What to look for when buying Car Insurance

Consumers purchase automobile insurance to transfer the risk of an accident to their insurance company. In most countries, drivers are required to have some sort of coverage in place in order to drive on the road. Typical variables that will affect the driver's premium are: age of the driver, how many people are insured to drive the car, their driving record, the value and model of the car, the size of the excess/deductible and the level of protection offered.

Car insurance varies widely so it is worth the effort of shopping around. There are various websites that compare car insurance and they are useful, particularly for those shopping mostly on price. You can also use a car insurance broker who can sort through the various products and jargon to find a product that suits you. The broker will get a commission from the insurance company when the policy is sold. Since drivers are as different as car models, you can save money and get better coverage if you buy a policy best suited to your needs.

Some things to consider are:

- Who is driving the car? Is it just yourself and do you plan to add a teenage driver at some point? You will have to advise your insurer if someone else drives the car and the cost of insurance will probably increase for a younger driver, as they are more likely to have an accident.

- Age matters for older drivers as well. Some policies reward older drivers for years of safe driving or if they do not drive much.

- How often are you on the road? You can get policies designed for people who are not driving to work every day. The insurer will also want to know how the car is used, such as for business or private purposes.

- Where you live may affect the premium, as well as if the car is parked on the road rather than in a garage and whether you live in an area where vehicles are often damaged or stolen.

- Make and model of the car. Any modifications to the car must be disclosed because they may affect the premium.

- What is covered? Third party insurance might be compulsory in your country or state and at its most basic, covers you for injury claims made by another person. The level of compulsory third party insurance varies. If it is just for personal injury and legal action by another party, you will need to look at insurance that covers damage to another person’s vehicle or property (such as a fence) if you hit them and are liable.

- Do you have coverage for damage caused by another person who was not insured, known as "uninsured motorist coverage." This may also cover you for someone who is underinsured.

- Fire, damage and theft. Check the levels that are covered. For example, your insurer might pay for you to hire a vehicle while yours is being repaired after an accident and you may or may not want to pay for a premium with that included.

- The excess or deductible. This is the amount of the claim that you pay. The insurer will typically say you pay the first $X of the claim. This may be compulsory or you might be offered the option of choosing to pay the excess in return for a lower premium. If the accident is not your fault, the insurer may return the excess to you.

- No claim bonus. Does the policy reward you for not making a claim in any year? This may affect your insurance rating in applying for car insurance and should reduce the premium payable if you have a good driving record with no claims.

- Your driving record. You should be rewarded for a clean driving record but you may be penalized otherwise and this varies widely between jurisdictions.

- Market or replacement value. How does the insurer value your car if it is stolen and never recovered or written off in an accident? Will it be replaced with a new model if it is new? How is an older car valued? Note there are special policies for classic cars.

- How is a claim settled and what is your insurer’s dispute resolution process? If you are unhappy with the settlement offered you can ask your insurance broker to intercede for you. The insurance company should have a procedure for handling disputes.

If you are unfortunate enough to have an accident, contact your insurer or insurance broker as soon as you can as the insurer will have procedures that should be followed. Make sure you get the details of the other driver, including the licence plate number of the other car and their driver’s licence number as well as the names and contact numbers of any witnesses. If you have a mobile phone with a camera, you can take a photo of the scene.

Some useful sites:

Canada -  www.ibc.ca

Australia: - www.niba.com.au

USA - www.carinsurance.com

US - www.biba.org.uk