When you’re shopping around for car insurance it’s important to take out a policy that matches your needs, budget and vehicle.
Regardless of which insurance product you decide on, it’s important that you understand all the terms on your policy. Here are four key insurance concepts you should have a good handle on.
Your insurance cover lays out exactly what you are insured for in your policy.
There are several different levels you might consider depending on your individual budget and situation.
The most basic option is usually third party cover, which will pay for damages you cause to another vehicle or property.
A full comprehensive policy will cover everything from damage to your car to theft and even fire damage.
Requesting an obligation-free car insurance quote is a good way to get an idea of how much you will be paying for each level of cover.
2. Market value and agreed value
There are two distinct methods that car insurance providers use to determine the value of your car when setting out your policy.
Market value refers to how much your car would cost in its current state in the current market, and therefore looks at various factors such as its condition and mileage.
Agreed value is the value decided upon by both you and the insurance company, and is the amount they will pay you in the event of a total loss of the car, for example.
An excess is a portion of any repair costs you are required to contribute when making an insurance claim.
You can usually set the amount yourself, but do keep in mind that the lower the excess, the higher your overall premium will be.
4. Duty of disclosure
This is a legal term that means both parties to a contract are required to disclose any vital information that may affect the conditions of the contract.
In terms of car insurance, this means you have to notify your provider about any factors that may alter your premium, such as changing your address or plans to modify your vehicle.