Insuring your car isn’t just essential – it’s a legal requirement. But knowing what kind of policy to buy can be a little overwhelming. After all, there’s a lot of choice out there.

Here’s my guide to the things you need to be aware before buying.

The three types of policy

Let’s start with the basics. There are three main types of policy when insuring a vehicle:

Third party. The cheapest / minimum level of cover you can buy. This only covers damage to another party or vehicle.

Third party, fire and theft. A little bit more expensive, these polices do what they say on the tin – adding cover for claims arising from fire or theft of the vehicle.

Comprehensive. The most thorough policy and the one that covers most things. So if you are at fault, then you should be able to get repairs done to the vehicle.

Comparing quotes and potential premiums

The price you pay for any insurance is based on the risk that the insurer will have to pay out. That’s not always going to feel fair, as premiums can be set based on things that are out of your control, like your age, where you live, if you’ve had an accident that’s not your fault and more.

You must be upfront about your circumstances when applying for insurance, or the firm could invalidate the policy. This is known as ‘non-disclosure’. However, the insurer must also ask you appropriate questions, so you know what you have to tell them.

There are some things that you can do to get your quote down though. For example, did you know that how you describe what you do for a living can make a big difference? Pop a few variations in to the ‘job’ section and watch that quote change!

There are other things you can do to get a better deal too. Like getting a multi car policy if you’ve got more than one vehicle. Insurers are increasingly trying to entice people to move all their insurance policies to one firm, so you might get a better deal if you combine vehicle, car, travel or other policies.

The trouble with auto renewals

Insurance companies have to contact you to tell you before your policy renews, usually between 21 and 30 days before. This is usually in the form of a letter.

However, we’re all busy, so it’s easy to miss your renewal date – so put the date in your calendar a month before renewal so you don’t miss out. In the past, insurers used to increase the premiums of loyal customers at renewal. There are lots of good deals to be had the earlier you speak to an insurer – and you can use Resolver’s new free switching services to get an idea of the deals out there.

Black box insurance (telematics)

In recent years insurers have been encouraging higher risk drivers (people under 26 for example) to consider a ‘telematics’ insurance policy. This is a device that you plug in to your vehicle or is permanently installed. This monitors your driving and if you follow the rules of the road, you’ll get a cheaper policy.

The systems use GPS and send regular updates to the insurer. However, if you’re concerned about privacy and data monitoring this may not be very appealing to you.

Add-ons, extras and assumptions

Increasingly insurers are offering add-on extra cover – often for things that used to be free. Some of these policies are useful, like legal expenses cover or no-claims discount protection. However, others, like cover for lost keys, are of questionable value. All come with limitations so read what’s covered thoroughly.

Before you commit and buy the new policy, make sure you read everything, understanding policy limits, excess fees and unusual T&Cs. You should get a key facts document with the contract which covers the basics facts that are really important. But most importantly, have a thing about what you’d expect to be covered if a problem arises and check the contract to see if you are covered.

Martyn James is a leading consumer rights campaigner, TV and radio broadcaster and journalist.

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