Telling a Good Car Insurance Policy from a Bad One
Let’s say you’ve done exactly what the guides have suggested and obtained a number of quotes for a car insurance policy. The numbers, while not as cheap as you would have liked, still appear quite reasonable. You look up more information and are told to “carefully compare and analyze the quotes”. What do you do then? There are car insurance policies that are well worth their price, and those that make you regret the day you bought them. The two can be identified with careful scrutiny and comparison.
Very Low Premiums
An insurance provider will request some personal information when you request a car insurance quote. Provide these details as accurately as possible to get a valid quote on the car insurance premiums you will pay if you accept the policy. While it’s tempting to just go with the lowest quote in these belt-tightening times, you should be wary of an extremely cheap quote.
As the saying goes, you get what you pay for, and paying dirt-cheap prices for car insurance will most probably get you the barest minimum insurance coverage. While this may seem worthwhile in the beginning, it’s likely you’ll face undue hassle if or when the time comes when you need to make a claim.
The insurance provider may also have other means of making up the “loss” for charging cheap premiums as well, and tack on an absurd amount of “administrative fees” that you never bargained for. On the other hand, premiums that are too high or a policy that is too expensive may indicate that you have more insurance than needed.
Coverage Doesn’t Match Your Needs
The premium you pay varies with the type of insurance you opt for. For some people, third party insurance will do just fine, while others want nothing less than comprehensive coverage.
It’s your responsibility to tell your insurer everything they might need to know in your quote request and your car insurance application. They will then use the information you provide to calculate a quote. If the policy they then offer you does not meet the criteria you specified, this may indicate a lackadaisical or one-size-fits-all attitude towards customer satisfaction. In that case, the policy and, by extension, the company in question may be less than ideal to deal with should you need to file a claim.
Demographic-Discordant Coverage
Why do you have to provide information like your age, gender and address when you’re looking for car insurance quotes? Insurance providers do this in order to come up with a quote that most accurately reflects the risk a driver poses to the company.
Car insurance policies usually charge a higher premium for younger drivers, or where you insure a brand new, high-end car. Male drivers will also usually face higher insurance premiums than female drivers. The more densely populated the area in which you live, will also likely increase the cost of your insurance.
The opposite of all these attributes is usually true as well, that is, older drivers pay lower premiums, as do those who drive older or more “conservative” vehicles. An environmentally friendly hybrid car may also get you a cheaper policy, as might a clean driving record.
If you receive a quote for a policy that takes none of these factors into account, then you may want to move on to the next quote.
Lack of Clarity for Excess and Premium Charges
You might wonder how “excess” relates to the policy. Car insurance excess is a pre-defined amount that a policyholder can choose to contribute in the event of a claim. In general, there are three types of excess:
Standard driver excess: The amount varies with your address and its population size and the person driving the car. Some insurers may waive this if the claim was due to the other driver’s error.
Age excess: Applies to drivers under 24 years of age and 25 year olds with less than two years’ driving experience. In general, the younger the driver, the higher the excess.
Non-nominated driver excess: Applied when you make a claim for a driver not mentioned in the policy. Not all insurers may apply this excess, which makes reading the fine print especially important.
Most of the time, a higher excess can be contributed if you wish to pay a lower premium. This means that the policyholder agrees to bear a larger financial cost in the event of a claim. Any claims exceeding the excess is covered by the premium.
If a policy only highlights a low premium and doesn’t provide details on the excess payable, then you might find yourself paying a lot out of pocket if you make a claim that isn’t covered by the premium you pay.
Word Of Mouth
If you’re still unable to glean any insight from comparing the quotes you have, you might find some answers if you ask friends and family about theirs. Compare the policies you have with the ones that are most similar to yours in order to obtain the best results. It may not be the perfect method, but it certainly helps determine which policy is the best for you.
It might sound like a lot of trouble to identify whether a particular car insurance policy is “good” or “bad”, but you have to remember that no measure is too complicated when it comes to making the most out of your money.
This article contains general advice about car insurance. The author has not taken into account your financial situation or needs and you should consider whether the advice provided is appropriate for your own circumstances before relying on it.
Filed Under: Insurance Comparison
