In order to end up with the car insurance best suited to your needs, you have to clearly understand what you are looking for and what options are available to you. This is done by researching in two areas.
Firstly, you research the market to find out what kinds of car insurance are available, familiarizing yourself with the different features, styles and price ranges etc. Secondly, you examine your own unique requirements.
With the different kinds of applicable car insurance and car insurance laws in different countries worldwide, it's important that you know what laws apply to the country you live in. Indeed, in the US, there are different laws for each state, so that also needs to be taken into consideration.
Research the market: Car Insurance essentials
The first part of the research step is to investigate just what's available in the car insurance market. The range of options can seem daunting, but you can make a good start by understanding the following major features:
Types of coverage: Often the terminology between policies is different; make sure that you clearly understand the type of coverage that is being offered by the different companies. If you are not sure call and speak with an agent or make an appointment to visit the insurance company, if they have a locally available office.
Options: With every company and agent there will be several different options to add or remove from the policy. Some options are standard and may be very similar between companies, but many will be different. Discounts for safe driving, accident forgiveness or credit for new drivers taking drivers education courses are a few options that are found in policies.
However, if you're looking at accident forgiveness on your policy, you need to make sure you understand what's involved. It can be an excellent addition to have - after all, it protects your premiums from increasing should you have an accident where you're at fault. There are some stipulations, though.
These include usually having to be with the same insurer for a set amount of time (normally a minimum of 3 years, although this isn't the case for all insurers). Additionally, you're normally expected to have a clean driving license with no previous accidents.
There's also a lot of discussion as to how “legal” accident forgiveness is. There are some issues as it basically takes away blame for an accident. For this reason alone, it's worth keeping in mind that not all accidents may be covered, if you have to go to a court of law.
Cost and Payments: How often do you want to make payments, and what can you reasonable afford?
It used to be that the longer you took out an insurance premium for, the lower the rate. While this is still true in some cases, it's more likely that you'll receive a fairly low rate due to insurers trying to offer the best prices to attract new clients.
You may also receive a better rate if you pay your annual insurance in one lump sum, or set up a direct transfer from your bank account, as this means less administrative work for the insurer.
Age is a large factor as well, when it comes to how much your car insurance will cost. For example, in the UK, any driver under the age of 25 will normally find it very difficult to get a good insurance rate, and this is why so many new younger drivers go directly onto their parents' insurance cover. Other countries, particularly North America, may only have higher insurance rates for drivers under the age of 21, so again it depends where you live.
Older drivers can also be penalised if they don't re-sit their tests in certain countries. In Spain, driving tests need to be retaken every 10 years; while in the UK there are growing calls for people over 70 to retake their tests every three years.
Combinations: Automobile insurance may be offered in combination with other existing insurance policies. These inclusive policies may result in discounts if you insure your car and home together through the same company. Although make sure you check the terms and conditions, since some of these joint policies are tied into each other. So, if you have to make a claim on your car, it can affect your home or life insurance, and vice versa.
Research your needs: Questions to ask yourself
Now it's time to determine what your requirements are in car insurance. For example, will you use the car insurance only for your teenager's car?
You can start this process by considering the following questions - as well as any others you think of yourself - and recording your answers.
| Have I used car insurance before? |
| | If you have used car insurance, work out what you did or didn't like about the policy. You may be looking for a policy exactly like it, hoping to upgrade, or even trying to avoid any particular features that you found inconvenient. |
| Why do I need car insurance? |
| | Think about the main reason for needing car insurance. Perhaps you will be an add-on to an existing policy or you may be the primary driver on a new policy. |
| What special options will I need? |
| | You might require additional coverage just to meet what the state, province or region requires. Perhaps you have some conditions or concerns that may require you to have additional coverage. |
| Will there be young drivers, first time drivers or student drivers on the policy? |
| | These drivers can affect the cost of the policy as well as the terms of the policy under certain conditions. |
| How old is the car and do I need full insurance? |
| | Many older vehicles will not require complete policies, and may be eligible for reduced cost policies. If you are buying your car through a finance company, full insurance may be compulsory. |
| What can I afford to pay for insurance? |
| | It is important to consider any financial restrictions that may impact on your premiums. Although it might seem that you're making a saving by taking out a less expensive insurance premium, it could cost you a lot more in the long run. |
For example, only taking out third party cover instead of third-party fire and theft could mean see you save a small amount on your insurance cover, but pay out thousands if your car is stolen and then set on fire. Don't skip necessary costs - you'll regret it in the long run.
| How do I want to pay premiums, monthly, quarterly or yearly? |
| | Some companies offer monthly, quarterly, bi-yearly (bi-annual) or yearly payment options, most with discounts for paying in advance. You can also save if you choose to pay through your bank, as opposed to monthly invoices at a local insurance broker. Therefore, it's worth checking what special deals are available for payment options, since it could save you quite a bit on your annual premium. |
Understanding your needs is the key to a successful purchase and you can revisit your list of needs at any time during the buying process.
Once you complete this Research step, having informed yourself about the essentials of car insurance and identified your needs, you are ready to move on to the next step: Evaluation.
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