Car insurance companies or more accurately, short-term insurance companies, abound in what is a very competitive market. The market has become so fiercely competitive that some car insurance companies have entered niche markets where they specialise in particular sectors of the market, e.g. car insurance for female drivers, whereas others offer all sorts of incentives to retain their customers.
Car insurance companies are operating in a very volatile market as insurance contracts are by nature short term. As such, the main issue to them is to retain customers and build up a loyal user base, thereby protecting cash flows and profits. It is in this regard, that most of them will offer some incentives to retain their clientele. These offers are mainly centred along no claim bonuses in the form of rebates offered after a set period of no claims on your policy – usually three years. Because the actual cost of these policies to their customers are the main reasons for them shopping about for the best price, either on entering an agreement or at the end thereof, actual premiums are also pretty competitive. The catch is often in the fine print of a contract, so premium comparisons and incentives offered are important to the customer, but as important is to read the fine print. It is in the fine print that hidden costs are contained – such as excess payments on any claim made. These payments vary wildly from insurer to insurer and could be rather hefty.
Something to consider, however, is that monthly premiums are affected by the size of the excess payment. The larger the excess payment, the lesser (normally) the monthly premium. Who may drive the car, what age they are and whether the vehicle is used for business purposes, are all factors that could have an influence on the monthly premium and excess payment. Clearly the type of car you drive, the model, the year of manufacture and whether the car has been modified are important issues, and affect the monthly premium charged. How and where your car is stored also has an effect on monthly premiums. Take note that should you skip a premium payment, the policy will cease to have an effect, and you will be left without any insurance protection and your credit record might also suffer as a consequence.
Car insurance companies calculate their policies on such issues as the car you drive, its value (you can insure for replacement value or market related value),where you live, whether the car is housed in a closed garage, your age, driving experience, whether you use your car for business travel and so on. These are all risk factors to the insurer and the greater the risk the greater the premium and often the required excess payment by the claimant will be. Car insurance companies will often be prescriptive on the repair of any accident damage in that they will nominate who may repair your car.
The important issue is to research the market for the best prices, but also to study the fine print in making sure that not only you get the best deal, but that you understand the risk issues from your side. It is one thing to pay as little as possible on the monthly premium but to be bitten in the bum on the excess payments applicable to your policy.