Buying car insurance is hardly the most exciting activity! But since it’s a legal requirement for all UK drivers, having to wade through all of the jargon is a necessary evil. Here’s a quick guide to debunking some of the most confusing car insurance jargon that can leave you scratching your head…
No-claims bonus vs No-claims discount
These terms are often seen as interchangeable, however there’s a slight difference:
No-claims bonus refers to the number of years in which you haven’t claimed on your car insurance policy.
No-claims discount is the reduction you receive on your car insurance premium, based on the number of years you have on your no-claims bonus.
A compulsory excess is the amount of money you agree to pay in the event of making a car insurance claim. This is set by your insurance company.
For example, your compulsory excess could be £100. If you’re involved in an accident and your car requires £1000 worth of repair work, you’ll pay for the first £100 and your insurer will pay the rest.
In addition to the compulsory excess set by your insurer, you can also add a voluntary excess. Generally speaking, the lower the excess, the more expensive the policy. Likewise, the higher the excess, the cheaper the policy.
It’s worth thinking carefully about how much you should set your voluntary excess at. While it’s tempting to go for a higher excess in order to receive a cheaper premium, remember that you might end up having to cough up more cash to repair your car, should it end up damaged.
For instance, the compulsory excess on your policy might be £100. But if you’ve set your voluntary excess at £300, you’ll have to pay the first £400 of your car insurance claim.
Third party vs Third party, fire and theft vs Comprehensive
These are the three common types of car insurance cover levels, and there are clear differences between them:
Third party (also known as third party only, or TPO) is the most basic level of cover available. If you’re in an accident, a third party policy will pay out for damaged caused to other vehicles, people or property. If there’s damage to your own vehicle, you’ll have to foot the repair bill yourself.
Third party, fire and theft (TPFT) covers the same as a TPO policy, but also offers protection against damaged caused by fire, as well as theft.
Comprehensive policies include everything covered by TPO and TPFT, plus damage to you or your vehicle, even if an accident’s thought to be your fault.
Driver’s legal protection
If you’re involved in an accident that’s not your fault and you wind up missing out on income as a result of being unable to work, driver’s legal protection will help you cover the legal costs to recoup any losses.
As we all know, legal costs can quickly add up, especially when lawyers are involved! But having driver’s legal protection can help to protect you from that happening.
Be sure to check with your car insurance provider as to whether or not driver’s legal protection is included with your policy – sometimes it is, or it can be added on.
We’ve all been there – after a busy day, we’ve dropped by the petrol station and absent-mindedly filled up the car without checking it’s the right fuel first!
If your worst fears are realised, misfuel cover will pay for the cost of draining and flushing your fuel tank, along with any additional repairs that are required.
Misfuel cover isn’t always included on a standard car insurance policy – again, check with your provider.
Content provided by Swinton Insurance. For more information visit www.swinton.co.uk