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Determining the True Cost of Car Insurance

The true cost of insuring a motor is directly related to risk assessments.  Insurance providers set premium rates based upon realisations made by their underwriters about the likelihood of damage or injury.  Car insurance companies analyse the statistics of claims related to accidents and drivers’ behaviours, then adjust their premiums and levels of coverage accordingly.  The high cost of car insurance nowadays makes it a necessity for drivers who wish to save money to conduct a bit of web research on different comparison sites, but before setting out to do so, it is important to understand how car insurance pricing models work.

Factors That Affect Pricing

Once car insurance providers have set their premium rates and levels of policy coverage, they look at certain factors that will determine how much you will pay.  Typical factors include your age, driving history, the neighbourhood where the motor will be kept when not out on the roads, the relative safety of the places and car parks frequented, the type of car, and sometimes even the colour.  Based upon these foundational factors, a teenager who just got his driving licence and lives in the East End, for example, will be forced to pay a very high cost of cover for car insurance, particularly if the car he or she wishes to insure is a flash sports car painted cherry red.

The car insurance industry considers many other factors that can make a big difference in how much you pay.  Motor owners who fit their cars with an alarm or a more comprehensive anti-theft system that includes an immobiliser device can cut their premium costs down considerably.  Prudent drivers are always more likely to save money on car insurance, thanks to their safe driving histories.  Drivers who have driving histories blemished by road traffic accidents or collisions in which high rates of speed were involved can expect to pay higher car insurance premium rates.  Receiving a Notice of Intended Prosecution for a more serious speeding could result in a reduction of six points off your licence, something that will certainly ratchet up your car insurance cost of cover for many years.

The use of a mobile phone whilst driving is perhaps one of the most detrimental offences when it comes to obtaining car insurance.  You can expect to pay double the premium rate that would be normally offered; thus, it is vital to fit your mobile phone with hands-free equipment and the interior of your motor with a cradle.  The offence, per se, does not deduct so many points off your licence other than the standard three, but drivers who wish to save money will not be able to do so with a mobile phone offence on their driving history.

Types of Car Insurance

Part Six of the Road Traffic Act of 1988 established compulsory insurance for all drivers and motors.  Third party liability is de rigueur under the Act.  Car insurance comparison sites often label their third party offerings as cheap car insurance policies, when in fact they are the minimum and not always the cheapest. Third party car insurance alone does not guarantee that a driver will save money in case of an accident, but it will at least provide a payout when another driver suffers damage or injury.  With third party liability insurance, the motor is not insured in case of fire or theft, however.

Third party fire and theft car insurance provides a higher level of cover against accidental damaged caused by fire or if your motor is stolen.  The premium rates of these policies are higher than the third party liability car insurance, but they are susceptible to certain risk factors that can be easily mitigated.  For example, a driver who fits his or her motor with a fire extinguisher, a car alarm or an immobiliser can considerably save money on third party fire and theft policies.

Fully comprehensive car insurance may command the highest premium rates, but drivers who obtain this level of cover invariably save money in the long-term.  A fully comprehensive policy is not considered discount car insurance, but it can be the cheapest when you stop to consider the overall cost-savings realised in case of an accident, even when you are determined to be at fault.  Young drivers who think they will save money with third party insurance often fail to take into account just how expensive a road traffic accident can be. Fully comp policies are also ideal for drivers who live in neighbourhoods where there is a high incidence of car theft.

Insurance Provider Comparison Sites

Once you have considered the types of motor insurance available to you and the risk factors you can mitigate on your own, the next step should be to go online and search for sites that allow you to compare premium rates.  The Internet can be the most valuable tool for drivers who want to save money on car insurance.

The first thing drivers should keep in mind when accessing comparison sites is that their personal information will be passed on to several insurers at a time.  At some sites drivers can compare between dozens of insurance companies, which means that personal information will be circularised widely.  With that in mind, the comparison sites are wonderful tools for drivers expecting to save money on insurance.  A report published by British research firm Consumer Intelligence in late 2011 found that more than one half of all drivers using comparison sites can save up to £200 on their policies.

It is easy to become magnetised by the low quotations returned by insurance providers.  You should always take a long-sighted look at the details of coverage and at all the provisions and clauses within the policy.  The car insurance industry is very competitive, and that close competition often causes insurers to offer attractive extras to drivers such as free car hire while the motor is at the mechanic shop -- bonuses awarded to set that company above the others in the eyes of the consumer. Watch carefully, however, that the expense of the added bonus features are not built into the actual cost of your 'discount' policy: Compare coverage limits as well as costs to ensure you aren't paying for what is advertised as free.

There is a great diversity of cars and drivers on the roads these days, and to that extent, comparison sites offer specialist insurance that is categorised as such.  Just because a driver chooses to motor around in an antique Vauxhall does not mean he or she can't save money on insurance. Specialist insurance policies are available for women, students, drivers over 50 years of age, classic motors, and modified cars. Most specialist covers do cost more on average than normal covers, for the car that is insured is often of a one-off or rare design or an antique.