The law requires liability insurance for all drivers and
vehicles. This means that if you are involved in a serious
accident, and it turns out that it was your fault, your
insurance company will pay out any claims that are made against
you. Extra coverage on your own vehicle, called comprehensive
insurance, is optional.
Insurance companies based on a number of risk factors will
calculate the price you pay for this insurance. Basically how it
works is the more they feel you are at risk of crashing, and the
more they think the resulting crash will cost them, the higher
the premium you'll pay.
Assessment
Common factors that will be used to assess the premium are the
value of the car you're driving, the safety of that vehicle, the
coverage you want, will there be deductibles or limits etc.? How
much you'll drive the car, how your driving record stands, how
long you've held your license, your age, and if you are young,
also your sex.
The premium is then calculated. Usually there is a flat per car,
per year rate that everyone pays, regardless of other factors.
The other factors will then alter this rate, generally upwards.
So if your car is especially fast or dangerous your rate will be
increased by a set amount. If it is very old, your rate goes up.
If you've had one or more accidents in the past, your rate will
go up. If you're young and male, your rate will go up. The more
of these factors you satisfy, the more your rate will be going
up.
Discounts
As a sales enhancement, many car insurers offer a "low estimated
future mileage" discount to customers who predict that the car's
mileage will be below some stated limit during the next premium
period. There is no verification involved and no additional
charge if the car is subsequently driven more than the stated
amount. This arbitrary discount tends to foster customer belief
in the mistaken idea that "miles" are just one of many
classification factors used to raise or lower prices from the
territorial base rate. In fact, odometer miles (which insurers
do not use) are not a factor but a metric - the only valid basis
for measuring each car's consumption of insurance protection in
on-the-road use.
The best way to save on car insurance is to shop around, keep a
good clean driving record, drive safely, and choose reliable
cars that are not known for their power and speed.
About the author:
Joseph Kenny is the webmaster of the insurance site
http://www.insure121.com/ where you will find information, news
and links to the leading providers of car insurance in the UK.
