Third Party or Comprehensive? What Does Your Car Need?

Third Party or Comprehensive? What Does Your Car Need?

You need to have auto insurance. Firstly, it’s illegal to drive without it. Secondly, it provides invaluable protection if you’re hit by someone who doesn’t have auto insurance, or your car is damaged in another way. There are quite a few options when it comes to car insurance. The two main choices are third-party and comprehensive insurance coverage. But what does your car need?

What is third-party insurance?
Third-party insurance is insurance you buy from a second-party (the insurer) to protect yourself if sued by a third-party. This type of car insurance will cover you against damages and losses when you’re hit by an uninsured motorist. In these cases, the third-party is the person who causes the damages, but can’t afford to pay for it. It may or may not cover hit-and-run accidents. This type of insurance is sometimes called uninsured motorist insurance.

What is comprehensive insurance coverage?
Comprehensive car insurance is “comprehensive”. It covers far more than the minimalist policies that are legally required. For example, comprehensive car insurance will typically pay for damages made by wind, a tree branch falling on your car or if you hit an animal. Comprehensive coverage also pays for the repair costs when a rock hits your windshield or your car is damaged in a house fire. This is why comprehensive coverage is often called “other than collision” insurance, since it covers everything other than being hit by someone else. Conversely, it costs much more than minimal auto insurance and somewhat more than minimal insurance plus collision insurance. Note that comprehensive auto insurance is always optional when you own your car, though higher levels of auto insurance may be a requirement of having a car on payments.

When should you have comprehensive car insurance?
If you have an older car, you probably need just the minimum level of car insurance. If you have a new or expensive car, you want comprehensive auto insurance. After all, you want to protect your car from everything that could damage it and hurt its value. If you’re between the two extremes, you probably want third-party insurance. This will provide coverage if you’re hit by someone who damages your car, though it won’t cover things like broken windshields and vandalism that you can pay for out of pocket.

You can lower the cost of comprehensive insurance by having a high deductible. The less the insurer has to pay out in claims, the lower your rates. You can also save money by bundling your car insurance policies with the same insurer. This is especially true if there are several drivers in the household. If you get both homeowner’s or renter’s insurance and car insurance from the same company, you’ll be charged less since the administrative costs are lower. Insurers typically lower your rates if you take defensive driving, are accident free and otherwise demonstrate that you’re a safe driver. Pay claims out of pocket instead of filing a claim, and you'll avoid an increase in your insurance premiums. Visit iselect and find the best insurance policy to suit your budget and lifestyle.

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