MOTOR INSURANCE

Types of cover

The first step when buying car insurance for the first time is to consider the type of cover you want. There are three types to choose from.

Third party

This is the lowest level of cover. It insures against damage and injuries that you, or your passenger, cause to another person or their property in an accident. It doesn't pay for any damage or injury to you or your car.

Third party, fire and theft

This is like third party cover but it will also pay to repair or replace your car if it's stolen or if it's damaged or destroyed by fire.

Comprehensive

Comprehensive cover extends third party, fire and theft insurance to cover damage to your own car in the event of an accident.

Even if you're thinking about third party, fire and theft, it's also worth getting quotes for comprehensive cover. Third party, fire and theft will always be cheaper, but you may find that comprehensive cover doesn't cost that much more, considering the extra cover you are getting.

No claims discount

The no-claims discount (NCD) is one of the most important features of your car insurance policy.

The amount of NCD you can expect varies widely between insurers. One year's claim-free motoring could give you a discount of as 57.5 per cent, or as little as 30 per cent, depending on which company you are with.

Typically, you can reach a maximum NCD of 65 to 70 per cent if you have four years of claim-free motoring. Some insurers offer a higher maximum NCD for older drivers.

Your NCD will be cut if you make a claim, but the size of the cut varies between insurers, too. In the best cases, the maximum NCD would be reduced by just 3 per cent, from 75 to 72. But if you are under 50, you could see your maximum NCD cut by as much as 22 per cent.

Check with your insurer what happens if you have to make further claims within a three or five-year period – as it may mean a further cut in your NCD.

Protected no-claims discount

You can limit the impact of a claim on your NCD by paying extra for NCD protection.

You'll typically have to pay 10 to 15 per cent to protect your NCD - and it is usually available only after four years with the same insurer.

This protection can make a huge difference to the premiums you pay. If you protect your NCD, making one claim in a year will have no effect. Making two claims in a year won't affect your NCD with some companies. But with others, your NCD could be reduced to as little as 45 per cent if you make two claims in a year.

Courtesy car

A replacement car is a useful benefit if your car is off the road after an accident. Most insurers will provide a courtesy car - but only if your car is repaired by an approved repairer. If you don't choose one of the insurer's approved repairers, you won't get a courtesy car.

Personal belongings

If the worst happens, will you be compensated for personal belongings which have been lost or damaged?

All our Best Buys include personal belongings cover. Typically, though, policies with this type of cover still exclude items such as tickets, money, stamps and vouchers.

The type of cover insurers offer varies. Only a minority of insurers will replace your items with new ones. The rest will take the age and condition of the item into account when deciding how much to pay out.

Choice of repairer

With some insurers, you must use one of their approved insurers. If you don't, they won't pay for the repairs.

Medical expenses

Some policies include cover for medical expenses: for example, dental work or physiotherapy you need as a result of an accident.

In-car audio equipment

Insurers differ in how they cover in-car audio equipment. Most companies will limit the amount of cover for audio equipment not fitted by the car manufacturer - typically £500 or more, but it could be as little as £100.

Legal protection

Motor legal protection covers the cost of legal action resulting from a car insurance claim.

Age limits

Most policies have age limits: they will insure people only over a minimum age and under a maximum one. Sometimes, though, the upper limit is lower for people taking out a new policy than for someone who already has a policy with the company.

Text researched from Which Please visit their site at www.which.co.uk

Recommended Companies

AA
Barclays
Sheilas Wheels
Lloyds

This web page is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or not make) any decisions. Always obtain independent, professional advice for your own particular situation.