Many car owners insure their cars, but they may not have a complete understanding about the nature of their policy. While taking a car insurance policy, consumers have certain intentions in mind but there’s no guarantee that their cars would be protected entirely against those risks. There are a few basics of car insurance that can help consumers make the right decision.

What is car insurance?

Car insurance is an insurance policy for any type of car and its primary use is to offer financial coverage against bodily injury and/or physical damages. In many countries, a valid insurance policy is required and it can cover damages and medical costs caused by unexpected circumstances, such as accidents, theft and natural disasters like cyclones, earthquakes and floods. The insurer will bear all or most the amount and car owners don’t have to pay anything out of their pocket. Even if there’s no such requirement in your area, it is still highly advisable to get your car insured; it’s not always your neighbors or friends who get accidents. Investing on car insurance is money well spent and car owners are required to renew the policy each year.

Third party insurance

When choosing car insurance, it is a good idea to choose a policy that also cover damages caused third party. If you’re at fault, you won’t be obliged to cover repair costs and medical expenses to the afflicted individuals. Third party insurance can be purchased on top of the standard policy, which provides a complete coverage for you and others.

Comprehensive insurance

As the name explains, it covers all or most damages caused to you and other parties. Costs caused by auto accidents are not only related to physical car damages and injuries; comprehensive insurance also often covers expenses related to legal matters and sometimes funeral services. As per this policy, car owners will also be covered from losses caused by theft, natural disasters, terrorism and mishaps during transit. Some policies also cover accessories like air conditioning and sound system.

Determining the type of coverage you need

When choosing for a type of coverage, you should consider whether you have the ability to opt for something higher and whether certain types of risk are worth protecting. If you currently only have a minimum coverage as required by the law, calculate whether you’ll get long-term benefits from purchasing more complete coverage. Additional types of coverage that you can add to your regular policy usually include the following:

• Under insured/uninsured coverage: If your car is hit by other vehicles, insurers pay for damages that you suffer.
• Personal injury protection: If your current policy only cover physical car damages, it is highly advisable to get covered from personal injuries. In many cases, medical expenses can be higher than costs needed to repair the car.
• Car accessories: It covers all unessential features and additions to your cars, such as air conditioning and music system.

Cars, except for some rare models, always go down in value and consequently, the premium will also go down progressively. It means if you opted for long-term coverage, the rates can go down over time.