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.
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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 an attempt 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 market: Telematic or Black Box policies.
If you opt for 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.
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.
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