Motor insurance is an important decision. It is also law that every vehicle on UK roads must have a level of insurance. The Road Trafiic Act states that drivers must meet any liabilites they incur should they damage someone elses property or injure someone in an accident.

Types of insurance

The law states that drivers must have insurance against third party injury or damage claims. The insurer will give out a certificate of motor insurance to people who are insured with them. In the UK, there are four major types of car insurance:

Act Only: This is a very rare policy. It gives third party liability risks incurred on public roads. Normally the only people who take these are people with a poor driving record as they are unable to get any other form of cover.

Third Party: This insurance is both for public and private roads. It covers third party claims and other legal liabilities such as knocking a cyclist over. If you write your own car off, it will not pay to cover the costs of getting a new car.

Third Party Fire and Theft: In addition to the third party cover, it also covers you in case the car catches fire, is stolen or someone attempts to steal it.

Comprehensive: This is the widest form of cover available. In addition to third party fire and theft, it has accidental damage cover. This means that policyholders can have their vehicles repaired or replaced. Most policies will also include personal accident insurance which provides payments if you are injured or you die in a car crash. Small amounts of medical expenses are also covered if there are passengers in the car at the time of a crash or loss or damage to personal property in the car.

The Premium

The premium is calculated on four factors – the price is dependent on the risks from each category.
The type of car: generally, the faster the car, the higher the premium. If the car is particularly desirable or has poor security, the premium will also be higher. If your car is expensive to repair (for example has coloured coded bumpers), your premium will be higher because in case of an accident, the repair bill will be higher.
The drivers: Younger drivers are more likely to have crashes therefore their premiums will be high. If you have made claims in the past, there is precedent that the insurers may have lost money therefore again, your premiums may be higher. Women’s accidents generally cost less money therefore women also usually get lower premiums.
Use: Socially, you have a lower chance of having an accident so cars used solely for social travel will have lower premiums that those which are used for commuting.
Place the car is kept: If the area has a high level of car crime, your premium will be higher. Also, if you keep your car in a garage, there is less chance of it being accidentally hit or broken into so your premiums will be lower.

No Claims Discount
Motorists who go over a year without a claim will qualify for a discount off the main policy, determined by the amount of years of claim-free driving they have. Up to 65% can be taken off a standard policy. Some insurers offer ‘protected’ no claims where if you have two claims in three years, your no claims will not be affected. These policies cost more to buy.

The Excess
The excess is the amount you have to pay if your car is involved in an accident, or it is stolen. Normally, if you increase the excess, your premium will decrease. Make sure that you can cover the excess just in case you do have an accident. Most policies have a compulsory excess on them, however if you have a lot of years of no claims, the company may let you have no excess on your policy.

Motoring Abroad
All UK motor policies should cover you for EU driving, however the cover will be third party only. If you want extra cover for your jaunt abroad, call your insurance company in advance – you will probably have to pay a little extra to have this cover.

Click here to see a list of motor insurers

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