What Insurance is a Necessity for Your Car?

Types of car insurance
Types of car insurance

Everyone knows that car insurance is a legal requirement but many motorists do not have a firm understanding of what this insurance is for and what it covers. You can also choose to buy various optional extras to your policy – which can make it even more confusing. However, it is important to know about these because they could save you a fortune.

Why You Need Insurance

So, why do you need car insurance? As mentioned already, it is a legal requirement in this country but it will also help by providing financial protection in the event of an accident where damage is caused to the vehicle, other cars, drivers, passengers or pedestrians. Accidents happen all the time on the roads so it is helpful to know that you have coverage in place.

The Main Types Of Car Insurance

It is important to know what you are buying so make sure you have got to grips with the main types of car insurance which we have summarised below;

Third party: The bare minimum required and provides financial cover for any damage to property and injuries to other people including your passengers. It does not provide any cover for you or your vehicle if you cause the accident.

Third party, fire and theft: Provides the same as above but also covers the cost of repairs or a replacement if a vehicle is damaged by fire or stolen.

Comprehensive: The highest level of insurance, this provides protection in the form of cover for damage to your own car and accidents involving other people.

If you only have third party insurance then if you damage or write off your car you will not receive any insurance payment to buy a replacement. If your car is essential to your job then being in an accident where your car is written off would be a disaster. Similarly, if you have bought your car on finance if it is written off you won’t get any money from your insurance company, you won’t have a car but you will have a car loan you still have to pay off. For this reason, it makes sense to buy a higher level of cover so you can replace your car should you write off your own. Many policies do not provide you with cover if the person damaging your car (or you) is not insured. Check your policy and consider buying additional cover to protect you from uninsured drivers.

Optional Insurance

There are then a few optional types of insurance which can provide extra protection. While these are another motoring expense, you could find that they save you a fortune and provide important peace of mind.

The main types are:

  • GAP insurance: Covers the gap between the amount paid/outstanding on finance agreement and the insurer payout in the event of a write off (comprehensive policies will only pay the current market value).
  • Warranty: A warranty will cover the cost of labour and parts for any electrical or mechanical breakdown. You are covered by a manufacturer warranty initially but once this has expired you can get an extended warranty from a specialist like ALA.

How is Cost Calculated?

One thing that you will notice when shopping around for car insurance is that the price can vary drastically and sometimes third party will not be the cheapest. There are various factors that go into calculating an insurance premium:

  • Age
  • Type of car
  • Annual mileage
  • Where the car is kept
  • Occupation
  • Whether or not you have committed previous motoring offences.

Having a clear understanding of car insurance and the different levels and types of policies is crucial so that you are able to arrange an adequate level of cover and have the knowledge that protection is in place.