Understanding and managing car insurance

Whether you are about to buy your very first car or have owned a vehicle for years, chances are you already know how vitally important car insurance is. Especially in our country where hardly a day passes without hearing about theft and vandalism, car insurance is not an option - it is a given.

This, however, does not mean that you have to pay through the nose for it! The trick is to get a policy that will suit both your requirements and your pocket. Keep reading to learn about the different types of car insurance available, and discover innovative ways to keep your premiums as low as possible without jeopardising your cover.

Basic types of auto insurance

Fully Comprehensive car insurance is both the safest and most expensive car insurance option. As the name implies, the policy holder is fully insured against virtually any and every possibility, including car accidents and theft without needing to assign “fault” in order to claim. Take note, however, that insurance firms seldom insure 100% of the vehicle's value - even under comprehensive schemes - as a means to stop fraudulent claims from owners who don't want their cars anymore.

Third Party, Fire and Theft car insurance is the middle ground between fully comprehensive insurance on the one hand and basic third party car insurance on the other. The policy holder is insured - as with fully comprehensive schemes - against fire and theft, with one exception: the insurance firm will only pay out if the policy holder is at fault when colliding with another vehicle, and “fault” can be proved.

Third Party Insurance is the most basic and cheapest kind of auto insurance. This scheme will only pay out if the policy holder is at fault when colliding with a third party in a car accident.

Tips to lower your car insurance premiums

A range of factors come into play when an insurance company calculates what each individual policy holder's monthly auto insurance premiums will be. These include your age, sex, driving record, place of residence, make and model of your car, how you use your car, credit history - and of course - how much cover you are looking for.

Having said that, here are some tips that will help you keep your car insurance premiums down:

  • Shop around - compare and contrast at least 3 different quotes
  • Negotiate with your insurance firm
  • Purchase a low-risk car: some cars are deemed higher-risk by insurance companies, and hence, will cost you more in premiums
  • Live and park in safe areas of your city or town
  • Drive safely: your premiums will decrease if you never claim
  • Increase the excess amount on your car
  • Improve the safety of your vehicle

Don't settle for the first car insurance scheme your broker or insurance company suggests - do your homework, negotiate and make sure you get what you pay for!