Make sure your insurance policy does not bring more car trouble
CAR INSURANCE is one of the most competitive fields of cover with little customer loyalty. Yet many who search for the lowest premium do not realise the scale of the restricted terms for their chosen policy until they need to claim.
This makes economic sense as insurers can only cut prices by cutting corners.
Much of this problem lies with the enticing websites who offer to do the homework for you. Many hide away or do not even publish the insurer’s full terms.
According to RAC research, over a third of motorists are out of pocket by accidents where they were not at fault through omissions in their insurance. Its study reveals that 36 per cent of drivers had to finance the cost with 21 per cent having to pay for the excess and eight per cent funding a hire car.
The highest uninsured loss discovered in the study exceeded £3,090 which was for loss of earnings.
Frequently, motorists believe that the insurer of the driver who is at fault will pay for all costs following a collision but this is not the law.
Start the search for the policy most suited to your needs with one that has been independently rated and awarded top stars. Both Defaqto and Moneyfacts publish annual surveys based on such key factors as the excess (compulsory and voluntary) and no claims discount but then look at uninsured driver cover, courtesy car and repair guarantee.
After an accident, if a car is being repaired by an approved garage, Saga will pay for a courtesy one and up to £500 towards travel to get you and your passengers home or for emergency accommodation following an accident.
Not surprisingly, it recently reported a 19 per cent increase in motor and home insurance business.
Moneyfacts’s assessment will include windscreen cover (including if this affects the no claims discount) and theft from the vehicle for audio equipment and satellite navigation.
One key question asked is whether the applicant has another vehicle available, either at home or work.
This should reduce the premium even though a privately owned car is in use just five per cent of the time.
The availability of a car through work means not only that your own car will not be used as frequently but also shows trust by the employer.
Some providers, like Admiral, make a feature of a greater discount for insuring more than one vehicle.
A good policy will include as standard: loss of key misfuelling, such as putting diesel into a petrol vehicle no charge for an amendment. Watch for the limit on medical expenses where a cheap policy is likely to prove inadequate.
If planning to use a car abroad, include foreign usage right from the start of the policy as it will almost certainly be more expensive to add it later.
Breakdown cover and legal assistance are both helpful extras which are increasingly included in policies but may be purchased separately.
If a new car should be writtenoff soon after purchase, there will be a yawning gap between the ‘value’ offered and the replacement cost.
This is where an experienced broker can assist, either in finding a policy which includes this risk or sourcing one to cover just this element.
If the insurer does not have ‘gap’ cover, it may offer a new replacement if the car is stolen or written off whilst it is under 12 months old. The friendly society LV= offers this help provided the insured is the first registered keeper, meaning that no ‘gap’ insurance is required for the first year.
New car sales fell by 20 per cent last month, the worst for a decade with confusion over the future of diesel engine cars and a lack of consumer confidence. Part though relates to the higher cost – up 19 per cent this year to average £26,105.
Increasingly hire purchase plans are helping sales with motorists using finance increasing from 88 to 92 per cent in a year.
One way to potentially reduce the premium and gain an insight into your driving practice is to participate in ‘telematics’. This is a way for an insurer to monitor your driving by either having a black box fitted or a device plugged into a vehicle’s diagnostic port.
The information is not taken into account during the year but at the time of annual renewal.
Initially, this approach was designed for young drivers but increasingly is available at any age and may become the norm.
When renewing, look for any special incentives.
Currently, for new policies starting on or before December 21 and renewed by November 21, Co-op Insurance is giving a £50 voucher which can be spent on food in a Co-op store. The policy must be in force for at least 30 days.
Do not overlook banks for providing car insurance. Highly rated policies are available from NatWest, Royal Bank of Scotland and Santander.
The latter is arranged through BISL and includes stolen keys up to £500, personal belongings to £100 and 60-day EU cover as standard.
It also has a three-year guarantee on all work undertaken by an approved repairer and unlimited cover for manufacture-fitted audio and sat nav equipment.
Similarly, many supermarkets have attractive policies, notably M&S, Sainsbury’s and Tesco using their banking arms. To attract custom, car manufacturers are also worth checking such as Audi, BMW, Fiat, Ford, Honda, Jaguar and Volvo.
As such deals are likely to be in the car showroom, it would be sensible to compare premiums and terms beforehand.
Many who have suffered from potholes or other poor road maintenance may be surprised to find that using their policy will affect their no claims discount. It will adversely along with being hit whilst parked, theft of or from a car, flood damage and being hit by an animal or object excluding vehicles.
Such a long list does not apply at all with Direct Line but does with such major competitors as Admiral, Aviva, AXA, Hastings Direct, LV= and MoreThan. The survey was carried out in March.
Such protection would be expected as standard by most motorists with comprehensive policies.
It pays therefore to read the terms carefully and not rely on summaries or slick advertising.
Finally, seek an insurer with a reputation and solid financial backing. Unlike certain money fields, if a motor insurer fails, there is no umbrella fund to pick up the pieces.
The only help is if an accident is caused by an uninsured driver when the Motor Insurers Bureau can step in to compensate.
Conal Gregory is AIC Regional Journalist of the Year.