Serena Cowdy examines some of the potential pitfalls of car insurance -- and how you can avoid them.
This article was originally sent to readers as a standalone email in our 'Good, Bad and the Ugly' series.
The May Day bank holiday is fast approaching, and millions of us will be taking to the road to make the most of our precious three days off.
Unfortunately, the combination of more people, more cars and more mileage also means more accidents and breakdowns. So before you zoom off, it's particularly important to check you have the cover that suits your needs.
If you're taking out car insurance for the first time -- or if you're looking to renew an existing policy -- here are three things you should know.
Don't Give Too Much Away
In The Easiest Car Insurance Trick, Cliff D'Arcy recently looked at why you should always shop around when the time comes to renew your cover.
But you also need to be careful when you're putting together a selection of quotes. If an insurer asks you what quotes you've already had, you're under no obligation to tell them.
If you do, there's a good chance you'll lose out. This is because they probably won't offer you the best possible price -- only a price that very slightly undercuts the quote you've mentioned. So don't reveal more than you need to!
Monthly Payment Misery
Many insurers will give you the option of paying for your policy in monthly instalments, rather than as an initial lump sum.
This could be music to your ears if you're on a tight budget -- but watch out. Insurance companies often charge huge amounts of interest for these staggered payment arrangements -- with APRs of up to 30%.
You could therefore be charged hundreds of pounds extra, so avoid this scenario if you possibly can. If you can't provide the cash up front, a cheaper option is to take out a 0% new purchases credit card.
You can use it to pay the insurance company straight away, and then pay off the balance gradually. Just make sure it's cleared before the interest-free period comes to an end!
Sky-High Fees
When you do decide on a new policy, make sure you know exactly what you'll be charged if you decide to alter or cancel it early.
That way, you should be able to avoid any nasty surprises -- many companies charge cancellation fees of £50 or even more.
It's also worth checking to see what other fees apply. A friend of mine was livid after being charged both a 'cancellation fee' and an 'early termination fee' when she pulled out of a policy early. So be on your guard!
Finally, it's a good idea to check whether an insurer will allow you to temporarily suspend your policy (if your car is going to be off the road for a while, for example). This may well prove cheaper than cancelling the whole thing and starting again.
Visit The Motley Fool Car Insurance Service to help find the best deal for you.