Beware! Car insurance confusions

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Is it just me or does the renewal date for car insurance always come round extremely quickly? And is it deliberate that it regularly occurs in the month you're particularly skint? With our busy lives, it can be tempting to simply accept your existing insurance provider's renewal quote and forget all about it. But although this can make life easier, it could also lead to you forking out far more than necessary for your insurance and result in you skipping over some important conditions of your policy. Car insurance can be confusing at the best of times, and it's easy to assume it covers you for something it doesn't. Here, we reveal five of the most common car insurance confusions.

1. Your premiums can rise even if the accident wasn't your fault

If you're involved in an accident with another driver and that driver is at fault, you might assume that the cost of your car insurance won't be affected. But you'd be wrong. Even if you make a claim on the other driver's insurance policy, your own premiums can still go up. The reason for this is that all accidents you're involved in must be reported to your insurer, whether or not they were caused by you. And, because your insurer knows you've recently been involved in an accident, it may believe you're more likely to be in an accident in the future and therefore push up your premiums at renewal. So be sure to shop around for a better deal.

2. Courtesy cars aren't always included

It's a common misconception that if you're involved in an accident and your car is no longer safe to drive, you'll automatically be entitled to a courtesy car. But courtesy cars are generally only part of the service if you have a comprehensive car insurance policy. Not only that, but you'll usually only be given a courtesy car if your own vehicle can be repaired. So, while your car is in the garage (this often has to be the garage approved by your insurer), your courtesy car will get you from A to B. BUT if your vehicle is written off – in other words, it's irreparable – you often won't receive a courtesy car as part of your insurance package. Instead, the only way you'll be given another vehicle to tide you over is if you have hire car cover. This is usually not offered as standard so you may need to pay a little extra to add it onto your policy.

3. Comprehensive cover isn't always more expensive

Many of us automatically assume that taking out a comprehensive car insurance policy will be the most expensive option. After all, it covers you for more, so you'd expect to pay more for it. In the same way, third party cover, which is the most basic level of cover, is often assumed to be the cheapest option. But actually this isn't always the case. In fact, our analysis shows that an 18-year-old driving a Ford Fiesta choosing third party cover was quoted 146% - or £1,524 a year – more for their car cover than if they had opted for a fully comprehensive policy. This trend continues until the age of 40. The reason for this is that third party cover is popular with young drivers. And because young drivers are more likely to be involved in an accident and make a claim than more experienced drivers, the cost of third party cover has been driven up. It therefore pays to shop around and compare deals to check whether third party, third party, fire and theft or comprehensive cover is the best deal for you.

4. A high excess could prove a false economy

When choosing an insurance policy, you will need to decide how much you want your voluntary excess to be. This is the amount you pay towards the cost of a claim. Opting for a higher excess will bring down the cost of your insurance premiums. But watch out because the additional amount you pay towards the cost of a claim could outweigh the reduction in the cost of your cover. For example, if you plumped for a £200 excess to bring down the cost of your insurance by £50, you'd end up forking out £150 more in total in the event of a claim. Bear in mind that many insurers also charge a compulsory excess on top, which is set by the insurer and is non-negotiable. Ensure you know what the total excess is and remember that if it's too high, you might struggle to afford it.

5. Protecting your No Claims Discount doesn't mean your premiums won't rise

Once you have built up a number of years' No Claims Discount (NCD) you'll be offered the chance to protect it. Doing so will mean that if you make a claim, you won't lose any of your discount. But this doesn't mean your premiums won't increase when you come to renew. If you've made a claim on your insurance, the price of your policy will still go up at renewal, even after the discount – making it important to shop around for a better deal once again.   [text-blocks id=cta-banner]

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