or injury that occurred to a third party.
The damage to your car or physical injury to you will not be compensated.
Third-party, fire and theft:
This is another form of insurance that covers damage to another party’s car or bodily injuries, as well as damage to your car in case of fire theft.
But if you are involved in an accident, and the other driver was responsible, then the damage to your car will be paid by their insurance, if not, you will have to pay all of it yourself.
What does car insurance cost?
Car insurance doesn’t come cheap. Although all different types of car insurance cost differently, the average price of car insurance increased by 58% last year, which means they are now paying £924 on average.
Factors that can impact car insurance costs
Car insurance rates are also affected by several factors. Here are the factors that can impact car insurance costs:
- Annual mileage
- Driver’s history
- Car’s history
- Car performance
- Your location
- Car usage
No-claims bonus
No-claim bonus is just like the name suggests. If you don’t claim your insurance then you will bonus.
You are eligible for a generous bonus which increases every year you don’t claim.
What it is and how it works?
If you want to protect your no-claim bonus, then you will have to top-up the payment after you make a claim.
However, if you don’t claim your policy, your bonus keeps getting increased every year from 30% up to 65% if you don’t claim your policy for 5 years.
But if you had an accident, then you lose two years’ worth of bonus. And if you have an accident more than once in a year, then you will end up losing all your no-claim bonus.
Even if you don’t make a claim, you will be required to inform your insurer in case you have an accident, or it could cut any further claim you are going to make.
How to get cheap car insurance?
Car insurance comes at different costs, but if you want to find the insurance that covers everything you need, at the cheapest rates, then here are a few tips for you to save some money on your car insurance:
Reduce the risk:
You can start by reducing the risk. The cost of your car insurance is based on how often you make the claim and how much risk you pose.
So you need to take some precautions to reduce the risk and associated cost.
For example, a security alarm will help, park your vehicle in designated and secure parking, drive less or drive more carefully, and take an advanced course if you aren’t an experienced driver.
Reduce the price:
If you pay your premiums annually instead of monthly installments, the insurers usually give you a better package.
In addition to that, try not to add extras to your insurance that your car doesn’t need if you want to cut the costs.
Get the best quote:
You can compare prices by getting a quote from different insurers.
If you already have car insurance, and you get a better rate somewhere else, then you can ask your current insurer to give you an equal or better quote than that.
Remember, never lie to your insurer about who is the driver, your driving history, etc. It never ends up in your favor.
Should I add extras to my car insurance policy?
Adding extras to your car insurance policy sounds tempting as they offer additional protection and privileges but it is important to consider your budget and the current condition of your car before adding too many extras.
Most car insurance companies make sure to offer you policies tailored to your needs so you can add or remove the extras according to your requirements.
Here’s what’s normally included in extras:
- Coverage for driving abroad
- Co-claim bonus protection
- Legal cover
- Personal injury and more
How to cancel car insurance?
You can cancel your insurance anytime by seeking assistance from your insurer. But a few things you need to know before cancellation are:
- A cancellation fee will be charged if you are not at renewal
- You will need a working and valid policy to get behind the wheel
- You will lose your no-claim bonus as a result of cancellation during the policy
Conclusion
Living and getting a car in the UK means you are legally a candidate for a car insurance policy.
It depends on you even if you get minimum coverage, but it is recommended to opt for the fully comprehensive policy as it offers total protection as well as costs less.
If you own a car and not a car insurance policy, it’s time to start comparing prices now.
Also read – Complete guide to travel insurance in the UK for hassle-free trips