| Car Insurance - Help for new drivers
Glossary of terms |
| Third Party |
This is the minimum car insurance allowed.
If you cause an accident you will get no help repairing your car. If
your car is torched or stolen you will receive nothing! The insurance
only covers damage you cause to other vehicles, other property and
injuries |
| Third Party, Fire and Theft |
As above but if your car is set alight (accidentally
or otherwise) or nicked you will get some money back from the insurance
- But be aware you will never get as much as you hoped, often less than
50%. |
| Fully Comprehensive |
If you have a car worth more than £1000
this is recommended, that way if you do have a bump that is deemed as
your fault then you can claim on the policy and get help with the
repairs. (see excess) |
| Premium |
This is the amount you pay to the
insurance company for the policy. You can pay annually or sometimes
monthly, but you will incur interest charges. |
| No Claims Discount (NCD) |
Each year you do not have an accident,
your insurance company should give you a discount for good driving.
Typically you will get 25% off after 1 year, 15% off after the 2nd year,
10% in the 3rd and 5% in years 4 and 5. You can end up getting a 60%
reduction in you annual premium if you don't make a claim. If you do
have to make a claim you may lose all your NCD the next time you renew
your policy. Sometimes you can get protected no claims bonus which means
you can possibly make 1 claim and not lose you NCD. If a claim is deemed
not to be your fault, you will have the NCD reinstated. |
| Excess |
This is the amount you have to pay when
you make a claim. For example if you dent a panel on you car and the
repairs cost £850, you would pay the excess (typically £250) and the
insurance company would pay the rest. |
| Voluntary Excess |
You can add a voluntary excess
(typically another £250) in return for a lower annual premium |
| Modifications |
If you add anything to your car that
makes it more attractive to the average car thief, you must communicate
this to your insurance company. This includes things like stereo kit,
alloys, stickers/decals, body kits. The company will often not charge
you unless it affects the performance of the car. Failure
to communicate this may invalidate your policy |
| Endorsements |
If you get caught speeding or have a
dodgy tyre it's all to easy to end up with 3 points on your licence.
Once again you must let the insurance company know straight away. They
will find out anyway and will inflict far higher charges if you don't
communicate this to them. In either case you can expect a higher premium
next year. |
| Named Drivers |
Young drivers often get added to a
parents policy as a named driver. This is fine as long as the car is
used regularly by the policy holder. In the case of an 'injury' accident
the insurance company will initiate an investigation. If
it is found that the named driver has had exclusive or near exclusive
use they will invalidate your policy |
| Courtesy Car |
Young driver policies are stripped of
many of the benefits that other drivers can rely on. The courtesy car is
well worth adding back in (typically £10pa) this means in a non fault
accident you can hire a car for the period that your car is off the
road. |
| Windscreen cover |
Get this added back in for about £5 pa.
This will typically save you £150 if your windscreen is damaged. Often
a £50 excess will be applied. |
Insurance Groups Explained
(Courtesy of
Firstcar.co.uk) |
So many factors affect car insurance premiums, it can sometimes be difficult to identify exactly which ones have the greatest impact on the cost. Aside from driving experience, the car you want to get insured on is probably going to decided whether you are quoted a three or four figure premium.
We all know your Nan’s 1.0 litre Nissan Micra is going to be cheaper to insure than your next door neighbour’s BMW M3, but do we know why? In this case it’s clearly the massive difference in power, but it isn’t always that simple.
All cars are put into one of twenty groups; with group one being the lowest. This system is administered by the ABI (Association of British Insurers) and used as a guide by insurers.
The following factors are used to calculate group ratings:
Damage and Parts Costs - The likely extent of damage to each car model and the cost of the parts involved in its repair. The lower these costs, the more likelihood there is of a lower group rating.
Repair Times - Longer repair times mean higher costs and the greater likelihood of a higher group rating. Different paint finishes on modern cars are an important factor, so these too are taken into account.
New Car Values - The prices of new cars are taken into account as they are often a good guide to the cost of replacement and repair.
Body Shells - The availability of body shells (the basic frame of the car) is taken into account in group ratings because they are essential for certain accidental damage repairs.
Performance - Acceleration and top speed are important factors. Insurers know very well, from their claims statistics, that high performance cars often result in more frequent insurance claims.
Car Security - Security features fitted as standard equipment by motor manufacturers can help to reduce insurance claims costs. Such features include high security door locks,
alarm/immobilisation systems, glass etching, coded audio equipment, locking devices for alloy wheels and visible VIN numbers.
Because the Aston Martin DB7 Vanquish sits in group twenty and the new Fiat Panda in group one, you could be forgiven for thinking the ABI weren’t just devising a system to calculate insurance premiums, but in fact a clever wall chart for deciding how ‘cool’ a car is. I think we should point out, however, that lower grouped cars have many, many advantages, especially for young drivers.
For a start they are usually cheaper to buy, tax, insure, service and repair, plus they won’t guzzle fuel like it’s going out of fashion, which is good because trust me, it isn’t. They are also less powerful, so you are statistically less likely to have an accident and lose your valuable no claims bonus.
Even if your ‘street cred’ is really important to you, don’t worry, group ratings are specific to model versions, so you can still be driving a popular model but with the ‘1.0 L’ rather than the ‘2.0
SXI’ badge.
|
| Disclaimer |
The information on this fact sheet
should not be relied on in a court of law. Please check with your insurance company for
the details of each individual policy |
