Car insurance or vehicle insurance refers to premium paid for covering your car. Unlike building and contents insurance, car insurance is a compulsory expenditure for every household.
As per 2012 family spending data from the Office for National Statistics (ONS), the average household paid £9.90 of car insurance every week or £514.8 every year. That is very close to the expenditure incurred on gas or electricity, and thus is a major expense for every household. As per AA Index, as of June 30th 2014, the average annual premium for a comprehensive car insurance was at nearly £504, which is slightly lower than 2012, but nevertheless a substantial amount.
Car insurance is determined by several factors based on the likelihood of a driver making a claim. The higher the chances of making a claim, the higher is the premium. These factors include the driver's age as the premium is higher for younger, inexperienced drivers. Other factors are your occupation or job title, residential address, car model, value of the car, annual mileage, power, driving track record, claim history, and type of cover. So if the car has a higher value, mileage or power the premium will be higher. The premium is lower if you live in a low-risk, good postal code. Similarly, if you have a clean track record in terms of road safety and have not made any claims, your car premium will be lower.
Third party insurance covers any damages caused to others by your car because of your negligence. So if a car owner with a third party insurance crashes into another vehicle, this insurance will only cover any losses caused to the other vehicle. The premium in this type of insurance is the lowest.
In addition to any loss to third party, this insurance covers your vehicle if it is stolen or damaged by fire.
Comprehensive insurance covers losses to your car as well as to a third party's car. In addition to losses to third party and losses due to fire or theft, comprehensive insurance covers your car for accident-related repairs, any damages, or anyone else harming your car on purpose.
Note that you are legally required to have third party insurance at a minimum for your car.
Sainsbury's Bank offers two types of covers - comprehensive and TPFT (third party, fire and theft). As part of the deal, the bank is offering £30 which can be spent in Sainsbury's supermarkets. It is also offering a 25% discount for holders of Sainsbury's nectar card. The insurance plan includes a courtesy car during the time your car is under repair. It also offers a multi-car discount if you take insurance for more than one car.
Our household budget calculator can help you understand how much car insurance is impacting your household budget.
People who read 'Car Insurance and Household Budgets | iCalculator' also read the folowing car finance guides and car finance calculators: