In order to find the right car insurance, you need to work out what kind of
insurance would suit you best.
Most car insurance providers will offer you various types of packages that
contain different levels of cover. Here we'll have a look at these different
products, so that you can get an idea of what they consist of and their relative
appropriateness for you.
There are three basic types of insurance policy packages that are most often
offered by most insurers. These are:
- Comprehensive car insurance
- Third party, fire and theft
- Third party only
There are also specialised types of car insurance, such as that for off-road
vehicles, which includes certain types of cover requirements that are specific
to that type of vehicle.
Third party only
The lowest level of cover you can take out is third party insurance. This
type of cover protects you from the financial implications of liability for
damage that you do to other persons from driving your vehicle. Typically this
includes damage caused in an accident, and death or injury caused to others. It
also covers damage to someone else's property, and injury to passengers in your
car.
Note that the option of taking third party only insurance is only available
to you if you have already paid off your car. If your car is still subject to a
financing agreement, you have to take out wider cover - this is a condition of
the financing agreement.
When is it suitable?
This isn't an ideal option to take, as your own car itself is not covered at
all. Consider this only if your budget is severely limited or if your car
doesn't have much value - an old second-hand one, for example. If the cost of
repairing your car after an accident is likely to be more than the value of the
car, or where its replacement value is very low, then also consider this option.
Third party, fire and theft
The next level of cover is a policy that covers the same third party claims
as above, plus damage caused by fire, as well as theft. Typically the actual
cover is a little wider than this - it will often also cover you against
lightning damage and explosions, as well as hijacking (which of course is a
common form of theft).
While this sort of cover is much better, its vulnerability is that you are
not covered for repairs that are required after an accident - and this of course
can be very expensive. Of course it does make a difference who is at fault - if
it was the other party, then their insurance will pay from their third party
cover. However if it is your fault, your third party cover will pay for the
repairs to the other person's car, and you will have to foot your own bill.
When is it suitable?
Once again, you cannot take out this form of insurance if your car is still
subject to a financial agreement. As before, if your car's replacement value is
really low, then you might consider this option. Premiums are also cheaper than
comprehensive insurance, so if you can't afford that, then this is an option
that will at least provide more cover than simply taking out third party
insurance. If you don't drive your car much, then it might also not be a bad
option to consider.
Comprehensive car insurance
This is really the only option worth going for if you're a regular driver of
a decent car, or if your car is subject to a hire purchase agreement or some
other form of financial agreement.
This covers everything, as the name implies - theft and hijacking, accidental
damage, death or injury to third parties, damage to the property of a third
party, injury to a passenger, and various car accessories. It also often covers
your medical expenses, and will usually come with plenty of value-added
services, like roadside assistance, legal assistance, towing and car hire.
This is where you need to shop around the most, to see what extra value
services are offered by the various insurers, who offers the best premiums, who
offers the lowest excess, and what no-claims bonuses are offered. A newish trend
amongst insurance providers is to offer lower car premiums if you take out
household insurance at the same time, so keep a look out for this, and make
inquiries about it when you're shopping around.
One area where you need to be careful, and check your policy carefully, is
the cover of accessories. For example, with some policies, sound equipment in
the car is automatically included - with other policies you have to actually
specify this over and above the basic cover. This won't necessarily add anything
to your premium, but the insurer wants to know that you have this in your car
and that the premium must cover it in advance.
Our reviews of the various packages from the different insurance companies
can help you find out this type of information when it comes to choosing the
right insurance provider.
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