It sucks to pay insurance every month knowing you are a good driver. Your driving skills are not the problem however, it is everyone else on the road that you are watching out for. And sometimes it just happens to you as well on an off day. That is where vehicle insurance helps a lot. It is usually a big sum of money that you must pay for damages. It helps ease the immediate stress and burden of the accident or loss.
Why is it helpful or needed?
- It eases the stress and financial burden if you must pay for a repair or recovery when something happens to your vehicle;
- Paying your insurance helps your credit record and shows that you are a model citizen;
- If you are getting financial aid (like loans) to pay for the vehicle, all institutions require you to have insurance should something happen to your vehicle; and
- It helps manage the risks as life can take many unexpected turns.
What factors can determine your rate?
- Insurance company;
- Which type coverage you want (more on this soon);
- Vehicle type;
- Where your vehicle will be parked during day and nighttime hours;
- Whether and which extra security measures you have;
- How much of a risk you are (if you have a bad credit record, you will likely pay more as there is a chance of no payment which pauses your coverage);
- How many accidents/ incidents you have had before;
These are only some of the factors as each insurance company has their own set of regulations.
What type of coverage can you get?
- Third Party Cover: Only provides cover for other vehicles in your accident. This is the cheapest option.
- Third party, fire and theft cover: This option does not cover the damages to your own vehicle. If it is written off during an accident, you may not be able to have it replaced by your insurer. Third parties might claim against your cover, even if they have their own insurance if you are the cause of the accident. With this option you are covered for fire that damages or destroys your vehicle as well as theft and hijacking.
- Comprehensive cover: Compulsory if your vehicle is still financed.
Most expensive option but covers the following:
- Damage to own vehicle when in an accident (excluding excess);
- Full or partial of the damage to any other vehicle that was involved in your accident (Third Party Cover);
- Fire that damaged or destroyed your vehicle; and
- Theft or hijacking of your vehicle (some policies don’t cover this in full or with higher excess payments).
What does the insurance usually cover?
- Liability Protection: The insurance covers any damage or personal injury claims for third parties if you were at fault;
- Uninsured motorist cover: You are covered if an uninsured driver is responsible for an accident involving you or your vehicle;
- Theft cover: Your insurance pays to repair or replace your vehicle if it is damaged. (Note they only pay part of it if it is damage, if stolen they pay what it is worth minus depreciation); and
- Accident repair cover: Your insurer pays partly for repairs caused by accidents.
We never know what might happen, but it is always better to be prepared for the worst-case scenario, that is where insurance eases some of the burden. Be sure to discuss all your needs with your insurance provider and find out what you can do to lower your premium.