A car is a major investment that usually takes years to pay off, which means it is important to insure it against any future damage. Just as there are many different car loan providers, there is a wide range of car insurance companies and options available. While the range of options means there is bound to be a car insurance deal to suit almost any lifestyle and need, it can also make finding and choosing insurance a lengthy process. But to help narrow down the search to the very best options, here are five of the best tips and insights to help choose the right car insurance every time.
1. Find Out About Different Types Of Car Insurance
There are a number of different types of car insurance that can be considered before or after buying a car. The three most common options are:
Third-party property: covers damage to other peoples property
Third-party property, fire and theft: covers damage to other peoples property as well as damage or loss caused by the theft of your car
Comprehensive car insurance: covers damage to your car, damage to other people’s property and damage or loss caused by the theft of your car.
Comprehensive car insurance is the most commonly recommended option because it protects both your car and anyone else’s when there is an accident, while third-party car insurance options tend to have lower premiums. There are also a number of insurance options that can help with maintaining and running a car. Loan protection insurance, for example, is designed to cover the cost of a loan when you cannot make loan repayments. Tyre and Rim insurance (TRI), on the other hand, offers specific protection for tyres and rims if they are punctured, suffer a blowout, or are damaged by various road hazards. There is also GAP insurance to cover the cost when comprehensive insurance is not enough to repair any damage to your car, and extended warranties to help maintain the value of your car if manufacturing errors arise.
2. Build A Budget For Car Insurance
Car insurance may often be considered an essential part of owning a car, but it still adds to the overall vehicle costs. So before choosing any car insurance, it is a good idea to consider how much money you can afford to put towards car insurance on a regular basis. When factoring in the cost of car insurance, try to consider both the premium that is regularly paid and the potential savings if something does go wrong. Often the potential savings make paying a monthly premium worth it for some peace of mind.
3. Consider the Excess
While the premium is something that is charged regularly for the convenience of having the insurance, excess is only charged when a claim is made. This amount can vary depending on the type of claim and who is at fault, so in theory you may never have to deal with it. But it is still important to look at what each claim could cost upfront so that if anything does happen, the costs do not make managing car finances a nightmare. Most car loans also give you the option of increasing the excess you will pay, in exchange for reducing the regular premium. This can save you money over the long term, but could mean that you have to pay more if you have to make a claim, so it is worth considering what option would be best for you.
4. Compare Agreed And Market Value Options
When choosing car insurance, there are two main ways that the value of your car will be assessed. With an “agreed value” option, there is a set dollar value on the vehicle. In contrast, a “market value” insurance option will assess the value of your car based on the make, model and condition. Generally an agreed value car insurance policy will cost more than a market value insurance option, but it is a good idea to take a look at both and make a decision based on your unique circumstances.
5. Consider Car Loan Requirements and Insurance Packages
Car loans can sometimes have car insurance requirements, so it is a good idea to check what options are available with either a current or prospective loan. Many car loan providers, for example, will outline that comprehensive insurance is essential for loan approval – particularly for secured car loans because the value of the vehicle is an essential factor. Comprehensive insurance, in this case, means that the car is more protected from depreciated value and makes it a reliable asset for the lender and for you. As a result, you may be able to get a fully protected car loan that includes all the insurance that you want at a competitive price. Many car insurance providers also offer a range of insurance packages, so that cover is not limited to just the bare essentials. Car insurance helps protect you both on and off the road, but a lack of research before choosing a policy can lead to a lot of wasted money. Keeping these five tips in mind, however, will help you stay informed so that it is easier to choose the right car insurance for every vehicle you ever buy.
Author Bio: Bill Tsouvalas is founder and managing director at http://savvy.com.au. He has been working in the vehicle & asset finance business for over 8 years. Join the discussion with Bill on Google+