Car insurance is a legal requirement, that will – depending on the policy you choose – cover you and your vehicle, and the damage that may be caused to other drivers and their vehicles. When you purchase a new car, you will probably do some research on the right insurance, and you will get a quote based on different things, such as how many miles you drive, the type of car you own, your driving records, and if you will be the one that will drive the car. Depending on the insurance company you choose, you can also add other drivers who are often referred to as “named drivers”, hence if you share your car with a family member, best friend, or sibling, they will be covered as well. Let’s take a look at the different insurance policies:
Different types of Car Insurance
As previously mentioned, there are different types of insurance, all of which have different prices and policies:
- Third Party – this is the lowest coverage that you can get. It will cover the damage you or any other passengers may have caused to other drivers and their vehicles, however, if your car gets damaged, you will have to pay the repair by yourself.
- Third Party, fire and theft – this type covers everything mentioned above, however, if your car gets stolen or catches fire, it will be covered for that as well.
- Comprehensive car insurance – this insurance will cover your passengers, and the damage done to someone’s car in an accident. As the name states, this is the most “comprehensive” cover, but sometimes it might not include “Personal Accident” in order to cover injury or death. Some policies might cover you to drive other people’s cars in the case of an emergency.
What are you paying for
Premium is the amount you will need to pay to get insured. The price will depend on the factors mentioned in the first part of the article and some of the factors might include your experience and driving history.
Excess is the amount you will need to pay every time you make a report claim. The value is usually determined at the start of the policy and the excess is often a combination of the compulsory amount, meaning that it is set and cannot be changed. For example, if you claim is worth $1000 and your excess is $200, the insurance company will only pay a maximum amount of $800. Hence, if you can afford a bigger excess, your insurance might be cheaper.
According to the experts from rabbitfinance.com car-insurance, this is a discount offered by some insurers if you want to stay claim-free for a specific amount of time. At the time of renewal, if you did not make a claim, a discount would be implemented at the overall price.
The players in Car Insurance
There are three important players that you should know about, the underwriters, brokers, and aggregators.
- Underwriters – they will basically decide if you will get insurance or not. They will evaluate the risk and exposure of possible clients, decide how much coverage you will get, and how much it should be paid for.
- Brokers – are independent middlemen, specialists in their field, who will negotiate with the insurance company in order to find the best products or service for the buyer. They are ethically bound to get the best deals, so you will not have to browse various websites to get the best price possible.
- Aggregators – they usually compare different policies and suggest the one that will fit you best. They will take your information and crosscheck it with different car insurance companies that will fit your needs, and it will immediately get you multiple quotes.
You will need to make sure that you choose a car insurance policy (and company) that will fit your needs and lifestyle. Remember, car insurance is important, hence it is best if you get one as soon as possible, to protect you, your passengers, your vehicle, and other people as well.