Car Insurance 101
Once you obtain your first car, it is essential to purchase car insurance, and this is required by law. All registered vehicles are listed on the Motor Insurance Database (MIB), and this database is used by police to identify cars that are insured, and those that are not. You must also have insurance and a valid MOT certificate for your vehicle, in order to purchase the required tax disc. Although it is possible to purchase a tax disc online, you will not be able to do so if your vehicle is not listed as insured on the MIB, as the website also has access to this database, as well as the VOSA database, which details your vehicle's MOT status.
If you intend to use your vehicle on public roads, the most basic coverage you will need is Third Part Only (TPO). This coverage will not cover any damages to or loss of your own vehicle, but it protects third parties, their vehicle and other third party property. It also protects you financially in cases where you are found at fault, as the insurance will pay for such things as repair of third party property and personal injury claims of third parties.
The next level of cover is third party, fire and theft (TPFT). TPFT covers you for third party damages, as above, but also covers your vehicle if it is stolen or involved in a fire. This coverage will not cover damages to your vehicle if you are involved in an accident, which is found to be your fault, or where the third party is uninsured. It is vital that you read your insurance policy documents carefully to ascertain exactly what is covered, as the cover for your own vehicle can vary, depending on the insurer.
The most beneficial coverage, and the most expensive, is comprehensive cover. Comprehensive cover will protect you financially from third party damages and damage to or loss of your own vehicle. This cover brings together both TPO and TPFT covers, but adds to it the coverage for damage and loss to your own vehicle. Therefore, if you were to be involved in an accident where your vehicle is damaged or written off, it is likely that your insurance policy would pay or reimburse you for repairs or replacement, depending on the circumstances. Again, it is vital to read your insurance documents to ensure you have the coverage you need, as this can vary, depending on the insurer.
In order to insure a vehicle, insurable interest must be present. Insurable interest means that you would stand to lose-out financially, should the vehicle be involved in an accident. This usually means that either you need to be the registered owner of the vehicle, or you need to have a legal contract in place between you and the person from whom you are renting the vehicle, which states that you are financially responsible for any loss or damage. For example, if you are borrowing your parents' vehicle, you cannot be named as the insurance policy holder and, in this instance, your parents would need to insure the vehicle, specifically naming you as a driver on the policy. However, if you are renting your vehicle from a rental company, and you have signed a contract stating that you are financially responsible, then you may purchase the required insurance for the vehicle.
It is a common misconception that if you have your own vehicle insured with comprehensive cover, then you may drive another person's vehicle if they have the same coverage in place. However, this is not true unless the other person's vehicle is insured with 'any driver' cover and, in this case, it would not matter if you have your own vehicle with insurance or not. If you need to drive someone else's vehicle, it is vital that they inform their insurance company that you will be driving the vehicle for a set amount of time. Similarly, it is important that the vehicle owner ascertains that their insurer can cover you to drive, as restrictions may apply depending on age, experience and any driving convictions you hold.
When obtaining insurance, it is vital that you be completely honest with the insurance company, and give correct information at all times. This is also true for any changes in circumstances during the policy term such as a change of address, a new driving conviction or a licence limitation of some kind. Failure to be truthful could lead to you not being covered in the event of a claim or even cancellation of your policy, without notice. If anything should change during the term of your policy, it is important that you call your insurance company straight away to notify them of the changes. This may prompt a change in premium, may need to be added as a clause to the policy, or may not require any action, but informing the insurer will ensure that you remain covered.