How often have you heard someone complain about how much they pay for car insurance and how their insurance company wouldn’t cover them when they had a crash?  This is a really common scenario and it has a really common cause.  The truth is that the majority of vehicle owners don’t even know exactly what they’re paying for in their car insurance.  Very often they’ll be covered for all kinds of risks that don’t really apply to them and then, only when it’s too late, they discover that they’re not covered for a risk that is all too real.

So the first step in buying car insurance is to work out what coverage you really need.  These days, most companies will give you a policy that’s absolutely tailor-made for you.  All you have to do is ask.  If the company you insure with now doesn’t want to do that, it’s time to shop around. 

There was a time when there were only a handful of big insurance companies and they all offered more or less the same product at the same rate, but the industry is no longer like that.  Today there are hundreds of small insurance companies and insurance brokers, many of them operating exclusively online and thus avoiding many of the overheads that their clients would otherwise be paying for through their premiums.

As with anything else, before you set out to buy car insurance, you should spend a little time learning about how it works.

Find out the Facts

To get the best deal in car insurance, you need to understand how insurance companies calculate the premium they charge you.  Although there may be variations between companies, the major factors are more or less the same and will generally include the following criteria:

• the state and local area you live in.
• your age and marital status and possibly your employment status.
• your driving history, especially accidents any convictions.
• the make, model and value of the car you want to insure.

Why is the state you live in important?  That’s because the requirements for insurance vary from state to state.  While all states require some sort of insurance, this is usually pretty basic and it is up to the car owner to choose whatever additional coverage he requires.  Of course each of those add-on extras will incur an additional premium.  This is why it is important that you first decide exactly what cover you need before you set out to buy insurance.  Depending on your circumstances and other factors such as the age of your car, you may be better off taking out only the minimum coverage required by your state.

If your car is more than about five years old, its replacement value may be so low that it’s not worth paying for comprehensive insurance.  So look very carefully at how much comprehensive insurance will cost you over the next few years and ask yourself if it would be more cost-effective to carry the risk of writing it off yourself.

Choose Carefully

Most insurance companies will charge similar rates for the most basic insurance, but it’s when you start adding on extra coverage that the difference between companies becomes important.

These days the internet has made it very easy to shop around and compare the various policies on offer.  There are a number of excellent websites which will make the comparison for you.  All you have to do is enter your details and the details of the vehicle you want to insure and the site will present you with a number of different options and the cost of each of them.

Of course it’s important that you don’t simply take this information at face value.  It’s essential that you check any proposed premium very carefully to make sure that it is giving you the coverage that you need – and also that you’re not paying for coverage you don’t need.

Another factor that is important is not choosing your insurance company but choosing your car.  Next time you are buying a car, first check out which makes and models are the cheapest to insure.  Just having the right brand of car may cut your insurance premium by up to a half, and you may be surprised by which cars attract the lowest premiums.

Demand your Discounts

There are a number of things you can do to minimize the premium, even once you’ve decided on a company.  Some of them are:

• pay the full premium up front instead of monthly; in this way you avoid paying the cost of providing credit.
• if you drive only very low mileage – usually below 7,500 miles per year – you will qualify for a discount with many insurance providers.
• if you’ve taken a safe driving course within the past three years, insurers in many states may give you a 10% discount.
• if you are insuring more than one vehicle, you’ll get a huge discount, so think about transferring family cars into one name.
• make sure you get a quote from the company which insures your house; having more than one insurance policy with a company will always earn you a healthy discount.
• if you belong to any kind of group – a union or professional association, a sports club or even a group of employees in a company – insurance companies may be prepared to give you a generous group discount if a large number of people insure together.
• some companies may even give discounts for evidence of stability, such as being a straight "A" student or having been in one job for many years.

What’s important about all these discounts is that you will probably need to ask for them, so don’t be shy; many insurance companies will not offer these discounts without prompting.

Another factor that will affect the insurance premium you pay is the level of anti-theft devices your car has.  If it has sophisticated protection either factory-built or retrofitted, the insurance company may agree to lower the premium because of this.  The same applies to safety equipment: if your vehicle is fitted with automatic seat belts and up-to-date airbags, this may also attract a discount.  Before you speak to an insurance company you should think about the principle of insurance:  it’s all about risk and anything that you can do to demonstrate that you or your vehicle carry a low risk will help to keep your premium down.

Of course it goes without saying that insurance companies will give you a lower premium if you have an unblemished driving record.  So be sure to mention if you’ve never had an accident or if you’ve never been ticketed for a driving violation.  All of these things are positive factors when it comes to assessing the level of risk you present as a driver.

Be Persistent

Even if you have a bad credit rating, a poor driving record and a history of insurance claims, don’t give up.  All insurance companies have their own refinements of the risk assessment process and, although you’re going to pay a higher premium because of your risk factors, some companies may assess them differently.  So even if you’re aware of being a poor insurance risk, it is still worth shopping around for the companies which will give you the best rates.