June 23, 2022
  • June 23, 2022

Shedding light: the main types of auto insurance explained

By on September 30, 2021 0

Auto insurance – it’s not the funniest subject, but it pays to know a lot. This is because, if you drive, it is an absolutely essential part of life – and relatively expensive at that.

Automobile insurance comes in two main forms: third party, fire and theft (or sometimes just third party) and all risks. Additionally, there is GAP insurance, which is not an essential form of insurance, but a form of insurance that many newer car owners purchase to protect the value of their vehicle.

Here we are going to explain all three to you, so that you can feel more assured of being insured.

Third parties / third parties, fire and theft (TPFT)

It is quite unusual for someone to only have TPFT insurance, and even more unusual for someone to only have a third party.

Liability insurance is the minimum legal coverage you need to get behind the wheel. This is a completely simplified form of insurance that covers driver injuries and repair costs that you encounter, but not yourself, as well as property damage that you may cause.

TPFT insurance adds fire and theft coverage to your car, so if your car ignites without your knowledge or is stolen, TPFT insurance will cover replacement or damage caused in either case.

While this might sound good, both forms of coverage are quite limited. TPFT will not cover any damage to your car, no cost of injury to you or your passengers (bodily injury coverage) or provide windshield protection. The same goes for third parties, but with the removal of coverage in the event of fire or theft.

Another interesting note is the cost of TPFT coverage. Considering this is a limited insurance format, it should be a lot cheaper than full coverage, right? Yes it should, but because TPFT has become so strongly associated with high risk drivers (young drivers and drivers with limited experience, for example) looking for cheaper coverage, it is in many cases more expensive. to opt.

Weird, but true.

Full coverage

The choice of virtually every driver on UK roads, Full Coverage, as the name suggests, offers the broadest form of protection for drivers, offering everything included in a TPFT package with:

  • Damage coverage for your own car in the event of an accident, even if it’s your fault.
  • Personal injury coverage, covering the cost of injury to you and your passengers.
  • Damage protection for your car, no matter who’s at fault.
  • In some cases, full coverage also allows you to drive other people’s cars

A much more comprehensive solution, therefore, but comprehensive insurance generally does not cover the following:

  • Outage cover
  • Courtesy car cover
  • Windshield cover
  • Coverage of legal costs

In many cases, insurers will either offer these additional services (breakdown guarantee, courtesy car cover) or include them as an additional service (windshield guarantee). You will often have the option of adding or removing these types of elements when choosing your font.

GAP insurance

Finally, leaving the world of compulsory insurance, you have GAP insurance. GAP insurance (guaranteed patrimonial protection) is designed to cover the difference between the value of your car when you bought it and the value of your car when you have an accident.

Say, for example, you have an accident in your third year after buying a new car. The amount your insurer pays will be based on the current value of your car rather than what you paid when you bought it. In a world where depreciation on new cars is huge – ranging from up to 30% loss in value in the first year to 50% loss in value after three years – it can mean big financial losses for the claimant.

Thus, GAP insurance is relatively popular with new car owners who will suffer the most from the impact of depreciation, and it is a service that is often sold alongside the purchase of a new car. It is by no means mandatory and only makes sense for some car owners, but if you are looking to effectively freeze your car’s value from an insurance perspective, GAP insurance is the way to go. .

In fact, supplementing your insurance each year will almost always come down to choosing the cheapest or best comprehensive insurance policy for you. However, if you find a much cheaper TPFT policy, you might be tempted to go for it. As for GAP insurance, it’s up to you – the important thing is to establish the right policy for your needs.