When you buy optional insurance (See Do I need more coverage?), you have to pay premiums for it, too.
These premiums are set according to the risk involved, as it relates to the coverage you're getting.
For example, Collision coverage generally costs more for a car that is expensive to repair than it does for a car that is cheaper to repair. This is just one of many things that influence the potential risk for each type of vehicle.
You might want to increase your Third Party Liability to $1 million, or you might feel you need to be covered for $2 million or more. Obviously the premium will be higher for a higher coverage.
When you buy Collision or Comprehensive insurance, you must choose a deductible [click for definition]. This is the amount of money you have to pay on your own towards repairs to your vehicle if you have a claim, before the insurance kicks in to pay for the rest of it.
Your premium will be lower if you choose a $1,000 deductible compared to a $300 deductible. However, you have to consider whether or not you will be able to pay $1,000 towards repairs if you have a claim.
Depending on your claims history, however, you may not be able to buy collision or comprehensive with a low deductible.
Choosing a deductible is a trade-off between what you're willing to pay now and what you'd be able to pay if you had a claim. Base your decision on your own resources.
