Car Insurance Explained

The price for car insurance varies dramatically depending on a number of factors, including your age, the value of your vehicle, and the type of coverage you purchase.

This article will take you through an overview of car insurance and reveal why it is such a personal choice for everyone.

Car insurance follows the principle of "risk and reward". The higher the risk you present to an insurer, and the more rewards you're prepared to accept in return for that risk, then the more you'll be expected to pay.

If you want to reduce your premium, your insurer will need to manage your risk. This is often done through a combination of factors. Your driving record, the type of vehicle you drive and its age, where you live, and even the age of other drivers on your policy are all part of calculating risk.

Insurers also compare your potential rewards to your level of risk, in order to determine what your premium should be. Car insurance companies will offer you different levels of cover, depending on the risks presented and the risks you are prepared to take.

The price for car insurance varies dramatically depending on a number of factors, including your age, the value of your vehicle, and the type of coverage you purchase.

Below is a simple breakdown of how car insurance costs change:

Comparison Table - Car Insurance Costs (Based on typical claims) The table below compares some common types of cover ranging from comprehensive to package. Mazda MX-5

Yaris Sedan

Honda Jazz

Honda Civic 1.8L Manual 5-door 9 years old, Full Comprehensive 14,400 15,700 16,800 24,500 2.0L Manual 5-door 7 years old, Full Comprehensive 10,200 11,000 12,500 18,300 2.2L Manual 5-door 7 years old, Full Comprehensive 10,200 11,000 12,500 18,300 1.6L Manual 5-door 6 years old , Full Comp 9600 10800 12500 17500 Mazda MX-5

Yaris Sedan

Honda Jazz

Honda Civic 1.3L Manual 5-door 9 years old, Full Comprehensive 11,900 13,800 14,700 22,100 1.6L Manual 5-door 6 years old , Full Comp 11,000 12,800 15,700 21,200

Packages Explained All car insurance policies will include comprehensive cover. This is a basic level of cover which covers the cost of repairs to your vehicle in the unfortunate event that it is damaged or stolen. Also covered are other key features such as windscreens and wheel rims. If you need to make a claim for damage to your own vehicle then comprehensive cover can be extended into breakdown cover or personal injury cover.

Other forms of cover include breakdown or rental car cover. These cover you for the cost of hiring a replacement vehicle if yours breaks down and you cannot afford to repair or replace it. It will also cover the cost of hiring your own vehicle if your own is damaged and you cannot afford to repair it.

You can also purchase additional layers of coverage including third party fire & theft, third party road funders, third party personal liability (for bodily injury), uninsured/underinsured motorist (for damage caused in an accident), and comprehensive & road funders. The higher coverage levels offer greater protection but they will all increase the amount that you need to pay for car insurance.

It is also worth checking that your policy includes legal liability cover as this can protect you if someone is injured in an accident at your own, or someone else's, fault. Taking out a comprehensive policy with legal liability will cost around the same amount as a car insurance policy without this cover.

If you are covering multiple vehicles then it is important to check each one's age and how much they are insured for, as this can affect what their cover costs. Also be sure to check how much of a discount you can get if you buy additional cover for another vehicle that is already insured by the same company.

The age of the car also has an effect on the price you will pay for insurance. Older cars tend to be less expensive to insure than younger ones, or newer models with a lower market value. However, this means that you will need to have higher levels of cover on your policy in order to protect your vehicle.

What type of policy do I choose? There are different variations of cover available such as temporary loss and collision, comprehensive or package, and legal liability.

Should I choose lump sum payments or regular payments? It is worth remembering that if you decide not to make any claims in the first 12 months then you may end up paying a higher premium in the long run.

The type of policy you take out is a personal choice, and the best way to decide which cover suits you best is to compare premiums available on the market.

What do I need to know? You should also consider joining a local car insurance association. These groups give discounts of up to 40% on your policy, and they can be a great help when comparing prices with different companies.

Examples *According to comparison review site uSwitch, total annual premium for all-risk cover for a Mazda MX-5 roadster without third party fire and theft, full comprehensive insurance would be £2686 in 2009 - but rising by 2.8% each year until 2017.

*According to comparison review site uSwitch, total annual premium for all-risk cover for a Mazda MX-5 roadster without third party fire and theft, full comprehensive insurance would be £2686 in 2009 - but rising by 2.8% each year until 2017.

Are there any discounts for victims of road traffic accidents? There are certain types of road accident which will give you a discount on your insurance. If you have been involved in an accident where another person has died, the insurer may reduce your premium by 20%. Also if you have been injured while stationary at traffic lights or if a vehicle is illegally parked the insurer may offer up to 20% off your policy.

What are the different types of insurance cover? There are a number benefits to having car insurance, and this includes legal protection, help with breakdowns, and a guarantee that your vehicle will be repaired if it is damaged in an accident.

The benefits of car insurance could alternatively be described as levels of cover. The following outlines what you can expect to get with each level of cover when you get insured. Comprehensive

This is the basic level of cover which protects your vehicle in the event that it sustains damage or that you have an accident. There are additional types of cover which can be added depending on your preferences and risk appetite.

Conclusion Car insurance is the most important factor when it comes to a vehicle purchase, and you should make sure that you have suitable coverage in place.

About the author Will Norris writes about car insurance at www.carinsurance.co.uk - providing information on all aspects of car insurance and how you can get the lowest price possible with different companies. Visit Will's site for more free guides, articles and information on A-Z Insurance related subjects.

Article Source: http://www.articledashboard.com/Article/Car-Insurance-Should-I-Buy-It--215417

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