Car insurance doesn’t have to be complicated. Understanding the elements concerning car insurance are key to getting you the best price and protecting you when you need it.
There are four key stages to selecting your car insurance:
1. Level of insurance
2. Type of insurance management
3. Payment type
4. Final decision on company
We break these four key stages of choosing car insurance down for you using plain, simple, jargon-free language.
Decision 1: Fully Comprehensive Insurance vs Third Party Insurance
Now that we know these facts we now need to understand the two main types of car insurance:
Fully Comprehensive and Third Party
Fully comprehensive covers you for damage to yourself and your own car as well as others, whilst 3rd Party insurance only covers other people. Therefore third party insurance is the cheaper of the two.
The difference in price between the two varies but as a ballpark average you could say third party can be anywhere as much as 55% cheaper.
The decision you need to make as a newly qualified driver is which you go for.
Although third party is much cheaper than fully comprehensive, always remember that this level of insurance does not cover you or your vehicle if you are to blame for an accident
Decision 2: Amount of Excess
Excess refers to how much you will pay towards the cost of repair or compensation when a claim is made. The more excess you pay, the cheaper your insurance will be.
Remember, the amount you save in relation to the amount of excess you select is something you should keep an eye on. For example, it may be foolish to put down an excess of £500 if it inly saves you £80 per year. Only put down what you know you can confidently pay if and when the situation arises.
Decision 3: Standard vs Blackbox/Telematics Insurance
The next key decision you need to make is whether you will opt for standard insurance or telematics insurance.
What is telematics (or blackbox) car insurance? Simply put, it’s insurance that tracks your driving behaviour and places it as a potential variable to the cost of your insurance. For example, if the telematics registers you speeding regularly this could potentially incur a charge from your insurance provider or even terminate your insurance with them.
It is important to note that not all telematics car insurance providers are the same or have the same terms and conditions. Make sure you are fully aware of what the terms and conditions are. Particularly the restrictions you may have and/or any potential charges you may incur.
Some car insurance companies that offer Blackbox technology report that young drivers tend to drive more safely than those who do not have telematics installed.
Remember, having telematics doesn’t make you a safe driver. It rewards you for being a safe driver. Always check the terms and conditions and look out for hidden costs or charges.
Decision 4: Pay Monthly vs Year in Advance
This is a pretty easy decision to make. Car insurance companies offer a discount if you pay up front for a full year of car insurance. This discount varies from provider to provider so shop around and see.
If you can afford to pay it off in one go then it is a good idea to do so. It means you don’t have to worry about paying your insurance off every month. However do not take a loan out to pay it all off in one go!
Remember, it may be a good idea to save up to have enough to pay it all in one go.
Decision 5: Insurance Company
The primary reason most people choose a car insurance company is price. So make sure you shop around and see how much you can save. It is going to be a laborious task having to enter your details several times but at the end of the day it is most likely worth it if you save several hundred pounds in the process.
Remember, cheapest might not mean the most suited company for you. Different companies will have different terms and conditions as well as different perks. So as well as shopping around on price shop around on benefits.