Top 3 things to know before you buy car insurance
You’ve just bought that car and ready to hit the road. As much as you want to take it for a spin right away, it’s worthwhile considering buying car insurance. As careful a driver as you might be, it is possible that you still end up damaging your car, from no fault of your own. It may be due to another careless driver or worse still, as a result of falling victim to theft or accidental fire. Accidents happen. If you are involved in a minor car crash, here’s what you should do.
Thankfully, it’s super simple to compare and shop around for the best deals on car insurance. You can literally have your car insurance sorted right from the comfort of your lounge. But, there are 3 things you need to know before you make that decision to buy.
What do you want to get insured?
There are mainly three types of car insurances you can buy. These are Comprehensive, Third party only, Third party and Fire & Theft.
A Third Party Only car insurance has limited benefits. in this instance, only the third parties’ costs to repair damages to their vehicle or property will be covered by your policy.
A Third Party, Fire & Theft policy on the other hand covers all three scenarios. But note that any damage to your own vehicle other than theft and fire are not covered. This means you will foot the bill for fixing damages to your own vehicle or property.
The Comprehensive policy is all encompassing, in that it covers the cost of repair to your own vehicle as well. That is over and above the bill to fix damages to other’s property or vehicle.
How much do you want to insure?
The second item you need to consider when buying car insurance is the maximum amount you want to be able to claim. There are two options. You can either base this on the Market Value of the vehicle or an Agreed Value.
Under the Market Value type policy, an assessment of the value of your car just prior to the incident will be made. You will then be compensated up to that amount. Under the Agree Value type policy, you can agree with the insurance company a pre-determined fixed dollar amount of cover. Should you then make a claim you will be paid that amount.
Remember, the premium you pay on your policy will be determined by the level of claim you are seeking. You will need to decide which of the above is important to your circumstances.
How much “Excess” are you happy to pay?
Most insurance policies come with a term that stipulates an amount called ‘excess’. This is the amount that you would have to pay in case of a claim. This can be anywhere from Nil to thousands. For instance, say the repair costs come to $3000. You have chosen an excess of $250. In this instance, you will pay the first $250 and the insurance company will pay the remaining $2,750.
This is an amount you can negotiate with your insurance company. Obviously, your premium payments will go up as you reduce the ‘excess’ amount, and vice versa.
Now that you have done your homework, it’s time to shop around for the best deals on car insurance. Remember, before you commit to any of the offers, ensure you read the small print!
