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WittySparks / Autos & Vehicles / Car Insurance Policies for Beginners
Car insurance policies

Car Insurance Policies for Beginners

Autos & Vehicles November 19, 2019 by Nishitha

The moment you earn your driver’s license, you start dreaming of owning a vehicle. Then, when that dream turns into reality, you notice that this machine drags more responsibilities with it than you imagined.

Gas money, winter/summer tires, and registration are the more straightforward obligations of a car owner. Car insurance policies, however, come in a variety of packages. Signing the first offer, a company places on your desk can create a black hole in your wallet. Here are a couple of tips to choose the right car insurance for your needs.

On this page

  • The Law
  • Types of Car Insurance Policies
  • The Costs
  • Telematic or Black Box Policies 
  • Insurance Extras
  • Policy Excess
  • Drive Safely 

The Law

A car insurance policy is mandatory by law, nearly the world over. The only vehicles without one are those explicitly declared and registered as off of the road. This is called a Statutory Off Road Notice (SORN) and is issued by the Driver and Vehicle Licensing Agency.

Types of Car Insurance Policies

If you take away the makeup of different company brands, there are three types of car insurance. These are Third Party; Third Party, Fire, and Theft, and Fully Comprehensive.

Third-party

This type of insurance policy is the legal minimum. Third-party covers damage to pedestrians, other cars, and objects on the road. Fixing and paying costs on the vehicle is your responsibility.

Third-party, Fire, and Theft

The second entry on our list is a slight upgrade to the previous one. Next to covering for the damages your car made on the road, this policy aids you with damages caused by theft and fires. 

Fully Comprehensive

Fully comprehensive policies, as the name suggests, cover all possible damages related to your car; on it and caused by it.

The Costs

Following simple logic, one might assume that fully comprehensive policies are the most expensive ones and third-party ones the cheapest. However, things are seldom that simple in real life.

Insurance agents noticed an interesting pattern when analyzing some drivers. Namely, some high-risk drivers always choose third party policies in attempts to reduce their premium costs. For that reason, more and more insurance companies raise the prices of third party insurance.

Telematic or Black Box Policies 

Insurance companies traded with the three aforementioned packages since the dawn of the industry. In the past couple of years, due to the rapid development of technology, a new option entered the marked: Telematic or Black Box policies.

If you opt for a telematics car insurance, you allow the company to monitor your driving via a satellite. They will use the received data to adjust your premium costs.

Car or Auto Insurance Coverage
Auto Insurance Discounts you need to keep an eye on.

Insurance Extras

Next to the base package, every company offers extra services. These include legal expenses, covers for personal belongings, and injuries, amongst others.

Extras on policies increase the premium fee. All of them are optional, however, every client should wage if it pays off to add anything on the base insurance they think they may need.

Policy Excess

Insurance companies would go out of business if every client made claims for every scratch and bump. In order to prevent disputes, you must determine an excess for your policy.

An excess is a part of the claim that the client pays. If the amount is $300, for example, and the total damage on the car $1300, you would receive $1000. The package determines a part of this sum, but clients can pay an additional, voluntary amount.

Drive Safely 

Car ownership is a big responsibility. The most confusing task is choosing the right car insurance policy. These three traditional types of car insurance policies are an excellent basis to get you covered and behind the wheel.

A new trend amongst companies is Telematics insurance. All extras are optional, while the excess is mandatory and determined before signing the contract.

Featured image source: Freepik

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Related Topics

  • All You Need To Know About Car Insurance
  • Five Tips for Protecting Your Vehicle and the Things Inside It
  • Does Your State Require No-Fault Car Insurance? 6 Things You Need To Know
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About Nishitha

Co-founder of WittySparks
WittySparks Staff

I am done with my Physiotherapy Graduation. And I always try to share Health and technology tips with people. Apart from Physiotherapy and being a tech savvy, I do explore more on Technology side and I keep sharing my findings with wider audience.

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Comments

  1. Profile picture for Levi ArmstrongLevi Armstrong says

    January 28, 2022 at 7:24 pm

    I find it helpful to know that fully comprehensive car insurance will cover all possible damage related to your car or caused by it. Melissa, my roommate, plans on buying her first car soon. She would need to get car insurance for her new ride, so I’ll share this article with her. Thanks.

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