If you have a motorcar or motorbike, you most likely have some insurance policy. In many countries insurance is compulsory for all car owners. The reason for this is that financial institutions like banks want to cover the risk associated with loans that they grant their clients. Governments are also exposed to financial loses associated with motor vehicles and the transport system in general.
The purpose of car insurance is to share risk. Essentially, you pay an insurer to financially cover the possibility of theft or damage to a vehicle. You as the client pay the insurance company small amounts of money over the long term, and they in return pay you large sums of money in the event of theft or accident. Of course, if nothing happens to the insured vehicle, the insurance company benefits. Ideally, this is what insurance companies want and have developed methods to determine the amount of risk that potential clients carry. They adjust their premiums accordingly and have developed insurance products that are suitable for different risk profiles.
Comprehensive cover is of an insurance policy that covers a wide range of possible incidents. Some of these events include things like fire, motor theft, accidents, and hijackings. This type of policy is usually the most expensive as it covers the greatest amount of risk. Institutions that finance vehicles will typically insist that their clients take this type of cover.
Personal liability insurance is usually sold as an add-on benefit to other products. It covers the insured person in when a third party sues for property or personal injury losses. This could include medical costs, physical and mental suffering, loss of income and damage to property. Personal liability insurance usually also covers legal costs and court fees. Premiums are typically low when this is added to an existing policy.
Personal Injury Protection (PIP)
Personal Injury Protection is similar to personal liability insurance except that it covers the insured person for medical costs and related expenses should something happen and the other person does not have personal liability insurance.
Car Rental Cover
This is another add-on benefit for car insurance. It covers the costs associated with the hiring of a rental car after an incident that has left the insured person without the use of their vehicle. This is a popular option due to the high costs of rental cars.
It is advisable that you discuss these insurance options with your broker or insurance agent. Correctly assessing your risk and taking out insurance to adequately cover it is the first step when shopping for insurance. Once this is done, you can begin comparing quotes from various insurers and select the cheapest one that meets your needs.