cheap car insurance- how to reduce car insurance costs

Car insurance is usually a legal requirement for drivers of all vehicles, wherever you live. The legal requirement may be national or local or both, and will normally involve a minimum level of legal third party cover. This means that if you have an accident where you injure someone, including a passenger of yours, or their property, your insurance company will cover your financial liability up to a set limit, specified in the motor policy. Beyond this legal minimum, there are a wide range of options and factors that affect the cost of your car insurance. Understanding what they are allows you to make choices that will affect the premium you pay, and the level of coverage you have.

The first thing to decide is what level of cover you want. There are essentially three main options, with a number of optional extras available. The three main options of cover are third party, third party fire and theft and fully comprehensive. In practice the first option is a bit of a non starter as the cost of adding fire and theft is minimal, so most people opt for third party, fire and theft and fully comprehensive.

Third party cover is as outlined as above, and fire and theft are pretty self explanatory. The important thing is the level of financial indemnity cover that your insurance company is providing. If there is a legal minimum specified by statute, it is likely to be less than you want. It is well worth getting as much coverage as you can here, and some insurance companies will offer unlimited liability. The other main option in terms of coverage is fully comp or fully comprehensive, sometimes known as all risks.

Be careful, because it isn't actually all risks, but it does cover damage to your own car as well as third party cover and other possible optional extras. Whether or not it is worth having this cover will depend on the value of your car. Bear in mind that if you do make a claim it will most probably affect your no claims bonus, which in turn may affect your insurance premium for a number of years. Also bear in mind that if you claim for the value of your car, any claim will be settled on the basis of what the insurance company believes is the market value of your car, not necessarily what you think it is worth, or what you think you would have to pay to replace it. This can be a source of major angst in trying to settle claims.

Other things that can affect the cost of your insurance policy include factors such as where you live, how old you are, your occupation, how many other drivers are on the policy etc. Also any additional areas of coverage that may or may not be optional and may or may not be chargeable. These can include things like car hire, breakdown recovery service, legal advice for recovering uninsured losses etc.