10 things you probably didn’t know about car insurance

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Life is lived at such a breakneck pace these days people can be forgiven for losing sight of certain things. What with charging here, there and everywhere at a zillion miles per hour, some facts and figures are long since misplaced in the resultant blur of non-stop activities. Like car insurance for example. Although never the act of insuring your car per se, more some of the basics about car insurance protocol which we might have forgotten about along the road. Or perhaps even things you probably didn’t know about car insurance in the first place.

Hectic careers, equally busy social lives, frantic child-rearing and various other demands on our collective times (and being constantly pulled this way and that) could easily lead us to being a bit rusty when it comes to a keen awareness of the rudiments of car insurance here in the UK. But fear not, because as usual we are on hand to bring car insurance policyholders up to speed on all they need to know (or rather, might have accidently let slip their mind) in recent years; courtesy of our incredibly handy list of 10 things you probably didn’t know about car insurance guide…

1. Car insurance is a legal requirement

There’s no escaping the underlying fact that car insurance is a must if you’re looking to drive a vehicle on the road. Insuring your car isn’t something you opt in or out of, it’s a legal obligation on the part of the vehicle owner/main driver to ensure that they arrange the necessary cover and have it in place at all times. As of June 2011 – and marking the advent of the Continuous Insurance Enforcement (CIE) law – failure to adhere to this will result in criminal proceedings being brought against you; unless that is the owner of a vehicle has completed a Statutory Off Road Notification (SORN), therein registering a specific vehicle that’s sat on the drive/locked up in a garage and not being driven as being ‘off road’. A note of caution that non-compliance with this ruling will routinely result in the guilty party being slapped with a £1,000 fine.

The ushering in of this new rule back in 2011 was aimed at reducing the alarming problem of increased numbers of uninsured drivers on the road, yet the well-meaning crackdown could inadvertently trap innocent parties if they don’t stay on top of their insurance responsibilities. Amongst this more unwitting demographic are those drivers who perhaps habitually choose to drive/insure

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their car for just the summer months (or alternatively those who might work away from home/overseas for long periods) is that it’s often easy to neglect the fact that an existing car insurance policy might well have lapsed in the intervening period, which would in effect mean that the vehicle in question is essentially uninsured. Blissful ignorance, alas, won’t save individuals from fines imposed and further actions taken against them for seeming non-compliance.

2. It can be cheaper to pay in one lump sum

Like many things insurance-based, if you’re in a financial position which allows you to pay up-front for an insurance product then it’s always advised that you bite the bullet and settle the premium in the one lump sum. And that’s for the simple reason it’s far more cost effective to take care of your insurance policy in this manner. And the outstanding business of motor insurance is no different in this respect.

Monthly payments, whilst convenient from the outset, will almost always incur more interest payments, and ultimately end up costing you more in the long run. This is primarily due to car insurance providers historically treating monthly payments as a loan from them to you, much in the same way as to how personal loan companies and lenders operate. Incremental (yet mostly unseen) interest charges could total some 30% over a 12 month period.

3. Your premium is likely to change when you move address

A percentage of everyone’s car insurance premium is worked out on the basis of where the would-be policyholder resides; and therein the postcode at which the insured vehicle would spend the largest part of its time. Hence the reason that if you should change addresses then the premium needs to be re-calculated to take into account any greater or lesser risk factor aligned to that revised postcode. And it’s not just relocation you need to keep your motor insurer in the loop about either, as equally important in the grand scheme of insurance things is a change in career, which could see the policyholder driving to a different location and times of day/night than confirmed in the original car insurance policy document.

Neglecting to update circumstantial and far-reaching policy details such as these can compromise your current policy and risk invalidating it in its entirety. What’s more, a future claim could be refused on the grounds that the owner/driver’s details had changed since the policy’s inception.

4. It’s an offence not to tell your insurer about any mods

While the more obvious additions of a 5” diameter sports exhaust, a rear spoiler the size of a picnic table and a respray in lurid orange might be obvious reasons in which to inform your car insurer that not-so-subtle changes have been amde since you first took out the motor insurance policy on your current vehicle, less extreme modifications are equally important to mention if you wish to remain on the right side of the law. Or at least, not risk invalidating your existing policy. Otherwise discerning, blink-and-you’ll-miss-it car mods such as changes to interior upholstery, the fitting of parking sensors, roof racks and tow-bars, and the adhering of non-original stickers, badges and murals risk landing the owner/driver in hot water with their insurer.

If in any doubt as to what does and doesn’t apply in the eyes of motor insurance providers remember this rule of thumb: an after-market modification is that what is deemed applicable should any vehicle be subject to alteration since leaving the factory or showroom, including exterior and interior aesthetics and the more understandable performance upgrades.

