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Understanding Motor Insurance Policies

If you want to drive on the roadways of the UK, you will have to carry motor insurance. It is required by law – and it’s a good move to help protect yourself, your passengers, your vehicle and those whose path you may accidentally cross. What is required, how much is it and can you cut costs to make insurance more affordable for your budget? Let’s find out.

What Type of Cover Do You Need?

There are different levels of cover you can choose. But at the bare legal minimum, you must have third-party only. Say you’re driving to work, a bit late, a bit too fast and tap the boot of the car in front of you. It’s your fault, and your third-party policy compensates for damage to the car you hit. If anyone in that car or passengers in your vehicle are injured, your cover pays out for those expenses as well

What it does not pay for is damage to your vehicle. You are out of luck, and those repairs are out of pocket.

On the next tier up is third-party fire and theft. This provides the same motor insurance coverage described above with the addition of damage caused by fire or theft.

Comprehensive insurance provides the most cover. In addition to third-party theft and fire, it provides compensation should your car be damaged in an accident. You can also opt for helpful add-ons such as having a courtesy car if yours is not functional after an accident or incident, roadside assistance, breakdown cover, insurance to cover your excess and more.

How Much Does Motor Insurance Cost?

This depends, of course, on a variety of factors, including the type of cover you select, the type of car you drive, your driving history, your age, claim history and more. According to the Association of British Insurers (ABI), the average cost for a motor insurance policy is £485 a year, or about £40.41 per month[1].

How do you save money on motor insurance and still get the cover you need?

  • Boost your excess. The excess is what you pay for a claim before insurance kicks in to pay for the rest. If you choose to have a higher excess, you can reduce your monthly premiums. A caveat: do not raise your excess beyond your ability to pay for it if you have an accident.
  • Pay yearly. If you pay monthly, the insurer will tack on interest and you’ll end up pay a significant amount more than if you put down a lump sum payment once a year. This can be difficult, but if you put aside a set amount each month, it’s worth it. Another idea for the financially responsible: get a 0 percent credit card, pay the annual fee and then pay off the card as soon as you can to take advantage of 0 interest.
  • Look online for quotes and comparisons. This allows you to scour multiple insurers to find the right fit. Remember, though, that the lowest price doesn’t always “win.” Balance the cover you get against the cost.
  • Ask us for help! We’ll answer all of your questions and help you find the policy that works for you and your budget

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