Understanding Your Motor Insurance
Car insurance (more generally known as motor insurance) is a legal necessity if you wish to own a car. The law is simple: if you drive a car, it must be insured. Clearly, however, there are a vast number of different types of insurance, each with their own quote to match. As a result, it is important to have a good grasp of the basics of car and motor insurance in order to make sure that you are getting the right deal.
Third Party and ComprehensiveIn the first instance, it is important to understand the distinctions between the various types of insurance. The most basic of these types is Third Party cover. This is the absolute minimum cover that is offered by insurers, as it is the minimum allowed by law. As suggested by the name, Third Party cover will insure the policy holder against the cost of damage caused to another individual’s vehicle, or of compensation paid to another driver or pedestrian. It does not in any way cover the cost of any damage to the policy holder’s own car, unless they have chosen to add Fire and Theft cover.
The alternative to Third Party cover is a comprehensive policy. While Third Party policies cover only damage sustained by the other individual involved, comprehensive policies will pay out to cover damage to the policy holder’s vehicle and personal injury compensation, as well as all of the elements that would be covered by a Third Party policy.
There are circumstances in which a comprehensive policy is a necessity. If, for example, you have bought a car through a credit agreement, the likelihood is that you would have to continue to make payments to your lender even if the car was written of or damaged. As such, it is important that you protect yourself against the possibility of making future payments against a non-existent car. There are other instances, however, in which taking out a comprehensive policy is simply pointless, even if you can afford it. It is perfectly possible, for example, for your annual premium to exceed the value of the car. If this is the case, then comprehensive insurance is almost certainly not for you.