Different Types of Auto Insurance

If you own a car, no doubt you’ll understand when people sit around complaining about the cost of their car insurance. But, the fact is that the cost of you car insurance is going to depend as much on what type of car insurance you buy as it is on what insurance company you use to insure your car. So, what are the different types of auto car insurance options available?

Auto Insurance Policy Types

Fully Comprehensive Auto Insurance
Fully comprehensive auto car insurance is without doubt the most expensive. However, with so many cars financed by finance companies, it is also probably the most common type of auto insurance – as the finance companies make it a requirement that the owner insure their automobile fully comprehensive.

In short, as its name suggests, fully comprehensive auto car insurance insures the owner of the car against all manner of events – from an accident to theft of the car. The upside of this type of insurance is there is no need to show ‘fault’ in order to claim. So, if you have an accident, which is not your fault, and the owner of the other car, who is at fault, doesn’t give you his insurance details, or, worse, is uninsured, you can still claim against your insurance company. Similarly, if your car is stolen, then fully comprehensive insurance allows you to claim against the insurance company.

However, do read your insurance policy carefully, as most auto car insurance companies refuse to insure 100% of the value of a car, choosing instead to only insure 80%, or so, of the value. The auto car insurance companies claim that doing this prevents fraudulent losses of cars where the owner of the car either no longer wants the car, or is encountering financial difficulty.

Third Party, Fire & Theft
Third party, fire & theft auto car insurance is a middle of the road car insurance package popular with those who have already paid off their auto loans, but who still have a certain level of intrinsic value in their car.

Under this type of auto insurance, most of the pay-out events covered under fully comprehensive auto insurance are covered – such as fire & theft. However, in the event of an accident, the insurance company is only required to pay-out if you are at fault, and you hit another car. So, in the event that you hit a wall, or only damage your car, the insurance company will not be required to pay. Likewise, if you are involved in an accident with another car, and are not at fault, your insurance company will not be required to pay-out, regardless of whether or not the other person has sufficient insurance to pay for the damage done to your car.

Third Party Insurance
Third party insurance is the ‘basic’ type of insurance, and only covers circumstances where you are involved in an accident, are at fault, and hit a third party. In all other events, the auto car insurance company is not required to make a payment. As such, it is also the cheapest type of auto car insurance you can purchase. That said, this type of insurance is usually only purchased by those car owners who have an old car with little or no value.

Specialized Car Insurance
Finally, strictly speaking any car over 25 years old is considered a ‘classic’. As such, this type of car should be insured as a classic car – with all of the benefits and requirements of such. Although ‘classic’ auto car insurance usually has all of the benefits of fully comprehensive auto car insurance, one significant disadvantage that classic car insurance has is that you are usually limited to the number of road miles you can drive in any given year – so check your policy carefully.

Categories Insurance

9 thoughts on “Different Types of Auto Insurance”

  1. I never knew there were different car insurance types. I just thought that all were basically the same. I thought that it was really cool that people offer classic car insurance. I didn’t even know that was a thing. Thanks for the great insights on car insurance.

  2. I have recently purchased my first car. I have been told that auto insurance is required by law, but I don’t know which kind would work best for me. I didn’t realize that a full comprehensive auto insurance policy is required for cars that have financing on them because banks want to be able to get their money back. I’ll remember that requirement moving forward.

  3. You wrote that fully comprehensive auto insurance is exactly that, fully comprehensive, including coverage for accidents to theft of the car. My husband just got a car and he needs to get good car insurance now. He really loves this car, so getting fully insured would let him take care of it even if an accident did happen. Thanks for the great article.

  4. My friend just got an old car that he wants to insure. I had no idea that any car over 25 years old was considered classic. It makes sense that taking the time to do a little research can help you find the best coverage for the type of care you have.

  5. I did not realize that there was some many different types auto insurance coverage available. I really like how you point out that taking the time to do some research can help you find the best car insurance for your needs. I need to get auto insurance, so it’s good to have a better understanding of the types of coverage available. Thanks for the advice!

  6. I think I’ll have the third party insurance because it says here it’s the basic type of insurance. My agreed and thinks of having this kind of auto insurance. She likes it that this insurance cover circumstances where you are involved, are at fault and hit the third party.

  7. I am interested in finding an auto insurance broker to help me with the car that I want to buy. Having insurance is so important to me so I appreciated having all the different types listed. I had no idea that third-party insurance was the most basic out of all of them.

  8. I like that you mentioned that third-party insurance is mostly for those who have an old car with little or no value. I just bought a car, and have been looking for the right insurance. Thanks for the information–I’ll be sure to contact an insurance agent and get some quotes.

  9. My friend talked about his new car recently and how driving it was a breeze for him! I like how you explained that investing in the right car insurance coverage can help you pay less for repairs caused by theft or fire damage. I believe it would be a good investment for a car owner to look for car insurance before finalizing their purchase.

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