Should You Cut Your Car Insurance Cover?

Britain has become a nation of cost-cutters since the recession began as its citizens look to save money wherever they can. From cutting their expenses to increasing their income it’s all about making money go further and that certainly applies to their car insurance cover too.

Research from a comparison website has found that comprehensive cover is increasingly out of reach for many customers who are instead downgrading their cover to third party only in a bid to save some cash. It found that one in five third party policyholders opt for this reduced level of cover because they cannot afford fully comprehensive cover in the present environment. It also found that six per cent of third party policy holders have switched from comprehensive cover.

However, many of these motorists are failing to understand what is and isn’t covered under the terms of a third party policy. The same research discovered that 8.6million of the UK’s motorists don’t understand the level of cover offered by third party insurance with seven per cent believing that it covers damage to their own car.

Why downgrading car insurance is a risk

While the urge to save money on car insurance is perfectly understandable, taking out third party cover instead of a fully comprehensive policy could prove to be a false economy if you are involved in an accident.

That’s because third party cover only covers damage to other vehicles. It does not cover you or your car – instead it covers any claims made by the driver or passenger of any ‘third party’ vehicles and any damage that these vehicles may have suffered. So if you were involved in an accident and your car was badly damaged or even written off, third party cover would not pay for repairs or a replacement.

Think about how important your car is to your life and lifestyle. Do you need it as an essential to get to and from work, for example? And how much is your car worth? Would it cost you thousands of pounds to replace? If so, then going without comprehensive cover probably isn’t worth the risk.

That’s not to say that third party cover doesn’t have its uses. It is worthwhile particularly for motorists in their first year of driving who have a car that is worth £500 or less. For these drivers it is essential to have some form of car insurance as it is a legal requirement in the UK, but there’s no point in paying more for comprehensive cover in one year than the vehicle is actually worth.

What are the alternatives to downgrading car insurance?

It is possible to take out comprehensive car insurance without paying over the odds.

The first step to achieving this is to shop around online – preferably using a comparison website. Most car insurers offer their cheapest deals online due to the savings they make on overheads and comparison websites are a fast and innovative way to compare the market with one search. Then you can be sure you’re finding value for money and not paying over the odds.

Think about the policy options you need too. You can protect your vehicle and ensure you get a payout should your car require repair or replacement without paying ludicrous amounts for cover. For example, you may be able to sacrifice options such as a courtesy car if your household already has another vehicle. You may be able to do without breakdown cover if you have a separate policy elsewhere; and you may not want policy options such as windscreen cover, personal injury cover or cover for possessions you carry in your car.

Even if you hold a comprehensive car insurance policy currently and want to retain this level of cover with the same policy options, you can still save money. There are certain methods you can try that nearly all insurers will recognize and offer discounts for.

For example, increasing the security of your car will nearly always earn you a bonus. Fitting car alarms, immobilisers or tracking devices will earn rewards from insurers as long as you consult them beforehand about which devices to buy. Also look into clearing out your garage and parking in it each night rather than leaving your vehicle out on the street.

If you are in your first year of driving you can save money by taking the Pass Plus course – some providers will slash premiums by as much as 35 per cent once it is complete. It may also be possible to agree to a mileage limit or to find a car insurance provider with a rapid bonus scheme allowing you to earn a full year’s no-claims discount in around 10 months.