5. Fully comprehensive insurance isn’t always the most expensive policy these days

Despite the automatic assumption that fully comp policies will typically set the policyholder back the most, financially-speaking, there are instances when this isn’t always the case. Irrespective of the basic cover afforded you by grabbing third party insurance packages, these products have witnessed significant increases over recent years, reflecting the popularity of them amongst younger and inexperienced drivers who by their very definition are statistically more likely to be involved in road accidents – which in turn pushes up the overall premium prices.

So in real terms this means the difference between third party packages and fully comprehensive aren’t as gulf-like as they once were, yet the latter offers substantial improvements for the policyholder.

6. Loyalty to a car insurance provider counts for nothing

They say a change is as good as a rest, and certainly in motor insurance provider terms this adage definitely rings true. Twisting rather than sticking is routinely advocated if you wish to secure a more competitive car insurance premium when it’s up for renewal, as rarely does retaining a relationship with an existing provider pay dividends. In fact, the opposite applies mostly nowadays, as insurers soon got wise to people preferring to stay with the devil they now than jumping ship when it comes to routine and unavoidable agreements and subsequent transactions.

Seizing on this misplaced complacency many car insurance providers know that policyholders will for the most part stay put as opposed to going through the hassle of searching elsewhere for insurance and so as to keep the status quo. Consequently, because they’re not chasing an existing customer for business they tend to do little to appease them (and certainly fall some way short of rewarding them for their repeat business).

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7. Opting for a high excess could end up being a false economy

Although electing for a high excess so as to minimise your monthly premiums seems like a great idea from the off, it does have the propensity to come back and haunt you should you ever need to file a claim and thus contribute your sizeable portion to the claim pot then and there.

Admittedly it’s all a bit of a delicate balancing act, as attempting to weigh up hypothetical repair charges against just how much your motor insurance premium is reduced by is a fine art. To help put this into clearer perspective it’s worth mulling over the following example: if, say, you plump for a £250 excess on your future car insurance policy you may end up saving £50 over the course of a year on your policy, however this has to then be conversely viewed as you being liable to stump up £200 more in total if a claim is forthcoming any time thereafter.

8. Protected No Claims Discount won’t stop your premium going up

Despite your best endeavours, a no claims discount will still edge up over a passage of time, whether it’s protected or not. It’s just the way it is due to the cost of inflation and other economic factors which nobody can determine. On the plus side you won’t lose any of your NCD should you lodge a claim, so if you’ve managed to accumulate a 50% discount you will continue to benefit from a 50% reduction should a claim be filed. It’s just that what a lot of motorists fail to grasp is that car insurance premiums will rise in line with inflation regardless of NCDs, so effectively the material gains from one will always be offset with a fundamentals of the ever-rising cost of living.

9. Telematics policies will bring premiums down

Based almost exclusively on the insured party’s acknowledged driving behaviour (as actively collated on a regular basis by the tech provisions of ‘black box’ devices manifest in policyholder’s cars), telematics insurance affords younger and inexperienced drivers the opportunity to challenge the hitherto insurance industry-accepted tried and tested formula of solely judging individuals on orthodox risk profiling systems. Which are ordinarily compiled claims statistics from peer age drivers.

Regular refunds offered throughout the term recompense the policyholder who will have paid the usual premium up-front and derived from typical risk profiles, on the proviso that they demonstrate they’re safe drivers, whilst other insurers give a larger discount at renewal time by way of reward. Although marketed as an insurance product for young and inexperienced drivers, telematics policies can be readily arranged by drivers of almost any age and are being proven to drive down the costs of premiums.

10. Fronting Isn’t Cool

The contemporary terminology may have slipped a few motorists by, so as a recap ‘fronting’ is the phrase coined for older drivers (mature and experienced motorists) who falsely present themselves as the main driver on car insurance documents so as to get a cheaper premium for a younger person (typically newly-qualified sons and daughters) who are cited as named drivers on the same policy.

Fronting is an unlawful practice and can – in the event of an accident – render the vehicle uninsured, which in turn would leave the policyholder legally responsible for meeting the costs of a claim themselves, for all parties concerned, while also likely to result in the willing and duplicitous perpetrator receiving a fine, penalty points and a motoring conviction. So in a nut-shell, fronting would theoretically end up costing dramatically more than the overall cost of being honest and insuring the vehicle in the correct way in the first instance.

To reiterate, although adding another driver is a frequent and legitimate manner in which to reduce motor insurance premiums, it’s illegal to falsely declare that you are the main driver of a vehicle when it practice it’s someone else who’ll be doing the bulk of the driving.

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