Car Insurance covers you in the event of the unfortunate occurring, guaranteeing you some financial compensation. This is why all car owners are strongly encouraged to get car insurance. When you are comparing the various types of car insurance available, consider if you’ve got alternative means of transport if your car is stolen or totaled beyond repair. It is important to also take into account if you will be able to bear the costs of repairs in the event you damage someone else’s car if you are the party at fault in a car accident. If you are confused, not to worry, read on to find out more about car insurance.
Differences Between The Types Of Car Insurance
Compulsory Third Party (CTP) insurance is the most basic type of car insurance which as its name suggests, is a must-have for every car owner. This is typically included in the amount you pay for your car registration cost. What this type of insurance covers is the cost of compensation in the event you end up killing or injuring another party as a result of a traffic accident.
Third-Party Property Insurance is a step up from CTP, but will also cover for damage done to other people’s cars. It does not cover damages to your own car if you are the party at fault in a traffic accident.
Third-Party Property, Fire, and Theft Insurance is slightly more comprehensive than the aforementioned insurance types, covering also property damage and damages to your own car due to fires or theft. This type of insurance should be considered especially if you live in an area prone to bushfires or crime.
Lastly, Comprehensive Insurance covers everything you can possibly imagine that could happen to your car, such as accidents caused by you. It also covers theft, damages by inclement weather events such as floods and fires, and even acts of vandalism such as keying or busted tires due to pranks gone wrong.
What Is The Insured Value Of The Car?
If you opt for comprehensive insurance, you typically get a choice of insuring your car for an agreed value or for the market value at the time the claim is made. This amount will be paid out should your car be totaled beyond repairs or get stolen.
As its name suggests, an agreed value is a value mutually decided and agreed upon by you and the insurance company. On the other hand, the market value is the value of your car on the open market at the time the claim is being made. Since this is likely to be lower than your actual purchase value as a result of depreciation over time, the premiums you pay for a market value policy are also going to be lower than a policy with an agreed value.
How Much Will The Insurance Cost?
Every year, you pay a sum of money to your insurer known as a premium. This amount differs from policy to policy based on the insurer’s estimates of your possibility of making a claim. What this means is that if you are deemed to be of a high-risk profile, your premium will likely be higher than someone who is of a low-risk profile. Your risk profile will be decided by the insurance provider, hence, it is important that you research which plan is more worth it for you.
An extra amount may also be payable when a claim is made. An excess (sometimes also known as a co-deductible), is the amount you pay out of pocket when a claim is made. This helps to prevent fraudulent claims or claims for items that could have been settled privately.
Factors Influencing The Costs of Insurance
No claim bonuses are one of the ways you can pay a lower premium for your insurance. A no claim bonus works by lowering your premiums when you don’t make any insurance claims for a set period of time. To find out if this is applicable to your policy, be sure to thoroughly read the fine print of your policy.
Buying direct from insurers is also another tip to cut down on the costs of your insurance. Some car dealers may offer insurance as an add-on to your car purchase. However, these often have been marked up for the convenience of not having to compare across insurers. Thus, by buying direct, you will likely save some money.
How To Get The Best Bang For Your Buck
Different use cases suit different types of insurance best. Here are some tips we have to help you figure out what type of insurance best suits you if:
your car is second-hand or is nearing the end of its lifespan, then Third Party Property insurance is probably all you.
you are heavily reliant on your car to get around but cannot afford to pay a large sum out of pocket for any possible repairs or compensation needed, then Comprehensive insurance is what you need.
you live in an area with a high incidence of vehicle theft or crime, then you should consider Third-Party Property, Fire, and Theft insurance.
Check with your insurer if discounts are available if you choose to take up other types of insurance with them such as home insurance, or if you opt to take further measures such as installing an alarm system in your car to prevent theft.
The best way to get the best bang for your buck, of course, is to shop around. Make sure to ask for quotes from at least three insurers so that you can find one that you are most comfortable with in terms of coverage and premiums payable.
A helpful tool in doing this would be to use comparison websites. They often give you a quick overview of the various policies available from various insurers. Just keep in mind that they too are businesses, and make their profit via promoting links and content, so it’s always good to cross-check what they offer you directly with the insurer.
Now that you’ve gone through all our tips, you know the lowdown on the various types of car insurance available and can make an informed decision as to what type of insurance is best for you. Be sure to stay safe on the road and get insured!