Car insurance is legal contract between an insurance company and a car buyer or owner where by the car owner pays premium and the insurance company covers any severe damage the car may encounter In the future. The car insurance is required in USA and many countries around the world that practice insurance policy.
If you are buying your car for the first time, choosing an insurance coverage might be a very difficult task for you. However, I will be giving you a guide that will help you through the process. I advise that you keep reading for better knowledge.
Purchasing a new car is the major step for most individuals. in this process, you can start to save money for new car of your choice. after getting the car, it’s very important that you select the best coverage to protect the car. Selecting an insurance coverage might be a difficult task if you are buying a car for the first time. Below are the vital steps for you to follow.
Table of Contents
Understand the various types of insurance of automobile insurance policies
Third-party insurance – the vehicle insurance coverage is required by the motor vehicle act of 1988 and protects you against liability resulting from an accident which may involve the third-party person or property. Driving without the third-party may result to large fines or imprisonment.
Own damage insurance – in this type of insurance, any type of damage the vehicle may come across in the future is covered by the insurance company. In this policy, a third party is needed so it won’t be sufficient. There is a need to purchase an insurance third-party policy.
Policy on private car packages – A good insurance policy provides you with a good insurance coverage. It covers many damages that may come across your vehicle not only the damage to a third party, but damage to your vehicle. This insurance types covers you vehicle when it’s stolen, damage caused by fire, burglary, and other natural catastrophes.
Comprehensive insurance – This type of insurance coverage covers for personal damages, complete loss or damage to the covered vehicle caused by theft, fire explosion, natural disaster, and other types of catastrophe, as well as third-party liability protection. This type of coverage covers everything for a single fee.
Recognize your insurance requirements.
Vehicle purpose – before selecting any insurance coverage, consider the purpose why the vehicle was bought and the vehicle usage. Is you are the type that rely so much on your car by driving it through congested routes on a daily basis, it’s advisable to look for more coverage.
Financial affordability – this type of insurance coverage has a direct impact on insurance premium which has to be paid. At times, it’s preferable to be underinsured.
Select the appropriate Add-ons
When you pay for additional premiums, more coverage maybe added to the policy to promote its coverage. Zero-depreciation insurance, return to invoice, road side assistance, engine protection cover, consumables cover, and others. Each add-on incurs an extra expense, it’s critical to select on those that are required.
Understand Insurance Terminology
It’s sometimes confusing while buying insurance because the vocabulary which is employed. In this case, it’s important that you understand different insurance phrase and abbreviations which have an impact in the policy’s performance. Below are some examples:
IDV – the abbreviation IDV stands for Insured Declared Value, this is the entire amount that policyholder will achieve if the vehicle is damaged. The IDV has a direct impact the premium which must be paid.
NCB – the abbreviation NCB stands for No Claim Bonus, this is a discount granted at the time of renewing vehicle insurance for reaching a year without filing a claim. In this case, one can get up to 50% discount on this insurance policy.