Are you a new car owner looking into vehicle insurance for the first time? Then surely you would have wondered why different cars cost different amounts for vehicle insurance premiums. There is a definite difference in the insurance amounts for brand new cars and second-hand cars which honestly confuses you. It is important to learn about car insurance and review it before you buy your first plan.

These insurances differ for three reasons-

Theft Protection
The cost incurred by a new and high-end car is much more than that for an older model second-hand car. This is simply because of the value difference between the old and new car. Even cars of the same brand have different rates depending upon its novelty. The insurance premiums also vary for the same reason. It costs more to replace a costlier car than a less expensive one, and hence the change in the insurance amount.

Type of car
The type of car you own affects the vehicle insurance premium your company will charge you. Insurance brokers use actuarial statistics to determine the premium and the claim amount to be paid in case of a damage. The statistics show that certain types of cars like sports cars are at more risk of getting damaged due to the driving behaviors exhibited by their owners. Hence sports cars and other utility vehicles are charged more premium when compared to the average type of cars.

Repair cost
The average repair cost for a new car is more than that of an old car even if the old car has more chances of needing a repair. If your new car ever happens to get in an accident, it is going to cost you more to get it repaired than a second-hand car of the same model. Hence the difference in the premium amount you are made to pay.

Car companies mainly offer two types of insurances. Total Loss Only provide risk coverage to a severely damaged vehicle. The extent of damage must exceed 75 percent for you claim a TLO insurance. TLO also provides coverage in case of a car theft. However, there are requirements by the insurance company, that should be met to make the claim. If the damage occurred while violating traffic regulations, or it was damaged in a natural disaster, then you cannot claim your insurance. Further, if the vehicle got damaged in a riot or a fight of sorts, you are still not allowed to make a TLO claim. The second type of insurance is the All risk insurance, which covers all type of damages to your vehicle except the ones that are specifically mentioned.

If your car is insured using an All risk Insurance and you later expand its coverage, it is termed as comprehensive insurance. In this case, comprehensive insurance is a combination of All risk insurance with one or more coverages for damages that can possibly occur to your vehicle. When compared to TLO and All risk Insurance, this gives complete protection to your vehicle and hence will have a higher premium rate than others.

All though you feel that some insurances better than the other in terms of damage coverage and premium rates, it all comes down to the type of protection your car will need. This depends on your place of residence and your usage of the car. As long as undesirable events have a chance to occur, it is advised that you insure your car on a safe side. Talk to your insurance company in Dubai to get the right quote for your car and make your ride safe.