Understanding the cost of car insurance

To maximise the value of your penny, it is wise to find the best deal for your car insurance.

08:32 02 October 2013

Numerous car insurance companies have different criteria in determining the cost of the insurance policies that they offer together with their corresponding pay out in cases of claims. These criteria must be able to provide profit for the company as well or the business will not survive. To avoid having to pay a lot in counteracting various cases for claims, the cost of the car insurance must be proportionate to the probability that the car will be involved in any accident. However the differences may vary, they function on the basic principle of risk management. 

• How is this probability calculated

The age and gender of the owner of the car are considered in determining this probability. In exchange for the insurance coverage, a premium will be paid in an annual or monthly basis depending on your preference. There are many insurance providers which provide offers for car insurances. Comparing their offers might be of help in finding the best deal for your car insurance. After a 12 month period, you will need to renew or look for a more competitive offer for your car insurance.

• What is the cost of a car insurance

Every insurance company has different criteria where they based the cost of car insurance; thus the cost varies with each insurance company. Additional costs will be charged upon take out or cancellation of the policy. Likewise, when a claim is made, there is also additional cost depending on the type of your policy; that is, if you have an agreement regarding voluntary excess.  

• How you may cut the cost of your car insurance

The first way is to gather quotations from several insurance companies and compare. From these quotations, you may find which deal is better than the others.