Like buying a car, there is no other best solution when it comes to buying insurance. Make sure that price is not the only factor you think about choosing your motor vehicle insurance. You have a wide choice of policies, and you must shop around to make sure that you are choosing the best that suits your needs and circumstances.
Types of car insurance
- Comprehensive car insurance
- Compulsory third party (CTP) insurance
- Third-party property insurance
- The third-party property, fire and theft insurance
What level of car insurance do you need?
Ultimately it comes down to how much it would hurt to go without your car if you ever write it off. Comprehensive policies offer you a couple of weeks’ worth of car hire if you write your vehicle off in an accident where you’re at fault.
Is it worth buying comprehensive insurance for an old car?
No one wants to be caught underinsured, but if you’re paying more than 10% of the car’s value every year in premiums you might need to consider a cheaper policy. Third-party property is always a good alternative as no one wants to be stuck paying for someone else’s repair bill.
Third-party property with fire and theft cover your vehicle for a couple of calamities, letting you save some cash in a self-insurance savings account. By self-insuring, you don’t have to deal with the insurance company when something goes wrong, but you do have to resist the urge to dip into the fund.
Agreed value and market value: what’s the difference?
For drivers with comprehensive or third party property, the amount your insurer will pay if you write off your car depends on your agreed value or market value.
Agreed value: This is when you insure your car for a specific amount set by the insurer. If your car is a total loss the insurer will pay you this amount, less the excess. In case your car is under finance, consider insuring it for an agreed value that’s at least equal to the amount remaining on the loan. That way, if you have a total loss you’ll be able to square away the debt before going to buy a new car.
Market value: This is when you insure your car for what its value is at the time of an accident.
Selecting this option reduces your premium, but it gives you less certainty about the value of your payout in the event of a loss.
Insurance tips, discounts, and traps
Know your excess
An excess is an amount that you pay to make a claim. The higher excess is the lower your premium will be. Increasing your excess can save you money but stay aware of a really high excess because it won’t be worth your while to make a smaller claim.
Look for ‘no claims bonus’ discounts
Every insurer has a different name for this like no claims discount (NCD), a safe driver bonus, the list goes on. Actually it’s a discount for not making a claim. The amount of the discount can be different depending on the insurer. You mostly pay extra to protect your NCD, meaning if you do have an accident, it won’t affect your rating
Get a discount for restricting drivers
Some companies discount the premium if you restrict the use of your car to selected drivers or to those over a certain age. If you take this up you must not let an excluded person drive – if they have an accident than it’s you who’ll pay a high additional excess or even you may not be covered at all.
How to get other discounts
Discounts may be available if you are having some other policies too with the same company, like having an approved engine immobilizer or alarm installed in your car, or take out the insurance online. Long-term customers, pensioners, people aged 50 to 70 and young drivers who’ve completed a skilled driver’s course may also receive discounts.
Insurers don’t reward loyalty themselves or make discounts available. You have to ask the company for discounts when shopping for a policy. You should shop around at least every one or two years to make sure you are getting the best deal.
Buying a car
If you’re trying to decide between different models of cars, it’s worth checking out what the insurance would be on each one. Some models attract a much higher premium because they’re more likely to be stolen. This can add hundreds of dollars to your insurance bill every year. Even the color of the car can affect your premium amount.