Fact 1: Your credit impacts your insurance rates
Fact! Unfortunately, if you have a poor credit score, you’ll probably have to pay higher monthly premiums. This is based on the assumption that people with low credit ratings are statistically more likely to claim on their car insurance.
Fact 2: Brand loyalty can cost you
True and false! Automatically renewing your car insurance often meant being charged higher premiums than new customers, who were often offered the best deals. But the Financial Conduct Authority (FCA) has put a stop to this. Now you may well be rewarded for brand loyalty. But it’s still worth shopping around for the best deals.
Fact 3: If you stop payments, you’ll pay in the long run
Possibly true! If you don’t plan on using your car for a while, you’ll struggle to find a provider who’ll let you pause your insurance. The only way out of it is to cancel your insurance altogether and start a new policy once you’re ready to get going again. But most insurers will charge you extra if you cancel your policy within the first 12 months. It’s therefore only worthwhile if you want to be off-road in the long term.
If you cancel your policy simply by stopping payments, your insurer could report you to credit bureaus which could damage your credit score. Any cancellations are also reflected in your insurance history, which could affect your future eligibility and premiums.
Fact 4: Your car insurance company can cancel or non-renew any time
True! Car insurance companies can cancel or not renew your policy at any point. But they only tend to do this for a reason — in the events of non-payment, non-disclosure or fraud, for example.
Fact 5: You can save money if you pay your premium in full
True! If you pay your annual motor insurance premiums in full and in advance, you’ll save money. This is because you won’t incur any of the interest that insurers apply to monthly payments.
Myth 1: Used cars or second-hand cars do not need insurance
False! You must have motor insurance to drive any car on UK roads. The legal minimum level of cover is third-party cover, which covers you if you have an accident and cause any damage or injury to another person, property, vehicle or property.
If you plan on buying a used car, you must have the cars’ insurance in place before driving it away.
Myth 2: No-claim bonus is non-transferrable
False! A no-claims bonus (NCB) is the number of years that you haven’t claimed on your car insurance policy. The more NCB you have, the more you can save on your car insurance costs.
You can usually transfer your existing NCB to another car when you buy a new motor vehicle. But if you cancel your policy or switch insurers before the year is up, you won’t get any NCB for that year.
Myth 3: Car insurance provides protection only against accidents
False! Depending on your policy, car insurance also protects you in the event of your car being stolen, vandalised or catching on fire. It also protects you if you cause damage to any other vehicle, road user or member of the public (i.e. third parties).
Myth 4: Red and black cars are more expensive to insure
False! The cost of motor insurance is not affected by your car colour. However, choosing to change the colour of your car after you’ve bought it can increase your premium. This is because changing your car colour is often viewed as a modification by insurers.
Myth 5: Parking in your garage is cheaper
Not true! Parking your car in a garage at night may be safer, but you might notice it increases your premiums. This is because drivers are more likely to scuff or scrape their cars while parking in garages.