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QUESTIONS AND ANSWERS.
Why do I need motor insurance?
When you own and drive a car you immediately start
taking responsibility. Risks go with responsibility, risks to you and
other people .
If you were to be involved in an accident, there is likely to be damage
to some extent, damage to vehicles, yourself or others, damage to property
and other losses such as being unable to work or travel. It doesn't
need to be an accident; there are all kinds of possibilities such as
fire, theft, vandalism and involvement in natural disasters. All these
are possible risks.
Motor insurance will help you to pay for any damage or losses however
great or small. This is done by an insurer and yourself agreeing a
contract which will show the rights and responsibilities of both parties.
You agree to pay the insurer an amount of money, called a premium,
and in return they will deal with and cover the majority of the costs
if you sustain any damage or losses or you receive claims from other
people
This agreement is stated in a personal auto policy, which specifies
your and your insurer’s rights, responsibilities and obligations.
As well as covering you for risk, many policies also offer additional
benefits such as a hire car if your car is off the road as a result
of an accident, or legal help if the accident or loss involves any
legal activity.
The Government has laid down a minimum level of cover that you must
have if you drive any car on the UK roads. Obviously you hope that
you will never need to use your insurance, but life, and particularly
driving a car, is unpredictable, and having good, reliable insurance
cover is essential if you want to sleep at night.
Who offers insurance?
There are so many companies offering motor insurance
that the situation can be very confusing.
There are the well known insurance companies such as AXA and Norwich
Union, these are long established and very experienced. Many have different
brands of insurance, and you may be buying from them but not realise
this from the name on the policy. Then there are the companies such
as Direct Line and Churchill who have developed as telephone call centre
insurers, and grown very big very fast. There are also many more ‘players’ in
the market such as your bank, and your supermarket.
The market is now so big, complicated and diverse that it is difficult
to know who you are dealing with.
Essentially, every insurance company takes on, covers, your risk in
return for your insurance premium. They decide how mush to charge you
by a complicated risk assessment process which takes into account the
car you are driving, information about accidents to that make of car,
where you are likely to drive it, the job you do, your age and many
more factors. They work out the risk that they are taking when they
insure you, based on this risk assessment, and set a cost, a premium,
which they think will reflect that risk and give them some profit.
They don’t do this in detail for every policy, but they will
use key factors including your age, where you live and accident record
which will result in a cost to you.
Often Insurance companies will sell their products through third parties,
brokers or consultants, but most now deal direct with you as well,
particularly through the internet
Whether or not a company is an actual Insurer or a third party, most
are members of the General Insurance Standards Council (GISC), which
regulates the sale of general Insurance in the UK. The GISC will be
replaced in 2005 by the FSA – Financial Services Authority.
What do I gain by buying on line?
Offering car insurance on line is much cheaper for
the insurers than other, more traditional methods, through a shop,
by correspondence, through an agent or even through a telephone call
centre. Because the process is very highly automated, and you can fill
in application forms yourself and send them very quickly, companies
do not need to employ as many expensive staff, and by clever electronic
technologies they can access huge risk databases which can automatically
assess the risk they are taking and give you a quote, often instantly.
The internet is always available, which means that they can trade all
year round for 24 hours a week, at very little extra cost.
Many companies are now using some of these savings to reduce premiums
if you buy on line.
You can also gain other benefits by buying on line. You can quickly
get several quotes, and compare these, at a time that is convenient
to you and without the high pressured selling tactics often experienced
when dealing with a company over the telephone. If you do like the
policy and price of a policy offered to you, it is usually possible
to buy the Insurance there and then.
You can also, in many cases. Make changes to your policy on line. This
is very useful if you change your car or add someone to your Insurance
policy, or you move house and need to change your address on the policy.
Auteco would recommend that you look seriously at insuring
your car on line, the benefits, which will usually include cost savings
are very worthwhile, but do make sure that the company you buy from
offers a good customer service telephone system in case you run into
difficulties, have an accident or require information and support.
What
is meant by ‘classic’ insurance?
