The benefits of car insurance

benefits car insurance
Car insurance benefits

Car insurance provides cover for loss or damage to your vehicle minus the excess or “first amounts payable”.

The maximum amount the insurer will pay will depend on the amount that you’re insured for in your policy or the retail or market value of your car. Your benefits will be unique to your policy but, the below overview of the four main types of car insurance will provide you with an idea of the major benefits each type offers.

Four main types of car insurance

  • Comprehensive - It offers the highest level of cover including third party, fire, theft, damage, and hijacking.
  • Third-party, fire, and theft - It covers you in the event your car is stolen, damaged, or destroyed by fire, and covers the cost of repairing a third party’s vehicle in the event that you get into an accident (and you’re at fault).
  • Third-party - It covers damage done by you to the vehicle of a third party.
  • Fire and theft only - It is ideal for vehicles that are not currently in use, this cover will payout in the event that your car is stolen or damaged, or destroyed by fire.

Keep in mind that comprehensive car insurance will always cost significantly more than third party, fire, theft, or third party alone. This is because you get a wider range of benefits and a higher level of overall protection.

Examples of expenses that your insurance may cover:

  • Cover for emergency expenses that resulted from the loss or damage to the car and this amount is added to the sum you’re insured for. This includes the cost of, for example calling the fire brigade out to extinguish a fire-related to your car.
  • In respect of the third party claims your insurance cover all costs and expenses which you’re legally liable to cover as a result of death or injury to a third party and loss or damage to the property of a third party
  • Representation for any civil or criminal proceedings resulting from an insured accident or incident
  • Car hire costs following the theft or hijacking of your car.

What is car insurance excess?

Excess refers to the amount that you, as the policyholder will have to pay out of your own pocket before your insurer will pay the balance for any claim. If you’d like to lower your monthly premiums you can opt for an increase in your excess amounts. This is known as voluntary excess whereas the excess set by the insurer is referred to as compulsory excess.

Remember that you will need to pay excess even if you were not responsible for an accident. With comprehensive, the insurer will pay for the repairs to your vehicle and attempt to recover both their costs and yours (the excess you paid) from the responsible party. This is done by you subrogating your rights to your insurer so that they may go ahead and claim costs from the guilty party.

This will take a particularly long time and even more so if the guilty party did not have motor vehicle insurance. This is also why it’s so important that you take down as much information about the other driver and their vehicle as possible.

What happens when a third party isn’t insured

As mentioned, this will make it much harder for your insurer to recover their costs and your excess but, they will still proceed to issue a letter of demand to the third party and get the legal process started.

The third party will then either pay the damages in one lump sum or by instalment over a set period of time. If the third party doesn’t respond to the demand the next step will be to issue a summons. This doesn’t, however, always happen since lower claim amounts are not worth pursuing legally.

If the claim is large and legal advisors have determined that the claim is valid and likely to succeed a fairly long legal process will begin, starting with the issuing of a summons. If the third party does not defend the matter, a default judgment may be sought.

What if the other driver is insured?

If the other driver is insured then your insurance company must send out a letter of demand complete with an assessed quotation to their insurer who must then make a payment to your insurer. This is why you’ll be required to go out and get a tax invoice that will stipulate the cost of repair to your vehicle.

What it means if your car has been deemed a “write-off”

When your insurer deems your car a write-off, it simply means that it would cost more to repair the vehicle than the vehicle itself is worth based on its market value. Once you pay the excess required, the insurer will payout based on this market value. The car will remain with your insurer.

Additional optional cover

  • Radio, sound reproduction, and communication equipment cover - Pays out in the event that equipment is lost or damaged up to a specified amount.
  • Tyre protection cover - This applies only to passenger vehicles that are privately owned and will cover the cost of tyre replacement or repair which have burst, cut, or been damaged on the road. You will typically be covered for a set amount per type or per event.
  • Additional windscreen cover - This covers you for the replacement and repair of your windscreen without requiring that you pay any excess.
  • Car hire following an accident - Car hire is generally only covered for theft and hijacking so this additional cover will cover the cost of hiring a car (as specified by the insurer) following an accident.

Remember that your claim to your insurance company will be processed before any claims are made by their legal teams against any third parties. This means you can get your vehicle repaired and back on the road quickly, even when there are still issues that need to be finalized.