Car insurance, how much should I Pay in premium

Car insurance, how much should I Pay in premium?

The question of how much you should pay for insurance, or for the premium of an insurance policy is like one of those bad philosophical ‘unanswerable’ questions like: Does a tree falling in a forest where nobody can hear it make noise? How what is the sound of a one handed clap? Or the classic ‘How many angels can you fit on the head of a pin? In other words it is hard to say. Like many of the questions we offered as illustration many could not car less for their insurance details. They view it as a necessary evil and not worth the time to fuss over.

Of course unless you are seriously wealthy (and even then it would silly) you should not ignore the issue of insurance. But calculating how much you should pay is a surprisingly difficult question to answer. The main reason for this is that insurance is not a tangible asset or good. You can work out the price per kilogram of each brand of a certain product. You can’t always determine qualitatively the price/value relationship of a certain policy. Let me illustrate, when buying a dishwasher soap at your local store you might take various factors into consideration, 1) The price, 2) The quality of the product, how well it cleans, 3) The impact on the environment and any other number of issues you care about in the soap department.  However with car insurance it is by no means so straightforward.

The main reason for that is that insurance may not be used, covers such a large set of potential circumstances it can never be comprehensive for every situation. Insurance companies try to put a price (the premium) on the possibility of  maybe having to  cover some unknown expenses incurred to some unknown random accidents. Would you like to put pen to paper and calculate that? Let me warn you it is not difficult. Even the best cost estimators and risk assessors need to allow for huge error margins.

All of this waffle means one thing to you, you are going to have to do your own research. Calculate what you need to insure, how much it is worth and what deductibles can you afford to place on the insurance. Then get this data and send it to at least five insurance companies. It is a good idea to spread the companies you send your request to along the car insurance spectrum. Then check the prices and go for the best price/quality ration. It is hard to tell the quality of a car insurance company until you actually need their help. This uncertainty can be curbed by checking past history with other clients, searching for past cases and the report the company receives. This way you will have a good idea of the going rate and will be able to shop accordingly.

As you can see how much premium you should pay depends on who you are, what you want to insure and much it costs.