If your car is a ‘classic’ vehicle that
will not be covering many miles, then you may be eligible for classic
car insurance. There are specialised companies which offer policies
for this type of car. and often the premium will be cheaper than insuring
through a normal motor policy. The policy will also often include additional
items such as giving a ‘guaranteed value’, any driver cover
and reductions in premium for limited mileage.
You also need to take account of the fact that often a classic car
will increase in value as it gets older, as opposed to the depreciation
of modern cars, and classic car policies can be arranged to account
for this.?
What is insurance grouping
Every make and type of vehicle in the UK is given an insurance grouping
by the Association of British Insurers, the ABI. This is based on various
factors related to the particular vehicle, how powerful it is , the
cost of the car, the cost of replacement parts, the cost of repairing
it and over time the accident record of that particular car and model.
Insurance groupings run from 1 to 20. The same grouping is used by
all insurers and ensures that ensures a level playing field across
the market, although some insurers who have had a series of bad experiences
with a particular make may add other costs to the standard grouping
In general the smaller the engine, the cheaper the car and the less
exotic the car, the lower the insurance grouping, but there are always
exceptions to the rule. You can find the insurance groupings of cars
and models printed in the car lists at the back of most motoring magazines.
The insurance grouping has a major influence on the cost of your premium,
the lower the figure the cheaper the cost.
If you have other factors that will increase insurance costs such as
your age, where you live or an unfortunate accident record, you should
always try to keep the insurance grouping of the car as low as possible,
if you want to keep your premium as low as possible.
Can
women get cheaper insurance?
In a lot of cases – Yes! Statistics show that women drivers cost
insurance companies less in claims. They don’t have fewer accidents,
but their accidents usually cost the insurance companies less than
those of males. Consequently, insurance companies will often offer
lower premiums to women drivers, and the difference can be quite large.
Recent research has shown that a seventeen year old male, insuring
a group 3 car with fully comprehensive cover can expect to pay 46%
more than a female driver for exactly the same insurance.
The difference in premium between male and female drivers does decrease
with age.
Some policies and companies will only accept women drivers, and others
have female only brands.
There are other factors that produce restricted companies and brands,
age, driving record etc. You should always look for these companies
if you fall into the category and get a quote from them, as this could
reduce your premium considerably.
What is no claims bonus?
Insurance companies will reduce your premium based on their experience
of you as a driver. They will give you discounts on your premium according
to the number of years that you have not made a claim on the policy.
This can be substantial and amounts in most cases to 65% of the premium
for a full no claims bonus.
Obviously the company is trying to reduce claims and to encourage you
to be careful when you are driving and not take risks.
It is important to realise that the bonus is for not claiming, it is
not related to fault. If you have an accident and it isn't
your fault, unless the insurance company can reclaim the money from
the faulty person, the claim will still count against you. This is
particularly relevant in relation to vandalism damage, where the claim
is obviously not your fault, but the odds of getting the vandal to
cover the cost is very long.
You can usually transfer the no claim bonus that you have built up
between companies, but always ensure that you retain all the documents
showing your entitlement to any no claim bonus as proof.
You can also, for an additional cost to your policy premium, protect
your no claim bonus, which will allow you to have a limited number
of claims without loosing your entitlement.
Should I always take the cheapest insurance?
Nobody likes buying insurance. It’s something that you cannot
easily see, you may never need to use and is often quite expensive.
You are even less likely to want to buy motor insurance, because you
haven’t got a choice. All motorists must have at least third
party insurance to be able to legally drive on the UK roads.
Add this feeling to the wish to get a good deal, and you will always
be tempted to take the cheapest deal.
Unfortunately the cheapest deal initially is not always the cheapest
in the long run. You should always check for hidden costs such as – will
it cost you an additional amount to change your car or address during
the life of the policy, what kind of customer service is offered, and
will this cost you in premium telephone charges.
You can also reduce your policy by agreeing a policy excess. This is
a stated amount of any claim that you will pay - £100, £150, £200
etc. Some insurers offer you no alternative but to take an excess,
so factor this in.
You should always shop around for the best price, and the internet
is a great way to do that, but be careful to choose the best policy
for you, which may not always be the cheapest.
