Vehicle Insurance
Vehicle Insurance is based on trust.
All vehicles on the road need insurance. This means that all registered vehicles such as cars, trucks, three wheelers, scooters, motorcycles and more need insurance when they appear on the road. Every country, state, county, city and area have regulations that regulate the usage of vehicles.
The purpose of insurance is to provide monetary protection to drivers and passengers against injury and death and also to pay for damages that occurred when vehicles were in collisions and other accidents and also when vehicles get stolen. Insurance can also cover weather damages and damages that came with natural disasters. Insurance protects against liability that could arise from all sorts of incidents in a car or other vehicles. Liability can lead to expensive litigation and vehicle insurance should include expenses deriving from such situations.
Levels of Coverage (Be sure to discuss this in detail with the insurance company when you insure your vehicle)
Vehicle insurance cover different insurance levels and the following;
Comprehensive vehicle cover
The parties in or on the vehicle of the insured party. Their medical expenses should be paid and it should be stated clearly by the insurance company in the contact or policy document.
The property that was damaged by the insured person. This can be very expensive and insurance companies should be transparent about their guidelines and policies concerning this.
The physical damage to the insured vehicle should be covered.
Third parties should be covered and that should include the vehicle, in most cases it will be a car but it can be any insured vehicle, also the people involved and the bodily injury they might have suffered, as well as damage to other property.
Third party fire and theft.
The most basic vehicle insurance and all other more extensive vehicle insurance coverage should include the third party as well as fire and theft of the insured persons vehicle.
No Fault Auto Insurance
It has to cover injuries to persons and passengers that are riding in the insured vehicle. This should be available without regard who caused the vehicle accident
Car rent cost
Vehicle insurance should also include the cost to rent a car if the insured person’s car is damaged.
Towing and storage
Towing and storage expenses of the insured vehicle while it is being repaired should be paid by the insurance company.
Temporary housing expenses
Hotel or housing expenses of the driver and passengers of the damaged vehicle as well as their transportation costs back to their homes that might be very far away.
Uninsured vehicles
The insurance company should also cover the costs of accidents with uninsured vehicles.
Clarity and transparency
There are many different types of vehicle insurance policies that will cover some of the abovementioned aspects. It is important that the insurance companies will be transparent and clear in explaining their products to the client.
GAP insurance
GAP insurance pays out the shortfall when the payout to the insured is less than the outstanding debt on the vehicle after the accident. When a financed vehicle is written off or scraped after the accident the amount paid out to the insured might not be enough to pay the outstanding debt at the bank because the marked value of the vehicle was less than the outstanding amount. The purpose of GAP insurance is to avoid such situations but GAP insurance is not always available and it can be expensive.
Excess payments (deductibles)
Excess payments are also called deductibles. This is a set amount that is paid when a vehicle is repaired by the repairing company and when the insurance company is billed with the charges. The deductible is agreed upon when the insurance policy is bought and it can vary along certain guidelines.
If the other driver caused the accident, then the vehicle owner can claim the deductible from the third party's insurer. But this will only happen if the third party's insurer agree to do so. They can sometimes be forced to do so when vehicle owner access the court and the court agrees to the claim.
A motor excess insurance policy can be bought separately to cover the excess but that might not be available and it might also be expensive.
Compulsory excess (compulsory deductible)
This is the minimum amount payable. It will depend on the age and driving record of the insured person.
Voluntary excess (voluntary deductible)
The owner of the vehicle and the insurance company can agree that the vehicle owner will pay a voluntary higher excess in case of an accident. This reduces the weight on the insurance company and therefore it can offer the vehicle owner a lower monthly premium.
Premium Prices
Premiums will usually be paid on a monthly basis but arrangements with some insurance companies for other paying terms are possible such as semester or yearly payments.
Insurance companies usually decide what the premiums will be, however, premiums can also be mandated by the government. Premiums prices are based on a wide range of statistical data that covers the full spectrum of possible factors that can make a person a high risk. High risk people pay higher premiums.
Factors influencing premium prices
Age: Very young drivers will pay higher prices because they are more inexperienced and more likely to make accidents. Older people over the age of 65 can also pay more because they might have bad eyesight and slow reactions, and therefore they are a greater risk to the insurance company.
Gender: In some countries the women pay lower premiums because they make less accidents. However, on the 1st of March 2011 the European Court of Justice decided that this practice has to stop since it is discrimination against men.
Driving history: people with many driving violations and bad accident records pay higher premiums because they pose a higher risk to the insurance company.
Profession: Some professions are higher risk professions because they carry people or expensive equipment. These people will pay more. Every insurance company will have their own list of high-risk professions.
Marital status: Married people usually pay lower premiums than single people because are considered to be more responsible and more subdued.
Type of vehicle, vehicle classification: Motor cycles and three wheelers are usually seen as high-risk vehicles. The value and age of a vehicle also play a part in determining the premium to be paid.
Neighborhood and Area of dwelling: Sometimes the geographical area that a person reside in can be viewed as a high-risk factor and that can raise the premium.
Distance: If a person spends many hours driving long distances then the risk factor for an accident or other expenses will be higher. Thus, the premium will also be higher.
Credit ratings: People with good credit ratings are considered as being able to look after their vehicles in a better way. Some insurance companies take these factors into consideration to set premiums and people with good credit ratings will therefore pay lower premiums.
Insurance based on behavior: This might become a factor in the near future. The behavior of individuals in their daily lives, even when they are not driving, can have an effect on the premiums that they will pay. Drug and Alcohol related behavior will probably strongly influence insurance premiums for drivers. The way in how individuals will be monitored remains a challenge and legal questions concerning privacy rights still need to be answered.
Repair Insurance
Auto repair insurance is very popular in the USA and is an extension of car insurance. It covers the wear and tear on a vehicle that is not related to damages from a car accident.