Where would we be without our cars? 75% of households in Northern Ireland rely on their vehicles for travel to work, school, for access to health care and to keep in touch with others. Cars can be expensive to run and maintain, and for a lot of us, the high cost of car insurance is a barrier to car ownership. There are hundreds of different insurance companies as well as different types of insurance and various optional extras and benefits that can be included in a car insurance policy.
Despite this, nearly 80 per cent of consumers we surveyed stated that cost was the most important factor for them when choosing car insurance. We recommend that you don't choose a policy based on price alone, make sure you get a policy to suit your needs as well! If you are worried about cost, check out our helpful tips on shopping around and getting the best deal for your car insurance.
Types of insurance
There are three types of car insurance:
- Third Party Only
This is the minimum legal requirement for cover - as the name suggests it only covers injury to a third party, i.e. someone else and damage to their vehicle or property; it does not cover you or your vehicle. If you have an accident that is your fault or if your car is stolen, vandalised or damaged by fire, you cannot claim against the policy for the damage to your car.
- Third Party Fire & Theft
This type of policy is similar to "Third Party only" except it also covers you if your vehicle is damaged by fire or if it is stolen. It will not protect you if your car is vandalised or involved in an accident where you are at fault, but it will cover any third parties involved.
- Comprehensive Insurance
As the name suggests this provides comprehensive coverage for you, your vehicle and any third parties against a range of perils including accidents, vandalism, fire and theft. The extent of the cover can differ between insurers and may include benefits such as limited cover for personal items stolen, windscreen repair/replacement or personal accident protection. In comparison to the other types of car insurance, if you are involved in an accident that is your fault, you will be able to claim for any damage to your own vehicle.
Optional Extras and Additional Benefits
As we mentioned above, some insurance policies include additional benefits or offer optional extras. These can affect the premium so always check the details, the most common are:
- Uninsured Loss Recovery (ULR) / Legal Expenses Insurance (LEI)
This covers you for legal expenses towards a solicitor to pursue a third party in recovering any uninsured losses you incur as a result of an accident that was not your fault. This could for example the cost of hiring a car, personal injury or loss of earnings as a result of the accident.
- Protected no claims
You can normally pay a bit extra to protect any no claims that you have. The length of time you have been driving without having any claims against your insurance is crucial to the premium. If you add protected no claims and have an accident, your no claims bonus will remain intact.
- Breakdown Cover
Most insurers will offer the option to add in breakdown cover, which can come in handy if your car has any mechanical problems when you are out and about. This type of cover can vary as well though so it is important to check what is included.
- Personal Accident Protection
This is often included or can be added to a car insurance policy. It will provide extra cover (normally a lump sum payment) if you are injured or die as a result of an accident.
- Windscreen repair / replacement
This is normally included in most comprehensive car insurance policies, you should check if there is an excess and how much it is.
What is Guaranteed Asset Protection (GAP) Insurance?
GAP insurance isn't normally included as part of your car insurance policy. It is a separate type of insurance that you may be offered when purchasing a car, or can purchase yourself at any time. It provides added protection if your car is written off following an accident. Return to invoice (RTI) GAP insurance pays out the difference between the car's purchase price and its pre-accident value. Other types of GAP insurance pay out the difference between the car's pre-accident value and your outstanding loan if you have finance on your car.
Driving someone else's vehicle
If you are 25 years old or older, most policies allow you to drive another person's car provided you have insurance. However make sure you check your policy as it may have restrictions such as coverage for emergency use only.
What is an insurance excess?
Insurance excess is the amount you need to pay towards the cost of a claim before your insurer will contribute. For example if the cost of a claim is £500, your excess may be £100 and £400 will be paid by your insurer. Sometimes you can opt to increase or decrease the excess on your policy, which will affect the premium. The higher the excess, the cheaper the premium will be however if you do need to claim on the policy make sure you can afford to pay it.
What affects the cost of my car insurance?
- WHAT you drive: the engine size, make, model and age. Also modifications to your vehicle can increase your premium.
- WHERE you live and where you park your vehicle can allow discounts on your premium, for example if it is kept in a garage or private driveway rather than on a public road.
- HOW you use your car: Some providers may charge more if you use your car to commute and domestic use is usually cheapest; the number of miles you do each year will be a factor in the premium as well. Also how you secure your vehicle can make a difference, for example if it has an alarm fitted.
- WHO is driving? Your age and driving experience is a major factor, as well as your occupation (Some occupations prove to be of lower/higher risk than others). If you have a bad accident record or motoring offences this may increase your premium.
How can I get the best deal?
Here are our top tips for driving down the cost of your car insurance:
- ASK AROUND: Family members and friends can tell you not only what they are paying in premiums but also how they rate their insurers' customer service, especially when things go wrong.
- SHOP AROUND: Don't accept the first policy quoted. Remember to compare the cover each policy offers not just the price. Currently only 40 per cent of consumers shop around for car insurance, meaning 60 per cent of consumers are missing out on potential savings. There are different ways to shop around:
o Go to an insurance broker - check www.biba.org.uk to find one close to you, they can shop around a range of insurers for you;
o Telephone several insurance providers directly (although this may be costly and time consuming); and
o Use a comparison website - remember comparison websites don't cover all providers so you may need to look on some insurance company websites too to make sure it is the best deal for you.
- REVIEW YOUR POLICY: Don't just accept a renewal quote from your existing provider - contact them for a complete review of your policy.
- INCLUDE AN EXCESS: Including an excess will lower your overall price. However make sure if you opt to pay a higher excess make sure it is an affordable amount in the event that you do need to claim.
- NO CLAIMS DISCOUNT: Make sure your insurer knows how many years no claims you have as this can substantially lower your premium.
- MAKE SURE YOUR DETAILS ARE CORRECT: In particular, your occupation can affect the premium. Insurers keep records of claims history about specific job titles.
If you want to know more about how to drive down the cost of your car insurance you can download our 'Driving Down the Cost of Car Insurance' guide on our website. Alternatively you can request a free copy by contacting us on 0800 121 6022 or via Facebook or Twitter.
Consumer Council Car Insurance Survey: What's your cover story?
We have launched an online survey about car insurance to gather a snapshot of car insurance in Northern Ireland as to how much consumers are paying, especially given that Northern Ireland is the second most expensive region in the UK for car insurance premiums.
We are calling all drivers to complete the survey anonymously - it takes less than 5 minutes! The survey will run until Friday 19 September.
To complete the survey visit www.consumercouncil.org.uk and click on the link 'Car Insurance Survey'. Alternatively the survey can be completed by telephoning freephone 0800 121 6022.