Drivers who experience a mishap abroad should be careful to make sure their financial situation also does not crash.

In research carried out by moneysupermarket it was revealed that a significant number of motorists are unaware that they may not benefit from the same level of insurance when driving on the continent compared to Britain. According to the price comparison website, some 39 per cent of consumers did not know that their cover may automatically be downgraded from comprehensive to third-party while on European roads.

Following on from a lack of adequate insurance, motorists who experience a breakdown or who crash their vehicle might find that they have to dip into their own pockets in order to meet the cost of repairs. In turn, this could have an impact upon their capacity to manage other constraints on their spending in areas such as personal loans, credit and store cards, mortgage repayments and household bills upon their return home.

Richard Mason, director of insurance at moneysupermarket, said: “If you normally have comprehensive car insurance, it will come as a shock if you are with one of those insurers who will downgrade your cover for driving in Europe. While it may be in the small print of your policy, our research shows many motorists are unaware of this. Every insurer must provide the minimum level of third-party cover in all EU countries. So, if there is any damage to your own car, you will be left to foot the bill. Anyone with a holiday home in Europe or who regularly drives in the continent will do well to look for an insurer that automatically provides the same level of cover throughout the EU.”

He went on to warn that drivers who experience a crash while abroad could find that a lack of insurance means their vacation turns from an “idyllic break into a holiday from hell”.

Findings from the firm also revealed that esure, Barclays, Direct Line and Swiftcover automatically lower their comprehensive insurance policies down to third-party level when their customers drive on the continent. It was pointed out that although the amount of money consumers will have to pay to extend their cover once more depends on various circumstances, based on those looking to drive a Ford Focus LX in France for a fortnight an extra 21 pounds will have to be shelled out by those who have premiums with Swiftcover and Barclays. Meanwhile, it was indicated that Direct Line customers will have to pay 23 pounds and ten pence to upgrade their insurance.

Whether looking to purchase the latest high-performance model or a second-hand vehicle, taking out a personal loan might be of assistance. By selecting this type of loan, borrowers may find that they are able to buy the car of their dreams quickly and effectively leaving them with an affordable level of repayments to make each month. In addition, the financial assistance that a personal loan provides could help consumers to obtain a comprehensive insurance policy. Meanwhile, a recent study by Experian revealed that environmentally-friendly vehicles are becoming increasingly popular. Over the course of 2007, sales of second-hand hybrid fuel cars went up by 71.8 per cent. Purchase levels for used diesel automobile were shown to have increased by four per cent and electric cars by 473.5 per cent.

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