Importance of Car Insurance

by | Nov 9, 2011 | Automotive

Automobiles are considered as one of the most expansive objects we use in our daily life. With the number of road accidents on the rise, it has become very important for every car owner to have some kind of car insurance or auto/motor insurance to get compensation or protection against damage, theft or losses incurred during accidents and against legal responsibility that could be incurred in an accident. On purchase of a car insurance policy, the policy holder gets a sum of money by the insurer in the event of an accident. Auto Insurance provides accident cover not only for individual owners of the vehicle while driving but also for co- passengers and third party legal liability.

However, shopping for car insurance can become an intimidating task as prior to purchasing any auto insurance, a number of things need to by considered. These could include the type of car you own, your driving experience and the amount of money you are willing to spend on the auto insurance. Understanding the various types of auto insurance gives a clearer picture on the types of car insurance policy to choose that can take care of all your car needs in the event of an accident.

There are three main types of auto insurance policy. These include, Fully Comprehensive Auto Insurance which is one of the most common and most expensive type of auto insurance as it provides insurance cover for all the possible damages to your car by flood, fire, or animals. It also insures your car in case it is stolen and allows you to get fully comprehensive insurance claim against the insurance company.

Third party insurance is one of the cheapest types of auto insurance cover that only covers for damages caused by your car to life or property of a third party. In other words, the insurance policy pays your bills if your vehicle damages someone else’s property. In this case, the company that underwrites the third party car insurance policy is the second party, while you are the first party.

Another type of auto insurance is Third Party Fire and Theft, also known as Non-Comprehensive Insurance offers the same cover as third party along with a few extra benefits like providing cover against damage to your vehicle by fire or theft of your vehicle.

However, it is important for consumers to be aware of the different policies available with the many different insurance companies before proceeding with the procurement of any insurance policy. There are a variety of policies that cover different kinds of accidental damage, but it is likely that these will vary between providers. Hence it is best to visit insurance companies’ websites before deciding upon which one to buy. It is also a good idea to check the small-print before signing any contracts.

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