This article aims to provide explanation to some of the terms and features of car insurance in the UK. Understanding exactly what it all means can hopefully lead to a more informed decision when buying your car insurance from one of the many insurers in the UK today.

The first part of this article, Car Insurance Explained (Part 1), looked at the various types of cover available, acceptable vehicle usage, and who can be insured under your policy. In this part we will look at insurance documents, excesses and additional add-ons for your insurance.

DOCUMENTS
Once you have purchased your insurance you will normally be issued with two documents detailing your insurance. These are as follows:

Certificate of Insurance - This is required by the Road Traffic Act 1984 for all drivers. It acts as proof that your vehicle is insured.

Policy Document - This sets out the full terms and conditions of your insurance policy, such as vehicle use, named drivers, type of cover etc.

Cover Note - A cover note acts as a temporary policy and certificate of insurance, and is valid for up to a month. It can be issued when you first buy your insurance to provide cover and compliancy with the Road Traffic Act until you receive your certificate and policy documents. If you pay for your insurance with monthly instalments, many insurers will provide a cover note and keep your certificate and policy documents until all or most of your premium has been paid for.


EXCESS
Your excess is the amount YOU will pay in the event of making a claim. For example, a driver has an insurance policy with a £200 excess. He has an accident and makes a claim for £500. He will pay £200 of this (his excess) and his insurance company would pay the remaining £300.

Your excess is always responsible for the first portion of the claim, so a driver with an excess of £300 who made a £200 claim would be liable to pay for the full amount.

Multiple Excesses
Some policies may include more than one excess, for example, one that applies to accidental damage, and one that applies to theft. Many policies will also have a separate excess for windscreen damage.

Voluntarily increasing your excess can help to lower your premium, but you must make sure you can afford to pay the excess in the event you need to make a claim.


NO CLAIMS BONUS
Drivers with at least one year of claim free driving can normally qualify for a No Claims Bonus, or NCB. An NCB offers a discount on your premium and can result in substantial savings on your insurance. Amounts vary between insurers but can range from 30% discount for one years NCB to 60% or more for four or more years of claim free driving.
Making a claim does not necessarily mean automatically losing your no claims bonus. Normally, a deduction of 2 years is made from your NCB in the event of an at fault claim. For example, a driver with 4 years no claim bonus, who makes an at fault claim would still have a 2 years bonus.


EXTRAS AND ADDITIONS
These days there are many extras and options that can be added on to your regular insurance package.

Protected Discount Policies
For drivers who have a 'no claims bonus' discount (see above) on their policy, an extra premium can be taken out to protect their bonus in the event of a claim. Typically, two claims are allowed in a three to five year period and your NCB will remain the same. If you make several claims however, or collect driving convictions your premium and excess could increase even though your NCB is protected.

Guaranteed Asset Protection (GAP)
Guaranteed Asset Protection gives you extra protection if your car is written off. If you have used a finance agreement to buy your car, GAP insurance pays out the difference between the car's pre-accident value and your outstanding loan. It may also include paying for a current equivalent replacement for your car or a deposit to buy a new vehicle. For those that didn't purchase their vehicle with a finance agreement, some GAP policies will pay out the difference between the original purchase price and the car's pre-accident value.

Legal Expenses Insurance - Legal Expenses can be purchased as a standalone policy or as an extension to your car insurance policy. In the event of a non-fault accident for example, this would help you to recover your uninsured losses, such as your excess, from the liable party.