Auteco recommended insurers
offer a fair and reasonable service and cover which represent value
for money
Should I get more than one
quote?
Yes. Auteco recommends that you get at least 5 quotes to
enable you to compare, not just price but additional services and hidden
costs. Prices vary a great deal and getting a few online car insurance
quotes can save you money.
Auteco's dedicated staff will do the
work for you. You fill in a general information Form, and then we will
then contact a range of companies to get the best quote.
What does an insurance broker do?
An insurance broker is a third party who deals with various insurance
companies. Only registered members of BIBA (British Insurance Brokers’ Association)
are legally allowed to call themselves an insurance broker. Companies
that are not registered with BIBA, must call themselves a “Consultant” or “Services”.
Brokers have strict operating standards placed on them to protect your,
the customers, interests. These include being truly independent and
various insolvency processes to protect any money you pay them.
The BIBA website is worth looking at. It offers useful advice and contains
a very good ‘jargon buster’
Brokers will search the market for you, and also handle all the applications,
explain the insurance policy and its implications, and usually deal
with any claims that you have to make.
Why does it cost so much for young
drivers to get insurance?
The basic answer is that experience and statistics show that young
and inexperienced drivers are more likely to have an accident than
older people. As this record implies more cost for the insurance company,
they set their premiums higher to reflect this increased risk.
Everyone has to start somewhere, so how can a young or inexperienced
driver get on the road and start building a no claims bonus.
They must be realistic about which vehicle they choose. It is better
for young drivers to get a vehicle that has a low car insurance group.
They can also take a lower type of cover. Comprehensive is the most
expensive and necessary for valuable vehicles, but the older and less
expensive car will probably only require third party or third party
fire and theft. This means that your vehicle isn't covered,
but the risk may be worth taking to get a reasonable premium cost.
Other ways to reduce costs are to agree a lower annual mileage, or
take the risk of increasing the policy excess.
You can also take some practical steps to reduce your premium costs.
Don’t modify the vehicle, and avoid any flashy additions that
may attract vandals or unnecessarily increase the value.
Why is it difficult to insure
imported vehicles?
Over the past few years, because of the high cost of UK vehicles, many
cars were bought abroad and imported. This practice is now dying out
as the cost of UK cars drops in relative terms, but in some specialised
areas, such as 4x4, vehicles are still imported in high numbers. You
may find that these vehicles are difficult to insure and companies
will often refuse insurance.
This is usually because the vehicles are the so called ‘grey
imports’ which are not intended for the UK market and as such
not to UK specification.
This means that they may use different internal and external parts,
so in the event of a repair being needed it would be much more costly
to obtain the spare parts – this extra cost means that the insurer
does not feel it worth while to offer the insurance.
You should always bear this in mind when considering buying an imported
vehicle.
What is motor trade insurance?
This is insurance for people working within the motor trade for motor
trade business. Car dealers cannot be expected to arrange separate
insurance policies for every vehicle they need to use. The various
branches of the motor trade need to be insured to drive customers cars,
insured for damage to cars whilst in their keeping, or for vehicles
that they will only own for a short period.
For this reason, motor trade policies will not insure specific vehicles,
but insure the trader for stock up to an agreed level of value.
There are companies who specialise in this type of cover
This means that your vehicle is covered whilst in the hands of a motor
trader.
How many vehicles make up a
fleet?
For companies that run a group of vehicles for the use of their business,
the option is available to insure these vehicles on one fleet policy.
Four or five vehicles are usually the minimum to be considered for
a small fleet insurance policy.
Most fleet policies are arranged on an any driver basis, usually involving
a minimum age. Any adverse driver matters, convictions, accidents etc
must be declared by the company. The insurance certificate covers any
vehicle owned by the company and avoids a cover note whenever there
is a vehicle change. It is worth noting that with a fleet car insurance
policy each driver will not be earning their own individual no claims
bonus, if the only vehicle they are driving is a company car. This
could give difficulties for the person when they try to arrange their
own personal insurance.
How can Auteco help?
Auteco have carefully looked
at the present insurance market and have identified various insurance
companies which we can recommend. From our experience these companies
offer a good, reliable, service which represents value for money.
Get a Quote
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