Used car insurance policies vary a lot from the traditional insurance policy. We shall now explore the various differences that are present in them.
The most basic difference would be the cost. You would not be paying as much premium as you would be paying for a new car insurance policy as you would be paying for a used car insurance policy.
So why does it cost lesser than a new car insurance policy? Well it’s because you are obviously going to insure your old car for a much lesser amount than you would if it were a new car. The insurance amount is by default determined by valuation. An agent is sent over to your home and he values the amount that the car is worth. And you would be suggested to go for a particular amount as coverage. This is for first party insurance. But it’s not very common that people would go for first party comprehensive insurance for their pre-owned car. Most of the time people go for third party insurance.
First party or fully comprehensive insurance is the sort of insurance that would provide you coverage no matter who is at fault in an accident. It would also provide you coverage against losses due to fire and theft. You would also be covered against instances like banging your car into a lamp post or tree.
Third party or limited insurance is when you are covered for just those accidents where it is proven that you are at fault. Even if your damage is exorbitant and the other party involved is not able to pay for it, you cannot claim money from your insurance company as long as you were not at fault in the accident.
But nowadays a lot of states have enacted no fault laws which stipulate that your insurance company has to pay you for immediate damages. Later on, if you really want to take it to court, you can do so at your own leisure. You do not have to worry about the mounting pile of bills.
There is yet another type of insurance when it comes to old cars. If you own or purchase a classic or relic automobile, you can go for classic auto insurance. This will allow you to decide what the car is worth. This way it takes into account the emotional value attached to the car. Although the premium will be very high as it’s usually just a collector’s fetish.