Car insurance is one of the biggest costs that a motorist needs to cover and a legal requirement. Despite its importance, there is a lot that people do not know about car insurance as well as a few dangerous myths that could catch people out. With this in mind, here are 5 things that you need to know about car insurance.
- Third Party is Not Always Cheapest
People tend to assume that third party is the cheapest insurance because it is the most basic form of cover, but this is not always true. This is because those that opt for third party tend to make more claims, which pushes up the cost of this level of cover. You may be able to find comprehensive insurance for the same or even lower costs while getting greater protection.
- Paying in Full Could Save You Money
If you are able to, you will find that paying the full annual amount for your car insurance in one go could save you money. This is because “convenience fees” are added when you break up payments into instalments, which means that you could be paying a lot more overall with monthly payments. If you cannot afford to pay all in one go, it is worth seeing if paying every six or three months is possible.
- You Only Get the Current Value in a Write Off
One myth that could end up costing a motorist an enormous sum is that a comprehensive insurance payout would cover what you owe on the car/originally paid in a write off. In fact, they would only pay the current market value, which could leave you short by thousands of pounds due to depreciation. This is why GAP insurance is so important as an optional type of insurance that covers the shortfall and ensures that you are not out of pocket.
- Loyalty Can be Costly
Many people simply set their insurance policy to auto-renew, but this could end up being costly. Insurance rates can vary greatly between providers, which means that you could be missing out on huge savings by not shopping around for a new insurance policy.
- Fronting is Illegal
The cost of insurance for a young driver can be incredibly high, but it is important to know that taking out insurance in your name and adding your child is illegal if they will be the main driver. This is known as fronting and can result in penalty points, disqualification and a fine.
Hopefully, this post will be useful and help you to make a smart decision when it comes to insurance.