The UK Car Insurance Market - How Does It Work? Part 1
As is the case with other intangible, service-oriented products, the key to good car insurance is to get the best value for the money. Car insurance is a unique product that is required by law for all UK motorists. Third Party Fire and Theft (TPFT) is car insurance in its most basic form and is a fundamental legal requirement. Most people who pay for it typically hope they never have to use it.
TPFT is however, becoming harder to find since not many insurers provide this basic cover any longer. In addition, it’s almost a certainty that if you have four or more No Claims Discounts (NCD) then your car insurance quote for fully comprehensive car insurance is likely to be lower. Comprehensive motor insurance is also a basic requirement to qualify for a Gap Insurance policy. So, it’s important for consumers to know how to get the best peace of mind protection with their insurance buy, at the very best premium price available to them.
The first step in the process of buying car insurance is to explore all the options. Are you buying a new car, in which case you’re more than likely to want fully comprehensive car insurance, or is it a used car where third party fire and theft cover may be sufficient for your needs, especially if you really can’t afford a higher level of cover. Third party is the lowest level of cover you’re permitted to drive with and if you have an accident, your insurer will not replace your vehicle for you, but only cover the damage to the third party, assuming the claim is against you.
Buying a new car often means that you’ll be introduced to car gap insurance by the salesman / dealership, and this is another form of motor insurance. This is not a legal requirement, but rather a top up to your fully comprehensive car insurance policy. They’re all about vehicle depreciation. The instant you drive your car off the showroom floor, it has lost value. It will continue to fall in value until the day you sell it, crash it or it is stolen.
Fully comprehensive car insurance will only cover you for the market value of the vehicle, and the balance will be left for you to manage yourself. That’s where car gap insurance comes in. RTI gap insurance or return to invoice gap pays you the difference between the insurance settlement you receive and the value of the vehicle at the time you took out the gap policy. New car dealers sell these at a higher price than if you buy it direct.
On average you could save well over 50% or even more on dealer gap prices when you buy directly from the supplier. The advantage to shoppers today is that the Internet has expanded the amount of available resources and allowed consumers greater access to the best products and best prices, through online specialists.