Young or old, experienced driver or inexperienced driver, you should always go into buying insurance armed with questions and with your eyes wide open.

To help, I have compiled some of the most important things to ask about and given some idea of the things to consider.

Q: How can you be sure you are getting your money’s worth for the premium you are paying?

A: The first thing to think of is how much of your money is at risk, how much is your car or bike worth and can you afford to lose all of it if something happened. The next thing is to think of is, how likely is it that something could happen? Ask yourself questions such as how good a driver am I, how good a driver is everyone else on the road, what is the chance I will have an accident, how likely is it that it will be my fault? How likely is it the bike I own will be stolen, some are more attractive to thieves than others.

Finally does my policy cover everything that I want it to, will the insurance pay out in the event something happens?

Q: What is behind the price? Are there any hidden costs to watch out for?

A: The price depends on the risk. Young inexperienced riders/drivers pay more for their insurance because they have less experience and statistically have more accidents, so they pay more than someone who has many years of experience and is a proven, safe driver. The price also depends on the value of the vehicle being insured, so that an expensive car will cost more to insure than a cheaper car because it costs more to replace if something happens.

The price also depends on the type of cover, although third party insurance cover is required by law, which covers your legal liability to pay someone else for their damages or injuries if they have an accident that you are responsible for, you don’t have to insure your own property.

A multi-millionaire may be able to buy a new bike if their bike is damaged in an accident, but a bike to most 16-year-olds represents their biggest asset so there is an awful lot to lose, therefore the decision to insure the vehicle is very much a personal one.

Q: What are the deductibles and how do you find out exactly what an insurance claim will cover?

A: You pay nothing if you claim against someone else as you will be classed as the third party on their own claim.

A deductible is the amount that you pay in the event you have to make an insurance claim against your own policy. The amount varies with the age of the rider as younger, more inexperienced riders pay more than a mature motorist who may pay as little as $200 for a car accident.

The deductible also varies with the type of vehicle and for the type of claim, such as an accident or a theft whereas a windscreen replacement is often deductible free. You should receive a booklet when you take out an insurance policy that explains everything the policy covers. Make sure you read it!

Q: What questions should a person ask their insurer to make sure they are getting the best deal?

A: It is important when shopping for anything that the first decision is to decide exactly what it is you want. Once that decision has been made, check the policy provides that level of cover.

The policy may provide additional benefits that you had not thought about before, but are very useful to have and once you have them you may not want to do without. For example is an overseas contingent damage waiver included for free and how much would it cost you to buy one for a hire car yourself?

Then check the price, is it worth paying the price for the cover you have, what are the alternatives. Weigh up the alternative covers and the costs of each.

Finally check the deductible, as that is something you will have to pay at the claim stage, having to claim can be stressful but having to find a lot more money at that time can make the situation more so.

Jennifer Murdoch is the general manager of Colonial Insurance Co Ltd.