What is car insurance ?
A car insurance policy will normally cover at least one and possibly all of the following : third party liability financial indemnity, fire and theft, damage to your own vehicle, personal accident insurance cover, personal effects, windscreen damage cover, legal costs protection, medical expenses, defined territorial limits, guaranteed asset protection, hire/rental car, breakdown recovery service and uninsured loss recovery
Car Insurance – third party liability indemnity
This is the cornerstone of all car insurance policies, and is normally mandatory for car drivers.
That means it is virtually always a legal requirement for drivers to have some form of third party cover. In the event of the driver causing damage to someone else or their property, the insurance policy should cover the insured driver up to a certain specified limit for financial damages.
A couple of things to watch out for. Sometimes there is a legal minimum financial amount the driver needs to be insured for. It is virtually always a good idea to increase this amount considerably.
Also personal injury claims can often take several years to finalize. For this reason you want to make sure your insurance company is likely to be around for that length of time.
If your insurance company goes bust or refuses to pay your claim, you are still liable if found against. The insurance company is there to reimburse you, not as primary defendant, in that sense.
Car Insurance – policy coverage
Apart from third party coverage, most car insurance policies will include fire and theft, along with third party as a one standard package.
The other standard package that is normally offered is known as fully comprehensive, and this will normally mean that your own car/auto is covered as well.
The extent of the cover, including the value of the car, can vary quite considerably. If the car is damaged and needs repairing, sometimes the insurer will insist on their own garage or repair shop doing the repairs.
This can contain costs and facilitate payment, but does deprive the car owner of choice as to where to go to get repairs done. If the car is what is known as a write off, then the insurer will pay the insured what they consider the market value of the car at the time.
This will virtually always be less than the insured thinks it is worth. It is sometimes possible to agree a specific amount with the insurer, as to what the car/vehicle is worth.
If this is going to be done, it needs to be done when the policy is taken out. This arrangement will probably cost the insured an additional premium, and is normally done with relation to high end value cars, or classic/vintage cars.
Car Insurance – policy extras
Motor policy extensions are sometimes referred to as extras. They are important area of policy that can have a big impact on your cover if you need to make a claim.
They can include such things as breakdown cover being available in the event of an accident or not. Sometimes this is restricted to certain conditions, so worth checking.
There will sometimes be different levels of legal coverage available. These can range from a free legal telephone helpline covering virtually any issue through to covering legal costs from trying to recover uninsured losses.
Some form of personal accident cover is often included.
This will be contain certain financial amounts of money payable to you in the event of an accident causing you to lose loss of one or more specified limbs, or loss of sight, or being temporarily partially or permanently disabled as a result of the accident. Car Insurance – policy excess/deductible
Virtually every motor policy will have an excess, although it will also sometimes be referred to as a deductible.
The excess is the amount that the insured person will agree to retain themselves, in the event of a claim. This is normally a fairly nominal amount, but it is standard to have an excess on policies.
Where it really matters, is that if you agree to have quite a high excess, it can quite dramatically lower the cost of you annual insurance premium. It is one of those factors that insurers like to take into account, when working out how much to charge you. It means they don’t have to deal with a lot of minor claims, and makes a lot of economic sense, so is something they encourage.
Car Insurance – territorial limits
Every car insurance policy will specify certain things like who is insured to drive it, where there main residence is and really importantly,what the territorial limits are.
This obviously depends on where you live, but there will be restrictions. It is crucial to know what they are, as any breach of them will pretty much render the insurance invalid. The insurance company will normally be happy to extend cover, but you have to check with them first. They will probably charge an additional premium.