ConsumerValue: Insurance
2. Car insurance
Some of this content is based on information from our website on financial products,itsyourmoney.ie
Do I have to have car insurance?
If you use a car on public roads in Ireland, by law you must have at least third party cover. This covers any injury or loss suffered by other people as a result of your driving.
Depending on your age and circumstances, you may want to extend your cover to comprehensive, which would include the cost of repair or replacement if your car is stolen, damaged or destroyed.
What are the types of motor insurance?
There are three basic levels of motor insurance. The price you pay will depend on the type of cover you purchase.
It is important to remember that value can be attained on each level of cover.
- Third-party cover - this pays out for claims that other people make against you for damage or injury caused by your driving
- Third-party, fire and theft cover - in addition to third-party cover, you can claim for loss or damage to your own car as a result of fire or theft
- Comprehensive cover - this gives you third-party, fire and theft cover and also covers damage to your car, no matter who is to blame
You should always check your policy for details about what it covers.
Don't be tempted to underinsure just to get a lower premium. Any subsequent claim you make will be reduced accordingly.
Don't overestimate either. If you overestimate the value of your car, say, and it's then stolen, the insurance company will only pay you what it considers to be the car's market value at the time of the loss.
How are premiums calculated?
The cost of your motor insurance is decided on the basis of a variety of factors. Some of these cannot be altered, but others may be flexible. Consider:
- The level of cover you want – for a given vehicle and driver,- comprehensive cover typically costs more than third-party fire and theft cover which in turn costs more than third-party cover. If you are driving a very old car of low replacement value, for example, do you need comprehensive cover that would provide for a replacement (of like value) in case of irreparable damage, or are you more concerned to be protected against claims from a third party? In this case, perhaps third party fire and theft would be adequate
- Your driving experience- whether you have a full or provisional licence and how many years you have been driving. Clearly, you cannot change these facts and they will inform some of the variables in calculation of your premium.
- Your age and gender– typically, the younger you are, the higher your premium will be. This is particularly the case for drivers under the age of approximately 25 years. Drivers may also pay more once they are over 65. Women tend to have fewer claims and so, in the main, pay lower premiums than men.
- Driving convictions and penalty points - serious motoring offences such as dangerous driving or drink-driving can result in an increase in your premium or even a refusal to offer you insurance. Depending on the number of penalty points you have, your premium may also increase.
- Addition of a named driver - the cost of adding a named driver to your policy depends on a number of factors including their age, the type of licence they hold and how often they use the car.
- Your no-claims discount- if you have a full five-year no-claims discount, it can cut your premium by about 50%, although some companies give higher discounts.
- Where you live- premium levels can vary depending on the area in which you live. There may also be a reduction if you keep your car in a garage at night.
- The model and value of your car - the more expensive your car and the bigger its engine, the more you are likely to pay. You may also have to pay more if your car is imported or if there are more theft claims on your model of car.
- What you use your car for - it costs more to insure a car or van for commercial use than for personal use, which includes driving to and from work.
- Your occupation- people in some jobs are deemed to be more prone to motor accidents and may be charged extra by some insurers.
For more information, see our latest motor insurance cost comparison on itsyourmoney.ie.
Are there things I can do to cut down on my car insurance?
You have to have at least third party cover if you drive a car, and you must renew this insurance each year. But even if you stick with the same insurance company there may be other ways to make savings:
- If you are a younger driver in particular, you might reduce your premiums by switching to a lower value car or one with a smaller engine.
- If you can have access to a garage, informing your insurer your car is garaged overnight may contribute to a small premium reduction.
- If you car does not have an alarm or an immobiliser, having these fitted can influence premium levels.
- You may be part of a group insurance scheme (for example, through your job). In this case you may get better value through the scheme rather than as an individual buyer, so check this out first.
- If the vehicle you wish to insure is used for leisure purposes only and covers a very limited number of miles in the year, as an example, there are specialist insurance policies that may suit your needs. These policies typically limit the number of miles you may cover during a period of insurance cover, with a corresponding reduction in premium.
- There may be extra-cost items on the policy you might consider removing, such as no-claims protection or foreign travel cover. Read the terms of your policy closely and consider any removals carefully before instructing your insurance company.
The key is to shop around and to get as many quotes as possible.
How do I buy car insurance?
There are two main ways of buying car insurance. You can:
- Buy directly from an insurance company, or
- Buy through an intermediary, for example a broker
You can shop around in person, by phone or online.
Car insurance premiums can vary widely depending on the insurer and how you purchase cover.
Some insurers offer discounts for buying online or if you specifically ask for a discount.
For further help our itsyourmoney.ie website has a shopping around checklist (PDF, 79KB) to help you ask the right questions when shopping around for quotes and to keep track of discounts and benefits.
itsyourmoney.ie also publishes regular cost comparisons so you can see what insurers are offering the best value for money.