Imagine you've just been quoted a rock-bottom price on your car insurance - good news. But now you need to find out whether the cover is right for you. To help you decide, we've taken a close look at some of the important areas where policies can vary.

New for Old
The maximum a policy will pay out when you make a claim is normally the market value of your car at the time it was damaged or stolen. New cars can lose up to 30 per cent of their value in the first year. So, if your car was stolen during this time and not recovered, or damaged beyond repair, you could end up with a lump sum that' s a lot less than the cost of an identical car.

You can avoid this potential problem by choosing a policy that offers new-for-old cover. This will replace your car with a brand new one if it's stolen or severely damaged within the first 12 months. But the level of cover varies. For example, most insurers provide a brand new replacement car if the cost of repair exceeds 50 to 60 per cent of the list price of the car at the time of the claim. But some policies (Eclipse from Summit, for example) use a figure of 70 per cent. Also, some insurers won't provide a new replacement car if you've done more than a specified number of miles. For example, the policy from The Direct Insurance Centre uses a limit of 12,000 miles, and Countrywide's Service Car policy has one of 10,000.

Courtesy Car
If you're dependent on your car, you'll want to know that you can get a courtesy car while your car is being repaired. You'll normally have to take out comprehensive cover to get a courtesy car - but don't assume that you'll definitely get one. Most of the policies we looked at provide one, but a handful don't - Direct Line's policy doesn't, and CGU Direct's Choice policy offers one only as an optional extra.

Check exactly what the insurance company means when it says it will provide a courtesy car. For example, Crowe only promises to provide one 'subject to availability' and Northern Star 'if possible'.

Foreign Travel
All policies will give you the legal minimum cover required in EU countries, but this is usually similar to our third party cover. If you want the same level of cover abroad as you do at home, you'll have to pay an extra premium with some policies. With others, your cover is automatically extended at no extra cost provided that you're travelling within the EU or any other country listed in the policy. Regardless of whether or not you get free cover, you should tell your insurer if you intend to take your car abroad.

No Claims Discount (NCD)
Most policies state that an NCD isn't a 'no blame' discount. So even if you claim for something which isn't your fault, you can still lose your NCD if your insurance company has to pay out. There are some policies, such as Royal & SunAlliance's Motor Policy and the RAC's policy, that won't penalise you for an accident which isn't your fault.