An insurance policy is basically an indemnity which takes a certain payment from you, called the premium, against which it indemnifies you against an unforeseen occurrence. Auto insurance, similarly, is an insurance policy which takes a certain premium from you, in return for which it guarantees to put you back in the same position you were financially before the accident occurred. But there are a number of types of auto insurance, which have various optional riders, and the buyer of the policy must make sure that he knows exactly what he is buying, so it matches well with his actual requirements and his budget. Let us try to understand these variants below.
Comprehensive Auto Insurance
As the name suggests, a comprehensive auto insurance policy protects the car owner from all possible mishaps that can occur, starting from a theft, to permanent damage in an accident. Obviously, since all possibilities are covered under such a policy, it charges a higher premium than other specific policies. But the word comprehensive could be very misleading, and one must read the fine print and find out exactly what the inclusions are, and which events are covered to what extent under the policy. That said, this type of policy still remains the most popular type of policy.
Third Party Auto Insurance
A third party auto insurance is useful if the buyer is the owner of a car and is at fault in an automobile accident in which the counter party (referred to as third party by insurance companies) is injured or his car is damaged. This is the cheapest form of insurance, and is preferred by those vehicle owners whose cars are of substantial vintage and are of lower value.
Combines Fire & Theft and Third Party Auto Insurance
If the car is not very new but also not too old, and still might have some resale value, then this policy is useful for the car owner. The theft and fire component of the policy protects the owner from loss arising out of damage to the car due to fire or from financial loss due to the car being stolen. The protection to you in case of a collision is also offered by the third party portion of this policy, but only when you are at fault.
Classic Vehicle Insurance
Premiums for older persons taking insurance coverage is higher, and similarly, a car that is more than 25 years old would attract very high premiums for regular auto insurance policies, and the claim amounts would also be significantly reduced. That is why owners of cars which are more than 25 years old should go in for this specialized insurance policy known as the classic vehicle insurance policy.
In order to strike the perfect balance between a reasonable premium at the time of purchase, and adequate compensation in the event of a claim, one should talk to a dependable insurance advisor and also compare the various offerings before making his choice.
