Just like purchasing an automobile, nothing is as important as buying insurance. When you are looking to buy an insurance cover for your vehicle, make sure its cost isn’t the only thing you consider. There is a wide range of policies, and you need to shop around so as to ensure you have a product which suits your circumstances and needs.
As with any other insurance, before you can sign the insurance contract, you need to carefully review the policy document as well as the product disclosure statement to know what you are getting yourself into. Be sure to ask your insurer for clarifications if there are any aspects you don’t understand.
What are the requirements?
While car insurance differs from one state to the other, drivers need to prove they are capable of paying damages in the case of accidents. This aspect is known as proving financial responsibility.
A number of states require drivers to offer proof of their payment ability by posting a certificate or bond; nonetheless, car insurance is generally the easiest way to fulfill the requirement.
Types of car insurance
As the owner of an automobile, there are four major kinds of general car insurance you need to know about.
- Compulsory Third Party – This kind of insurance protects any individual you might injure when driving your car. It’s not the alternative to taking out a policy to cover financial liabilities such as the damage to another property or car, or even your own vehicle
- Third Party Property – This type of insurance covers the damage caused to other’s property as well as the legal costs. However, it doesn’t cover damage to your own car
- Comprehensive Insurance – This one covers the damage caused to your car as well as other’s property. It also includes aspects such as theft, other risks, and legal costs
- Third Party Fire and Theft – This is a Third Party Property insurance and has some add-on features which cover your car
Benefits of vehicle insurance
Before the time when vehicle insurance was greatly mandated and adopted, victims of car accidents did not get any kind of compensation for the harm they incurred. In case the victim filed a lawsuit against the driver at fault, the driver faced huge costs which crippled their finances.
Requiring auto insurance has made it possible for states to protect drivers from incurring enormous costs associated with the accident. Car insurance ensures that:
- The driver at fault is able to cover the costs of property damages or injuries as a result of an accident without having to incur large sums in a lawsuit
- The accident victims are able to get the medical assistance, cater for the funeral costs, and repair their property without having to pay out of their pocket
You need to remember that car insurance gives you a peace of mind knowing that you are covered financially after an accident.
Do modifications affect car insurance?
It is important that your insurer knows about any non-standard accessories added to your vehicle or any modifications made to the car as soon as possible. Failing to let the insurer know about these aspects may lead to the cancellation of your policy.
When buying car insurance, it’s imperative to answer all the questions regarding modifications in an accurate and honest way. This is an essential part of your disclosure duty. Additionally, you need to let your insurer know that you want to make some modifications during the term of your cover. If they accept to cover a modified vehicle, they will only cover the legal modifications.