Compulsory vs. Third Party Insurance
Like the Olson twins, car insurance comes in pairs. First you must have compulsory insurance which is issued by law. Secondly, you can add onto that insurance based on your own needs.
When taking out car insurance for the first time, the client must decide on a rate. Usually a parent will make the decision for their children. Compulsory insurance is a good place to start. It’s required in most countries and forces you to pay a fairly high premium each year. It covers damages for other vehicles in the event of an accident.
Compulsory insurance does not cover damages to your vehicle. Compulsory insurance also does not cover money lost in the event that your vehicle is stolen. Third party insurance covers both these aspects, and many people deem them necessary “add ons” to their insurance policy.
Compulsory insurance is calculated based on age and experience of the driver, while third party insurance is calculated based on the value of the car. Factors that drive the value of the vehicle include the age, condition, and protection (where the vehicle is parked).
If the parent wants to further their children’s insurance coverage than signing up for third party insurance is a terrific idea. Chances are your son or daughter will make a few mistakes when they first start out driving alone. Hopefully these mistakes will not result in harm to your children or others. Third party insurance covers accidents involving the sole car of the driver.
The higher your vehicle is worth is directly related to the premium. Obviously you will run into higher premiums if your vehicle is brand new or valuable based on age or rarity.
Comprehensive insurance is very popular and another good coverage. It covers accidents as well as theft, making the vehicle protected under minor to major car thefts. The insurance is calculated based on the value and condition of the vehicle as well as the driver’s age and where it’s parked.
Tags: Cars