Car insurance, sometimes referred to as auto insurance or motor insurance, is a type of financial cover that protects you against the cost of any losses and damages due to driving or owning a car.
In most parts of the world, it is compulsory to have car insurance in place. In the UK, it is a legal requirement.
Car insurance is there to protect:
The costs that can occur as a consequence of having a car accident can be incredibly high.
You will need to repair your car and that of anyone you crash into, but there are many other costs you can incur after a collision that may be a little less obvious:
While most accidents are limited to a few thousand pounds, some major collisions can run into the hundreds of thousands.
Without car insurance, you would be liable for the entire amount. Putting this into perspective, now all those yearly premiums don’t seem so high.
Basic car insurance comes in three versions:
Car insurance also comes in different categories:
When purchasing car insurance, make sure you get the insurance to fit your circumstances. Having the wrong insurance in place is the same as having no insurance!
There are a few extras and additional insurances that are worth looking at when you buy your car insurance.
Guaranteed Asset Protection (GAP) insurance is designed for someone leasing a car, or purchasing one on finance.
GAP insurance is put in place to cover the difference between the market value of your car that will be paid out by the insurer, and the true level of finance you have outstanding on the vehicle.
Due to depreciation, there could be a gap of many thousands of pounds difference and Guaranteed Asset Protection insurance is there to cover that.
Adding breakdown cover with your insurance provider can give you peace of mind should anything happen to you at all while driving, from a flat tyre to engine breakdown.
If you regularly travel with expensive tools or other items in your car, it is possible to extend your insurance to cover the items in your car.