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Understanding different types of car insurance

How can you be sure that you have the right kind of car insurance for your budget and your needs? A good start is to know the difference between the various types of insurance. Let’s take a look:

Comprehensive insurance

Comprehensive car insurance is the most common type of insurance policy for new vehicle owners. This kind of policy covers a wide range of risks that you and your vehicle might be exposed to. But what exactly are you covered for, and do you really need it?

  • Comprehensive car insurance covers your vehicle in the event of accidental damage, theft, hijacking, third party damage and everything in between.
  • If your car is financed by a bank, it’s essential that you have comprehensive insurance to protect yourself and the bank’s interest in your vehicle.
  • Another added bonus is that comprehensive cover includes certain natural risks. Which is helpful when the hail storms hit and cause major damage!
  • Comprehensive cover comes with a higher price tag because of all of the risks covered by this type of insurance.

Third party, fire and theft

The official term for this kind of cover is limited liability, but we know it as third party, fire and theft cover. The biggest difference between this cover and comprehensive cover is summed up in the name, it only offers third-party, fire and theft insurance. This means that the accidental damage to your vehicle won’t be covered by this insurance policy. But what else should you know?

  • Third party, fire and theft cover is ideal for vehicle owners who no longer owe any money on the car.
  • Although the damage to your vehicle isn’t covered, third party damages are. This includes property damages to third parties involved in the same accident (in case you are responsible for causing it).
  • You will also be covered if your car is stolen, if there is a theft attempt or if you involved in a hijacking.
  • The same cover extends to damages to your vehicle caused by fire or explosions.

Third party, total loss

Typically this cover will be taken out by someone who wants to only be covered if their car is stolen, hijacked or written off. Minor accidents and damage will be self-funded. Damage to third parties and properties are also fully covered under this policy.

So, the next time you’re hunting for insurance quotes, you can go in knowing a little bit more about vehicle insurance than before.

 

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