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Insurance is a legal necessity when buying a car, and as such it is important that you know the various different types available to you. It can be expensive, especially for younger drivers or those who have only just passed, so it is well worth shopping around to find a type which works for your budget and needs. Here are some of the different types and their advantages.
This is the most basic level of cover, and as such is the minimum level required by law. In the event of an accident, it will cover the costs for damages to the other people’s property as well as their compensation if they are injured. It does not cover damage to your own vehicle, or theft.
Although third party is usually the cheapest, it is often the case that fully comprehensive cover is only marginally more, making it a more attractive option to many drivers. That being said, third party insurance will still work out cheaper in the long run, and is especially suited to very confident drivers.
As the name suggests, this is the most comprehensive cover you can get, and it will pay out in most eventualities. In the event of an accident, it will pay for the same things as third party insurance, plus your own damages. It also covers a great many other eventualities, such as theft and fire, and almost anything else.
Given the level of cover it provides, it is one of the most expensive types of insurance on the market. Policies can differ between different insurance companies, though, so it is worth checking exactly what is included in each. Some include extras like breakdown cover, but they may also affect the price.
For those who have a new car, GAP insurance can be an effective option. Although not essential, it can give you a larger pay-out in the event of an accident. Since most insurers will only pay what your car is worth at the time if it is written off or stolen, you can end up receiving a lot less money compared to what you paid for the vehicle.
GAP insurance fills in the gap between what you paid for the car and what the insurer will pay. Since new cars depreciate in value very quickly, this can be a useful option as it means you get the money back which you would otherwise have lost through depreciation.
How to Choose
The level of insurance you end up purchasing will depend on a number of factors, such as how confident a driver you are and what you can afford. As with any financial decision, research is essential in gaining a better understanding of which would be the most effective option.
You should also look at a number of different insurers before choosing one, as they vary in price and types of cover on offer. Look at exactly what is included in the terms and conditions, and how much it will go down by each year (if you don’t make a claim).
Choosing car insurance need not be a difficult task, just make sure you know exactly what you are looking for before you actually purchase a policy. This will go a long way in saving you time and money, and ensure you get the right policy for your needs.