Car Insurance: all you need to know

  • Find out more about car insurance
  • Top tips for reducing your premiums
  • Discover the key things to look out for

Nobody likes to spend too much time thinking about car insurance but equally nobody wants to end up paying over the odds for it either.

In this guide we look at the best ways to reduce your premiums and explore the benefits of the types of cover available.

Equiping you with not only the facts and need-to-know information about car insurance, but also top tips on how you could save money.

What is car insurance?

In a nutshell, car insurance offers financial cover for you if your car gets stolen, vandalised or is involved in a road accident as well as offering cover to the other people and vehicles affected if an accident is your fault.

When an insurance company calculates your monthly premium, quite a few factors are taken into account including your age, previous claim history, the value of the car, how many miles you drive and where you park it at night.

Types of cover

There are three main types of insurance cover;

  • Third party
  • Third party, fire and theft
  • Fully comprehensive

In some cases the cheapest option is the third party cover which offers protection for other road users but not you. This means that if an accident occurs and it is your fault, your insurance will cover the cost of the damage to the other cars and passengers affected by the accident but not you or your car. 

Third party fire and theft is essentially the same as third party with the addition of cover if your car is stolen or catches fire.

As the name suggests, comprehensive cover is the broadest cover available and will in most cases include accidental damage, full cover for you and other parties in an accident, theft cover and more, you may also be insured to drive someone else’s car.

To find car insurance quotes from some the the UK's leading providers visit Parkers Compare today.

Short term cover & Gap Insurance

Most insurance policies last for a year, and at that point the policy and premium is reviewed. But sometimes you may need cover for just a small period of time, which is when short term cover comes in useful.

Instances when you may need it include if you wanted to borrow someones car for the weekend, if you're teaching someone to drive in your own car, or if your children want to borrow your car for a few weeks and you don’t want to risk your no claims bonus.

Short term insurance is usually available for up to 28 days and can also work if you have just brought a car and want to drive it straight off the forecourt but don’t have the time to shop around for an insurance deal.

Gap insurance is designed to help cover the difference between the value of the car when you brought it and the amount the insurance company will pay if it gets written off.  The difference can sometimes be thousands, depending on how much your car is worth it may be worth considering.

To find out more read our complete guide to Gap Insurance here.

Excess & No Claims Discount

Put simply, excess is the amount of money you will need to pay in the event of a claim. When getting a quote the insurance company will ask you how much excess you will be willing to pay. Yes, a higher excess will in most cases result in lower monthly premiums, but you need to make sure you can afford it if you ever did need to claim.

Many insurance companies will give you reduced premiums if you have stayed ‘claim free’ for a number of years, more commonly known as a No Claims Discount.

The more years you can go without making a claim, the larger the discount will generally be - up to a maximum limit that many insurance firms set (usually six years). You can also pay to protect them and transfer them over if you move insurance companies.

Things to watch out for

One of the most important things to remember when taking out your car insurance policy is to be honest and don’t forget to notify the insurance company if anything changes.

This includes if you move home, change jobs or even if your relationship status changes; all of these can determine how much you pay each month. For example if you move from a house which has on-road parking to a new home with a garage your premium could go down.

Failure to tell your insurance company know could result in your policy becoming invalid.

Reducing car insurance premiums – top tips

Here are some top tips to keep your insurance premiums down.

  • Shop around

Let Parkers Compare take the strain out of finding your next car insurance policy. We work with a number of the UK’s leading insurance companies to help you find a good deal. Search insurance quotes with Parkers Compare here.

  • Set the right mileage

The amount of miles you travel directly correlates to the cost of your insurance premium so make sure you don’t over estimate too much how many miles you will travel as it’ll cost you.

  • Secure your car

Fitting approved alarm systems and placing your car in a garage each night could significantly reduce your premiums.

  • Add an additional driver

Adding an experienced second driver with a good claim track record to your policy can sometimes help to reduce premiums, especially if you are a young or inexperienced driver.

  • Pay annually

Although paying monthly can help when juggling your finances in most cases it’ll cost you more over the course of the year as an interest rate is usually applied.

  • Modifications

The more changes you make to your car, except security ones, the more you're likely to be charged. You should always tell your insurer about any modifications whether you made them or not as it may invalidate your policy.

  • Your car choice

If you’re in the market for a new car, make sure you check its insurance group rating, even opting for a smaller engine size can make a difference when it comes to your premiums. You can check your new car's insurance group rating by using our car insurance group calculator here.

Remember:

  • During the process of getting new quotes it may pay to ring your current insurer to see if they can offer you a better deal.
  • Always read your policy documents before taking out your new policy and double check it has all the cover you need like breakdown recovery and car hire.