How much will car insurance cost?

Costs obviously vary according to the type of insurance but from the insurer's perspective, it really comes down to a number of factors concerning the vehicle itself and your personal circumstances.

How much is it worth?
On the vehicle front, the make, model, age, and accessories determine the value while the insurer's own claims history on that particular car, whether it is used for business or private purposes, financial liability, where it is kept and period of insurance also impact on the premium.

The value of the vehicle is usually determined as either agreed or market. You will generally pay a higher premium for an agreed value policy but if the car is stolen or written off, you know exactly how much you are covered for.

Market value is determined at the time of the loss or crash and varies according to the condition of the vehicle, the mileage and most importantly, market conditions. Its swings and roundabouts, but if the bottom drops out of the used Commodore market you suffer, but at the same time you could find yourself cashing in if there is a sudden surge in demand for late model second-hand Saabs.

History repeats
The claims history on particular cars is also an important determining factor. If your car is seen as the latest on the wish list for ram raiders or joy riders or the repair parts are known to cost an arm and a leg, then be prepared to pay a premium premium. Some cars have such a bad claims history that underwriters may not even offer to insure them or only if they are fitted with sophisticated alarm and immobiliser systems. Modified cars also present a problem for most insurers as they are deemed to be either more likely to be stolen or crashed and indicative of a high risk driver.

If you are concerned about the cost of insurance on a particular vehicle it is best to find out what you are likely to pay before you buy the car. Some companies such as the NRMA provide theft ratings on all new cars that are available to the public by simply phoning its technical advice service. It uses a system of ratings for different features that adds up to a 100 where the higher the score, the lower the risk.

While other companies may use their own claims history which may vary, the NRMA ratings provide a good general guide as to the risk of theft of your intended purchase. Desirability in the first place, however, is in the eyes of the thief. Suzuki's little Alto for example, may be one the easiest cars to steal but would anyone really want to. Either way, it is always a good idea to get some insurance quotes before you buy the car just to get an idea.

Are you worth the risk?
On a personal level, the insurer wants to know what sort of a risk you are and take into account your age, sex, driving history and insurance history in premium calculations. Your insurance history is used to calculate the all important no claim bonus.

It is essentially a discount on your annual premium that you get as a reward for being a safe driver and not making any claims. After a year with no at-fault claims you are given a Rating 5 which amounts to a 20 per-cent discount while five years claim free entitles you to a 60 per-cent discount and luminous title of Rating 1.

Once you have achieved this status, most companies will also allow you to protect it either by paying an additional premium or as a free bonus and still allow you to make one at-fault claim a year with out losing your discount. Sort of a bonus bonus but any more claims and your rating and subsequent discount starts to slip.

Age and sex also come into the premium calculations with most companies requiring that you pay an additional excess on any claim if the driver is under 25. Young male drivers are seen as more of a risk so often the excess also varies according to gender.

Shopping for insurance is not a one way street however, and while the companies will assess what sort of risk you and your car might be, you should also be sure that you are getting what you want. Don't be fooled into thinking that price is everything, as with most things, cheapest is not necessarily best. Insurance policies vary dramatically and so it is vitally important that you know what you are being covered for before you sign on the dotted line rather than trying to deal with problems when you have had a crash.

Under a comprehensive policy, the wording from most insurers usually runs something like this: your car is covered for accidental or malicious damage, theft, windscreen and glass damage and hail, storm or flood damage.

This sounds fairly basic but ensure you read the full policy as there are often limits within these factors that may not suit your needs. Some companies for instance, will revoke a no claims bonus for windscreen damage or will not cover you if someone else was driving your car.

Then there are all the extra things that may or may not be covered. Most insurers will cover you for the cost of towing a damaged car to the nearest repairer, but what happens if you are not in the metro area. Here policies vary substantially with some covering up to $1000 for emergency accommodation or travel for you and your car while others leave you to your own devices. There are also varying limits on the value of cover for personal items in the car if it is stolen, damage to a trailer and new for old replacement vehicles.

Getting your car fixed properly is important to you and once again policies vary on who is authorised to do repair work. Most insurers have their own recommended repairers but if you want to use your own you will be required to get at least two quotes and even then there is no guarantee that the insurer will allow you to use your preferred repairer.