The renewal letter for your car insurance is one of the worst things that can land in your letterbox. Even worse is if you’re taking it out for the first time.

There are so many different companies, so many variables to choose from and lots of options that will affect the price – before you’ve even thought about that irritating Go Compare idiot.

So here’s a guide to buying car insurance, what all of the terminology means and what you need to look out for before taking out a policy:

Types of car insurance

• Third party only – This covers any damage that you may cause to another vehicle if you’re at fault in an accident, but it won’t cover the damage on your own car.

• Third party fire and theft – This is the same as the above, except you’ll also be covered if someone steals your car or it’s damaged by fire.

• Comprehensive – This offers all of the above, but crucially offers protection against damage to your own car as well.

It’s sensible to assume that third party only will be the cheapest – that isn’t always the case.

Some companies will actually charge you more as they assume that if you’re taking out the cheapest insurance, you’re likely to be a riskier driver.

Factors affecting cost of car insurance

There are many factors that affect the cost of car insurance. The main ones are:

• The type of car

• Where it’s kept – for example: on a road, in a garage

• Where you live

• Previous driving convictions

• The age of the driver(s)

Car insurance extras

No claims bonus – These build up every year that you go without making a claim. The more years of no claims bonus you have, the cheaper your premium is likely to be.

Excess – This is the amount you’ll have to pay with a claim. You can usually increase the voluntary excess, which may lower your premium.

There are other extras such as courtesy cars or breakdown cover – these are likely to increase the cost of your car insurance.

Making a claim

You should inform the insurance company as quickly as you can. Make sure that you write down as many details as soon as possible – it’ll be easier to do so while your mind is still clear.

You’ll need the details of any other parties involved in the accident and witnesses, if there are any.