Back to basics – car insurance explained . . .

As everyone should know, motor insurance (for cars, vans and motorcycles) is compulsory under the Road Traffic Act. According to the consumer organisation Which? around 25 million motor policies are currently in operation in the UK and, of course, that means that there’s significant choice in the insurance market. To say the least, it can be tricky to pinpoint which cover at what premium cost best meets your motoring requirements.

Let’s start at the beginning with the three basic types of motor insurance. By law, to drive on the public highway you must have Third Party cover. This is the minimum level and it protects against damage or personal injuries that you or your passenger(s) may cause to another person or to their property in an accident. Your insurer will not pay for any damage to you or your vehicle.

The second option is Third Party Fire and Theft. This is the same as Third Party but, as the name suggests, with the added protection that if your vehicle is stolen (sometimes it can be attempted theft), damaged or destroyed by fire, then you will also be compensated.

Finally, the third alternative of a Comprehensive policy further extends your insurance to include accidental damage to your own vehicle.

If you are contemplating taking out Third Party, Fire and Theft cover, do ask for a comparable Comprehensive quote as well. The difference in premiums may not be as substantial as you imagine, particularly if you have a solid No Claims Bonus record. As a rule, 20 years ago a Comprehensive policy would cost twice as much as one for Third Party Fire and Theft. However, for complex underwriting reasons, that disparity is now often less than 20% and, in some cases, Comprehensive premiums can actually be lower.

Insurers calculate premiums by assessing a range of factors, among them age, occupation (some professions qualify for discounts) and insurance history. For example, you might be a 55 year-old male driver with many years experience on the road but, if you’ve put in numerous claims over the last three years, underwriters will inevitably consider you a higher risk. Other criteria that come into consideration are the type of vehicle you drive (the smaller the engine, the lower the car group and the premium cost – however, be careful as some ‘hot hatches’ have a smaller engine but higher car group), your postcode and whether the vehicle is kept overnight in a garage or on the public road.

When it comes to choosing vehicle cover, it makes sense to consult an experienced broker who is familiar with the complexities of the sector. At Haden Welbeck we collate as much information as possible in order to get a feel for the perfect policy for each client – and which is the best value for money. It’s well worth being aware of all the options before you make a final decision.

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