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Car Insurance Guide

Knowing which car insurance policy can be incredibly difficult unless you are familiar with the ins and outs of the insurance industry. There is a lot of jargon floating around and it all adds to the confusion involved but when you have a little understanding things can look a lot clearer. Knowing what policies are on offer and what the names mean will help a great deal.

Starting with the cheapest kind of policy which is third party insurance, owners of this type of policy who get in to an accident will have damages paid to the other person. That is of course assuming it is the policy owners fault. The down side of this type of policy is that you will not receive any money to repair damages to your car. This is not a good idea if you have purchased your car on finance as you would still be liable to pay the finance provider.

If your car got broken in to or damaged you would not receive any reimbursement from your insurer with a third party policy. You would need at least a policy which was third party with fire and theft to cover a break in and of course if your car was burnt or caught fire. This policy is generally a little more expensive but the difference is marginal.

The most recommended policy is fully comprehensive insurance which would cover you in almost all circumstances. For instance you may have an accident in which no other cars are involved and your insurance company would cover the cost of repair to your car. That is of course unless the cost of repairing your car is deemed to be more than the car is worth. If the cost of repair is too high then it will be classed as a write off. If your car is written off the insurer will usually pay out the market value of your car’s age and model with mileage taken in to consideration.

Something to be careful of is being able to pay off any loan you may have for your car. For instance if you purchase a car for £10,000 and you take out finance over three years so the total repaid would be £11,500 because of the interest. If you had a crash on the way from the showroom the insurance company would only pay the value of the car and not the extra £1,500.

IF you were to have shortfall insurance built in to your policy then the finance would likely be paid off. There are some policies that state they have shortfall insurance but do not cover the whole amount of the finance in certain circumstances. With all policies there is an excess payment which means that you would have to pay a portion to repair any damage before your policy kicks in.

The cheaper insurance cover can often have higher excess so be careful about how much you are prepared to spend out of your own pocket. In most cases a £500 excess would not cover you if you had your window broken and someone damaged your ignition trying to steal your car. When it comes to deciding which policy to take out, basing your decision on price is not always a good idea.

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