Have you ever taken the time to try and understand the terms and conditions of your car insurance policy? Do you know what you are covered for and what is excluded by the policy?
It is important for any potential car insurance client to know what he is searching for – price comparison on its own is simply not enough! We need to know what we are comparing – and this can only be done when knowing what it is that we are comparing.
An insurance IQ study conducted by the Kansas City office of the National Association of Insurance Commissioners, which polled 1,000 American adults, found most Americans are very uneducated when it comes to insurance coverage. The study discovered that only 45 percent of Americans feel capable of making insurance choices, and that 86 percent do not completely understand insurance terms frequently used in recent discussions on health care reform.
The same lack of understanding is to be expected in South Africa – not only in health insurance – but also in car insurance! Consumer advisors and insurance specialists have warned consumers to make informed decisions – and for this we need to equip ourselves with the necessary info and knowledge!
On this Blog we have added a rather comprehensive Car insurance Glossary – with a description of the terms and conditions to be found in a car insurance policy. This list will never be complete – as there will always be a few more aspects that need clarification. We would like to share one simple yet very important concept to illustrate the importance of knowing the terms and conditions of your car insurance policy:
What is the difference between Comprehensive Cover and Third Party Cover?
This is one of the most important questions you need to understand before purchasing a car insurance policy.
To be fully covered – you would need comprehensive car insurance – this also includes “other than collision” coverage, as it also includes other damage than that resulting from a car accident.
Comprehensive car insurance is the highest level of car insurance cover, which usually covers you for:
- injuries to other people
- damage to other people’s property
- accidents caused by your passengers or a driver named on your policy
- the use of a trailer, while attached to your car
- fire damage and/or theft
- accidental damage to your own car
- medical expenses, up to a stated limit
- loss of or damage to personal effects in the car, up to a stated limit
Third party car insurance is needed to pay for the damages suffered by the owner/driver of the other car if you are considered to be at fault for an accident. This is also referred to in the US as liability insurance and is mandated in every state of the US.
We can also distinguish between Third party only and Third party, fire and theft. We would like to share the brief description of these terms:
Third party only
Third party cover is the minimum level of car insurance cover required by law in the US and contains no cover for damage to your vehicle. It usually covers your legal liability for:
- injuries to other people
- damage to other people’s property
- accidents caused by your passengers or a driver named on your policy
Third party, fire and theft
Third party fire and theft cover provides the same level of cover as third party cover, but protects you against damage to your vehicle from fire, or theft of the vehicle, as long as you’re not at fault.
We would like to urge all vehicle owners to consider these terms and have their vehicles insured. If not able to afford the comprehensive car insurance for both your vehicles – you might consider purchasing comprehensive car insurance for your new car or more expensive vehicle, and purchase a Third party, fire and theft policy for your older vehicle.
Not to be insured is a risk simply not worth taking. You may end up paying thousands of rands for the damage to the vehicle of another if you were at fault in causing an accident.
We would like to urge all vehicle owners to take the time and acquaint themselves with the terms and conditions of their car insurance policies. A few hours spent now could save you years of financial discomfort later!!
We would like to invite our readers to send us their queries and ask for clarification on terms and conditions not covered in our Glossary. This will enable us to add to this Glossary and assist more vehicle owners.
Also view:
Related posts:
- Do you understand car insurance terms and conditions?
- Do not purchase car insurance that you do not fully understand!
- Pay As You Drive [PAYD] insurance and black boxes could reduce car insurance premiums.
- Insurance fraud remains major obstacle to cheaper car insurance
- Finding car insurance by switching car insurance providers