Car insurance can cover you if:
- your car is damaged or stolen
- you are responsible for damaging somebody else's property or car.
What you're covered for, and how much your insurance company will pay, depends on the type of cover and policy you have.
Even with insurance you must take reasonable care to avoid accidents and theft, eg making sure your car is safe to drive, locking your car.
You can take out insurance to cover the vehicle's:
- Market value — what your vehicle is worth just before it is damaged.
- Agreed value — a value you and your insurance company agree on when you take out your policy and each time it renews.
An insurance premium is how much you pay each year for your policy.
Motor vehicle insurance can be:
Third party is the least expensive car insurance policy type.
It covers you if:
- you damage somebody else's car, eg in a traffic accident or hitting a parked vehicle
- your car damages another person’s property, eg you drive over someone's laptop or lose control and and hit their fence.
If you have third party insurance and someone else hits your car and admits fault, their insurance should cover the cost of repairs to your car. In some cases your insurer may chase compensation for you if the person has admitted fault and doesn't have insurance.
Third party, fire and theft
This policy covers you if:
- you damage somebody else's property or car (same as third party insurance)
- your car is stolen or catches fire.
This policy covers:
- accidents you cause or caused by someone else
- damage to yours or somebody else's property or car
- some other costs, eg towing fees if your car breaks down or is in an accident.
Comprehensive insurance is generally a more expensive insurance policy option. It pays out for the widest range of situations, including damage to your own car.
As well as standard comprehensive policies, you can buy extra cover, eg road side rescue, no excess for replacing a damaged windscreen. Before adding extra costs to your premium, ask yourself if they're in your budget and if you really need added protection.
Example — Three drivers, three policies