We asked Clare Seal, financial coach and author to take over our blog to share the things you should know before you take out car insurance.

Sorting out your car insurance is one of those life admin tasks that can feel tedious and frustrating. We know it's tempting to speed through or choose the cheapest option without diving into the details. But it’s really important to make sure that you have the right cover to suit your circumstances. This way you can have peace of mind that there’s no risk that your cover will be invalid or won’t be sufficient. Here are a few things everyone should know before taking out car insurance:

There’s a minimum amount of cover required by law – but you probably need better cover than that

The minimum level of cover required for you to drive legally is third party. This means that your insurance will cover the other driver’s costs if you get into an accident that is your fault. But it would leave you and your car unprotected. If you need your car, especially if you rely on it to get to work or to care for someone, you’ll need to consider a higher level of cover. Third party, fire and theft is the next level of cover and protects you against costs incurred if your car is stolen or there is a fire. Most people’s preferred level of cover is fully comprehensive. Fully comprehensive means that both your car and the other vehicle(s) in any accident are covered.

It’s important to understand your excess

When you arrange your cover, there will be an ‘excess’ – the amount that you’ll need to pay upfront if and when you claim. You’ll have to pay an excess no matter who’s at fault in the accident. It’s usually made up of a compulsory amount and a voluntary amount. Your insurer decides the compulsory element of your excess. It will depend on many factors, such as your car, age and driving history. Your compulsory excess may be higher if you’ve chosen to protect your no-claims bonus. You decide the voluntary element of your excess at the time when you take out your policy. Choosing a higher voluntary excess will usually result in a lower premium.

It’s really important to make sure you can afford your total excess (compulsory plus voluntary). Accepting a higher excess to reduce your premium may be tempting, but it could put you in a tricky position if you need to make a claim.

Read real experiences from real customers

When considering what provider is best for you, it’s important to read reviews. Use a financial services review site like Smart Money People to read good and bad car insurance reviews.Reviews can reveal if there are problems with how claims are handled, customer support, or any insurance cover disputes. Looking at what other customers say can help you decide if a car insurance company is right for your circumstances.

Paying monthly is more expensive but can spread the cost

You can pay for your car insurance either annually or monthly, and there’s no ‘right’ way to do it. However, paying annually is usually cheaper overall. If you’d prefer to do it this way, you might consider saving a pot of money for this specific purpose. This way you can afford to pay for your cover all in one go.

Otherwise, paying monthly might suit you. But it’s important to be aware that this does involve a credit check. This means that missed payments could harm your credit score.

Choose your add-ons carefully

On top of your basic cover, most insurers will offer – or even encourage you to take out – additional features. This could include breakdown cover, legal cover, courtesy car cover and personal injury cover. When deciding which extras are worth it, take a moment to compare the costs with obtaining those coverages separately. It’s also worth checking whether any additional feature is a benefit of any other product you might already have. For example, some bank accounts come with free breakdown cover, or you may have a family package that works out cheaper overall.

You can protect your no-claims bonus

If you don’t claim on your insurance, your insurer may offer you a discount on next year’s policy as a ‘reward’. This may increase with the number of years of no claims that you have. Often, when you insure your car, you’ll be asked whether you have any no claims bonus to use. It’s always good to be aware of whether this is a feature of your cover and, if so, how many years you’ve built up. If you’re in an accident that you can prove wasn’t your fault, you won’t usually lose your no claims bonus. Some small repairs, like cracks in your windshield, may be exempt from affecting your no claims status too.

Some insurers allow you to protect your no claims bonus, which acts a little like insurance on top of your insurance. You pay an extra fee to ‘protect’ your no claims discount, even if you do make one or more claims during your cover period. It’s important to note that you might still end up paying more for your insurance. Any claims you’ve made will still be factored into your driving history when you renew or take out a new policy.

Comparison sites don’t cover every provider

Many people use comparison sites to compare prices for items such as car insurance. These platforms often show the cheapest available cover. However, some insurers aren't listed on these sites. Checking directly with these insurers could provide a more comprehensive view of the available options.

Don’t let your cover auto-renew

It’s always a good idea to put a note in your calendar when your car insurance is due to expire. That way, you can look at some new quotes. Auto-renewing is often the most expensive option. You may get a much better deal by shopping around.

Some policies are online-only

Cheaper policies are sometimes online-only, which means that you may have to pay extra to conduct any admin over the phone. If you’re someone who values customer service or likes to talk things through, this might be something to consider. Whereas if you’re comfortable doing everything online, these types of policies might be perfect for you.

We hope you find these tips useful. For more tips on managing your money, head over to Clare’s website or find her on Instagram or Twitter.

Have you recently taken out a car insurance policy? Help others find the best provider for their needs by leaving a car insurance review on Smart Money People. Leaving a car insurance review to help us improve trust and transparency in financial services.