Your Essential Guide to Car Insurance

When it comes to car insurance it can be a difficult task to remember each of the terms that can be associated with it. This guide will hopefully help to clear up any questions and clearly explain the more popular and common terms.

Firstly, car insurance itself can be easily explained as the payment of an annual premium to a car insurance company, and in turn the insurance company pays most of, or all, of the costs that are associated with a car accident or damage done to your car.

Following on from this there are a few terms that we will briefly touch on that are important in understanding the different aspects of car insurance;

1. Comprehensive Cover – The most expensive and highest level of car insurance, for good reason! This covers all aspects ranging from medical expenses, to a specified limit, right up to any damage sustained by vehicles in an incident. Policies will be different depending on the insurer, so it is important to check these policies before making a final decision.
2. Third Party Only (TPO) – The opposite end of the spectrum compared to comprehensive cover, TPO covers you at the most basic level. This does not cover any damages to your vehicle, instead it covers you for any injuries caused to other people or damage to another person’s car in the event of an accident.
3. Third Party, Fire & Theft (TPFT) – This is essentially the same as the previously mentioned Third Party Only with the added bonus of covering you in the event of your car being stolen or damages caused by a fire.
4. No-Claims Bonus – This is a reward for drivers when they do not make claims to their insurance over each year. As a result of not making any  claims throughout the year, your insurance company may reduce the cost of your annual premium, which means more money in your pocket!
5. Settlement – Simply put, a settlement is when the insurance company pays out in full for a claim in which you have made to them regarding an incident.

Car insurance can be difficult to understand at times, especially when it comes to very specific terms. The few that are mentioned are some of the more common terms, but you would be surprised how many people can be unsure on what exactly they are. It is always important to understand exactly what kind of cover you are opting for. Make sure to discuss this in detail with your insurance company before deciding on what you go with. They are there to help you, so use their knowledge to get the best cover that suits you.