It’s required by law, but car insurance tends to be regarded as a necessary evil by many car owners. As such, everyone’s always looking to save a few pennies come renewal time.
But some of the conventional wisdom about car insurance and how to save money isn’t necessarily true. Not only that, but it can significantly degrade or invalidate your coverage should you actually need to make a claim.
With help from motoring marketplace Your Red Car, The Car Expert has set out to answer some of the commonly asked questions about what you can and can’t do when looking for car insurance.
FALSE – This often used to be the case, but policies that allow you to do this are increasingly rare. Therefore, it is wise to check the ‘driving other cars’ (DOC) section of your policy documents before getting behind the wheel of a car that your insurer does not know about.
If you are allowed, keep in mind that you are usually only covered for third-party liability, so any potential damage done to the car you are driving will have to be paid for out of your pocket.
You may also find that this isn’t offered to drivers under the age of 25. You shouldn’t drive another vehicle unless you are sure you will be covered, and you must always ask permission from the vehicle owner.
FALSE – Third-party cover is the minimum level of cover required by law. This will cover damage to another person’s car along with compensation for anyone injured but not for yourself or your own vehicle if the accident is your fault.
It may seem logical that the minimum level of cover will come at a minimum cost, but this isn’t always the case. High-risk drivers tend to opt for the lowest price cover so as a result, this has driven the price of third-party-only cover-up.
It’s wise to do as much research as possible to find the best price for the best level of cover. It’s possible that fully comprehensive cover can end up costing the same or even less than third-party cover and it comes with the bonus that, if you are in an accident, your vehicle will be covered if it is damaged.
TRUE – If you no longer use your car, and you have no plans to use it in the future, it is true that you don’t have to have an active car insurance policy on that car. However, the story doesn’t end there…
Since the Continuous Insurance Enforcement (CIE) act came into effect in the UK in 2011, all cars must be insured unless they have been declared off-road with a Statutory Off Road Notification, known as a ‘SORN’. This must be applied for via the DVLA.
Your unused car can only be declared SORN if it is kept off the side of the road on private property like a drive or garage. This means that if you park on the street, you will still have to pay for car insurance for that vehicle, whether you use it or not.
Another point worth mentioning is that if you car is under finance, you will almost certainly need to have comprehensive insurance cover, even if you’re not driving the vehicle for a period of time.
FALSE – A safe space to park your car may seem like it would reduce your insurance policy but again, this is not always the case. In the eyes of the insurer, this could be deemed riskier than the driveway. Manoeuvring in and out of a garage potentially increases the chance of bumping your vehicle.
It’s all based on statistics and how many claims are made because of this reason. For example, if the area you’re in has seen an increase in claims made because of garage-related accidents then this could impact your price. It is worth comparing quotes for driveway and garage parking if you have both options, and working out which is more convenient.
TRUE – It can be difficult to find the money to pay for a year’s cover in one go, but paying it all upfront usually works out much cheaper than paying in monthly instalments.
While it might seem sensible to spread the cost of the insurance policy with monthly payments, it almost always costs more in the long run as there will usually be fees and/or interest to pay your car insurance in instalments.
FALSE – It may seem like an innocent way to reduce the financial burden on a young family member who has just started driving, this practice is known as ‘fronting’ and is certainly illegal.
It is fine for a parent to be a named (secondary) driver on a young driver’s car insurance policy, and some insurers offer a discount for doing so, but instances where a parent is named as the main policyholder can lead to quite serious consequences, including penalty points, disqualification, and fines of up to £5,000 if the case reaches the courts.
TRUE – While it can be a bother to change your insurance provider when the time comes each year, car insurers rarely reward you for your continued loyalty. Even if your quote is cheaper this time around, you are always best served shopping around to double-check that you are getting the best deal.
Even if you can’t find a cheaper quote, you may be able to find a policy for the same fee with better coverage.
FALSE – You won’t lose your no claims bonus if you make a claim and you’ve paid to protect it, but your premium could still rise as if your insurer considers you a higher risk after the accident.
Your no claims bonus is a discount that is applied to your car insurance premium, but if your premium rises you will still end up paying more. This discount also won’t protect you from general cost increases that your insurer gives to every policyholder.
Also, keep in mind that there’s a limit to no claims bonus protection – if you make more than one claim in a year, you might find that your insurer still removes a year or two’s from the bonus you have accumulated.
FALSE – Unfortunately, the truth is that if your car is hit by an uninsured driver or falls victim to a hit-and-run incident, you will still be required to pay the excess. This also applies if you find your car damaged in a car park.
FALSE – No matter how short the journey is, you must be insured. Under no circumstance can you drive – or even park – on a public road without your car being covered by a minimum of third-party insurance.
