What you need to know about car insurance

Man driving a car

Insurance companies take the risk away from the car owner. If the owner has to pay for repairs or replacement of an automobile, the insurance company will make the payment based on the terms and conditions of the insurance policy. To take this risk, the insurance company will gather information and records of the car owner to determine the price and conditions they are willing to give. The car owner then decides if the cost is worth it.

Buying insurance online saves money

Most car insurance companies have websites where customers can get a free quote as well as purchase their insurance policy. Some companies offer discounts for people who purchase their auto insurance from the website. Discounts can be a flat rate of 10 percent or up to $50 cash off.

Comparing insurance is often a complicated process because it is time consuming to compare prices and coverage. Obtaining comparison quotes online is the easiest way to find the cheapest policy. Online discounts don’t always mean the policy is the cheapest. This is why it is important to compare price and coverage.

An insurance company that offers both good rates and good coverage is Allianz () – the winner of the Large General Insurance Company of the Year Award at the 2012 Australian Insurance Industry Awards.

Young drivers are higher risk

An insurance policy will often have discounted premiums if there is no one under the age of 25 years driving the vehicle. Statistically, people under 25 years of age are at greater risk of making an insurance claim, which is why this is one way to reduce the cost of the premium.

Extras come at a price

Choosing extras for an insurance policy can add to the cost of the policy. Before selecting any policy or choosing extras, the car owner should carefully consider the type of coverage needed. Purchasing only the coverage needed can save a lot on the cost of the premium. The Product Disclosure Statement should be carefully read. Paying a higher excess will also reduce premium payments.

The excess is the amount the policy holder pays in the event of an accident before the insurance company starts paying. If the excess is high, the monthly payments will usually be lower. The policy holder should make sure they have saved enough to cover the excess. Otherwise, they may be in for a surprise if they make a claim and have to pay a high excess.

Using the same company can save money

For those who already have home insurance, boat, motorcycle, life insurance or other insurance policy from one company, it is smart to get their car insurance from the same company. If all the required insurance is from the same company, they usually give discounts.

Ask about discounts

Many companies offer discounts for specific reasons. One reason is if a person was initially on their parent’s insurance policy. Before taking out their own policy, they may be eligible for large discounts because the years spent on the parent’s policy will count towards their personal policy.

Security measures reduce car insurance costs

Any security device such as an alarm or immobilizer or a GPS tracking unit will reduce the cost of the policy. Having a secure parking space at night is also consider safe against car thieves, and simply parking in a driveway is considered less risk than parking on the street and will reduce the premium cost.

Check the payment schedule

Making insurance payments monthly is usually more costly than making one annual payment. However, some companies are now offering monthly payments at no extra cost. It is worth checking with each company being researched if they offer no-cost monthly payments. This makes budgeting easier and avoids a huge annual bill.

Customer service

The cost of the car insurance policy is important, but not the only factor to consider. A cheap policy with poor customer service at the time it is necessary to make a claim can cost more money and headache than a slightly more expensive policy that offers good claims service. The best way to find out if a company had good claims service is to ask their customers. A good insurance company will be happy to put a new client in touch with other customers.

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