The concept of car insurance is as simple as this: you pay an insurance company to supply funds to cover the repair or replacement of your car if it is damaged or destroyed. Although this sounds fairly straightforward, the real world is far more complex than your average dictionary definition. Often insurance companies will likely give you what you sign up for, while burying a whole lot of terms and conditions in the fine print. This guide will help you to know exactly what to look for in a car insurance policy, so that your insurance can be a true assurance when you’re on the road.

Shop Around

Maybe the first thing to consider is where one should look for reliable car insurance. There are plenty of insurance brokers claiming to offer you the best deals, so where should you start looking? You may be tempted to ask your friends and family about their recommendations. Unless your loved ones work in the insurance industry in some capacity, they may not have the know-how you need to make the right decision on your car insurance. Check in at your local garage, body shop, and personal-injury lawyers and ask which insurers the experts recommend, since they’d have first-hand experience dealing with good and bad insurance brokers. When shopping around for insurance, don’t be afraid to negotiate. If a one insurance company gives you a pricier quote than another, you can call in and ask for a more competitive rate. It’s worth being persistent – there’s a good chance you can do better.

How To Read An Insurance Policy

Before signing a car insurance contract, make the following elements your focus:

• Excess payments: What excess would you have to pay under this policy? Does it differ in cases of loss or damage? Is the excess a flat rate? Does the policy include an excess waiver?
• Waiting period: Would you have to pay any penalties, if you claim within the first six months or the first year?
• Claims: What is the turnaround time for claims? Beside the initial excess fee, are there any additional excess fees that are required when claiming?
• Cover amount: Is the car covered according to its resale or full retail value? Will the cover amount change if someone other than the insured is driving at the time of an incident?
• Insurance limitations: Is the insurance comprehensive car insurance? Does the policy place any limitations on when or where you’re allowed to drive your car?
• Car hire: If your car is in an accident, does your policy cover car hire for the period in which your vehicle is being repaired or replaced?

It is important that you read through your policy carefully. So, take your time. See if you can get the insurance broker to send you a copy of the policy, so you can give it a good read before signing anything. Look out for sections along the lines of “Collision” and “Personal Injury” coverage. Under these headings, you should find headings like “Insuring Agreement”, “Limit of Liability”, “Payment for Loss”, Damages Covered By The Insurer, and “Determining Amount of Loss”. Pay particular attention to how the insurance company would go about determining the value of your vehicle.

What’s Your Risk?

Insurers can set premiums based on various factors regarding your car and your driving abilities. These can include the age of your car, the safety of the home location, the cost of repairs or replacement parts, and where you park and drive regularly. Every insurer you approach will have to ask you a number of detailed questions on these factors to understand the risk of you causing an accident or opening a claim. Insurers also consider the type of car you drive, since different models may entail higher or lower repair costs for parts. For instance, since German cars typically have the most expensive parts, the premiums to insure such a car would be more expensive than your average Japanese or American-made cars. Keep this factor in mind, if you happen to be on the market for a new car. However, there are some measures you can take to reduce the price of your car insurance premiums. One simple trick is to install a car tracking device to monitor driver behaviour and whereabouts. Something worth keeping in mind, when insuring your car, is to make sure that the insurance company records the depreciated market value of your car as this can also push down the price of your premium.

Policy Features You Will Need

1. Uninsured Motor Coverage (UM)

This type of coverage is most people’s go-to when looking into car insurance. UM cover helps you cover the resulting costs of an accident that was caused by another person, who has no insurance coverage of their own. You would likely resort to this is the type of cover in case of an unfortunate meeting with a hit-and-run driver. Without UM coverage, you would have to file a claim on your collision coverage for such an incident, which would drive up your premium rates.

2. Gap cover

If you bought your car on credit (like so many people do), this type of coverage is an absolute must. Should your car meet an untimely end in an accident, the amount from this insurance covers the “gap” between the amount due on your car and the percentage you have already paid off. If you have gap cover, the insurance company is required to pay toward the amount that is still owed on the loan on your car. Gap cover is typically worth having in your corner in this case.

3. Custom or specialty equipment cover

There’s a lot to love about your car. You know this, but so do thieves. Aside from the car itself, you need to look after some of the aftermarket add-ons to your vehicle. Radios, navigation system and any other upgrades or modifications attached to the vehicle. Without this type of cover, your insurer will only cover the cost of your car’s stock equipment and features.

Make Sure Your Car Insurance Keeps Working For You

1. Keep an eye on the market

It’s rare for any insurance policy to be a once-off solution. You may find another policy that offers more bang for your buck, so take some time every few years to shop around. Remember that insurance companies raise their policy-holders’ rates a little each year. So, there’s a good chance that you could get a better introductory rate with another company. At the very least, you can get a competitor’s quote in order to negotiate the rates offered by your current insurer.

2. Keep up-to-date on your policy

Insurance companies typically revise their policies every few years. They do this to adapt their insurance products to new laws, regulations, or precedents set by claims that have gone to trial. Your insurer is obligated to send you a copy of updated policy every six months. This is an excellent opportunity to stay in the loop where your working knowledge of your insurer is concerned. Plus, it keeps you on top of any important developments to either avoid or recommend to friends.

3. Remember to renew your coverage

Whatever you do, don’t allow your insurance to lapse! This is the most common mistake that most car-owners make, when it comes to insuring their car. People often allow their insurance to lapse by forgetting to renew their coverage. Alternatively, they fail to pay their premiums on time. If you buy a new car or sell your current vehicle, make sure your insurance company is notified. An easy solution to this problem is to set-up an debit order and other such fail-safes to ensure you meet every payment.