Why do we need to take out car insurance? In the UK all drivers are required to insure themselves. This is in case of an accident as a result of use of a vehicle on a public road or in a public place. Today, there exists a wide range of cheap quotes available for drivers to compare.
Whether you take out third party insurance or comprehensive insurance, you should be covered for the above. Comprehensive insurance will also cover the actual policyholder's vehicle.
Four things you should know about before buying your car insurance:
1. Limits and excesses
As part of the terms and conditions of your policy, you may be required to pay an excess on any claim. This means that the insurance company will only pay out on any claim over and above this excess. Likewise, limits on the amount payable in the event of a claim are often set. Details of any limits and excesses will be included within your policy document.
2. Insured Drivers
If any other drivers are going to be driving your car, you need to inform the policy provider. The age and driving history of the named drivers will be used to determine the additional cost of insuring them.
3. Vehicle Use
You are required by the insurer to give information about what you intend to use the car for. Most policies will insure your car for social and domestic purposes, which does include driving to and from a permanent place of employment but does not cover you if you are using the car for the purpose of your job, e.g. making deliveries, etc.
4. No claims discount
This is when a policyholder qualifies for a discount on their insurance premium if they have a 'claim-free' record. The price reduction that you receive depends on who you insure your car with and the type of vehicle you insure, however the following scale is fairly representative of most insurers:
One year without a claim = 30% discount
Two consecutive years without a claim = 40% discount
Three consecutive years without a claim = 50% discount
Four or more consecutive years without a claim = 60% discount
If you have made a claim in the past, you may still qualify for some form of no claims discount saving. Again, the level of discount will vary from one company to another, but you should expect to lose around half of your discount.