A policy in which a person receives financial protection or reimbursement against losses from an insurance company is an insurance contract. It is protection from financial loss. It is an agreement between two parties, the insurance company, which is the insurer and the individual who is the insured according to the car and driving style. The insured pays an amount in return for the promise made by the insurer.
The insurance company promises to pay the insured’s losses in the event of a loss. The event might be a death occurrence or destruction of property. The event of the loss is called a contingency because there is no certainty of the loss occurring.
While determining the price value of a car, insurers consider the age of the vehicle and market value.
There are three main types of car insurance;
- Liability insurance
- Comprehensive insurance
- Collision insurance
Liability Car Insurance
Liability car insurance is the insurance policy that provides financial protection to the driver who harms a person or their property while driving the vehicle. This means it only covers injuries or damages to third parties or their properties but not to the driver or their property.
The driver should have a separate insurance cover to cover their injuries or damages to their properties. Under liability insurance, there is a bodily liability that helps cover the medical expenses for those involved in the accident.
There is also property damage liability, which helps cover repair for the other drivers’ vehicles involved in the accident.
Comprehensive Car Insurance
It is an extensive motor insurance policy that covers the insured person against both their damage and the damages of the third party. This insurance covers other unforeseen incidents like fire, accidents, theft or natural calamity accidents.
For third-party insurance, it fails to cover your vehicle against the possibility of an accident occurring. This means that this insurance does not cover unforeseen accidents while comprehensive insurance provides extensive coverage.
Collision Car Insurance
Collision car insurance helps you pay the repairs or replace your car when damaged in an accident with other objects like another vehicle, a tree or a fence.
Comprehensive is different from a collision because it helps cover different types of losses that are not usually a result of driving the vehicle, like theft or fallen trees.
Comprehensive insurance pays for non-crashes damage. If you have no collision insurance, you will not have coverage for your damaged vehicle when involved in an accident. You are the one to replace your vehicle using your own money when you are the one at fault during the occurrence of an accident.
Therefore, as a car owner, it is essential to compare car insurance policies to buy the one that suits you most.
Conclusion
So, out of these three insurance policies, the one that suits your car and driving style is collision insurance. This is because it covers for damages caused when driving the vehicle. Comprehensive insurance covers unforeseen accidents which might be rare to occur.
Collision covers accidents that are possible to occur since they happen while driving. When driving, there are more possibilities of accidents occurring. It covers all the repairs or replaces your car according to the extent of the damage.
