Your car is likely to be the second biggest purchase you will make in your lifetime. Before buying, get a few speculative quotes to see if you can insure your chosen car or can afford it. Some models are virtually uninsurable if they are owned by certain buyer groups or if you haven't got a fat no-claims bonus. In some cases, a certain engine option can vary the cost of a policy by thousands of dollars.

THE RIGHT TYPE
Comprehensive cover is the most expensive route, but covers you for accidental damage to other people and their property, and damage to your own car and things inside it -- even if the damage is your fault. It also covers you for theft, with many policies offering additional services like cover for broken windscreens. Some comprehensive policies may include the provision of a rental car -- but check the small print.

Third Party Property covers damage to other people and their property -- but not damage to your own car. Third Party Property cover is cheaper than comprehensive, so if your car is not worth much, why go to the expense of full cover?

Third Party Fire and Theft adds fire damage and theft cover for your car to the benefits of a Third Party Property policy.

Compulsory third party is what you pay as part of your registration fees which covers you against any injury or medical claims if you are at fault in accident. Like it says, this is compulsory and you don't have any choice about paying it.

NO CLAIM BONUS
Your first year's claim-free motoring can earn you a discount of 30 per cent with most companies, which then rises steadily up to the usual maximum of around 60 per cent for five years of careful driving. Some companies, however, offer extra discounts for longer periods of driving without making a claim, so it's worth hunting these out if you have a good record.

Some insurance companies will recognize a claims-free record under a third party property policy so this may be a good way to build up a no-claims bonus if you can't afford a comprehensive policy.

If you have earned a healthy discount, you can protect it for a little extra each year while others offer incentives like lifetime protection of your no-claims bonus - again read the small print.

READ THE FINE PRINT
While it is important to know exactly what you are covered for it is equally important to know what you are not covered for.

Policies may sound the same but premiums vary according to whether they offer choice of repairer, free rental car, agreed value or market value, use of genuine new parts or reconditioned/secondhand/non-genuine parts, option of retaining the wreck, contents and windscreen cover and whether the car is under finance.

If, at the time of an accident, you were drunk, stoned, driving recklessly, racing or involved in a motor vehicle club event, carrying explosives or more flammable or combustible substances than would normally be used for domestic purposes, your chances of getting the insurance company to pay out are virtually nil.

It is also necessary to inform the insurance company of any modifications or accessories or minor damage as even the most simple thing like using the car for a driver education course or adding window tinting can void the policy. The best way to avoid any potential problems with insurance, is if you are unsure whether the activity will effect your coverage, phone and find out beforehand.

IT WAS WORTH MORE THAN THAT!
If you have a dispute with an insurance company, there are three tiers of formal procedures you can go through to have it resolved. The first is through the internal processes within the insurance company. If the matter can't be settled there it is referred to the independent body, Insurance Enquiries and Complaints Ltd who will allocate an officer to act for the insured.

If the matter is still not resolved it then goes before an external panel comprising eminent people including members from consumer organisations, representative from the insurance industry and maybe an expert depending on the problem who will adjudicate on the matter.

Whichever way you decide to go, it is worthwhile shopping around as with so many varied products on offer, the competition is fierce. All it takes is a bit homework, and you can make your insurance work for you rather than being beholden to the underwriter.

Article by Joe Kenwright and the Carsales Network

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