All You Need To Know About Car Insurance

All You Need To Know About Car Insurance

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Car insurance refers to financial protection against loss as a result of an automobile accident or theft.

According to Wikipedia: Vehicle insurance (also known as car insurance, motor insurance or auto insurance) is insurance for cars, trucks, motorcycles, and other road vehicles. Its primary use is to provide financial protection against physical damage or bodily injury resulting from traffic collisions and against liability that could also arise from incidents in a vehicle.

Vehicle insurance may additionally offer financial protection against theft of the vehicle, and against damage to the vehicle sustained from events other than traffic collisions, such as keying, weather or natural disasters, and damage sustained by colliding with stationary objects.

Understanding auto insurance—the basics

Auto insurance is a contract between you and the insurance company that protects you against financial loss in the event of an accident or theft. In exchange for your paying a premium, the insurance company agrees to pay your losses as outlined in your policy.

Auto insurance provides coverage for:

Property – such as damage to or theft of your car

Liability – your legal responsibility to others for bodily injury or property damage

Medical – the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses

Basic personal auto insurance is mandatory in Nigeria. Auto insurance coverages are priced individually to let you customize coverage amounts to suit your exact needs and budget.

Policies are generally issued for six-month or one-year timeframes and are renewable. The insurance company sends a notice when it’s time to renew the policy and pay your premium.

Who is covered by my auto insurance and under what circumstances?

Your auto policy will cover you and other family members on your policy, whether driving your car or someone else’s car (with their permission). Your policy also provides coverage if someone who is not on your policy is driving your car with your consent.

Your personal auto policy only covers personal driving, whether you’re commuting to work, running errands or taking a trip. It will not provide coverage if you use your car for commercial purposes—for instance, if you do intercity or state transportation or food delivery.

Personal auto insurance will also not provide coverage if you use your car to provide transportation to others through a ride-sharing service such as Uber or Taxify. Some auto insurers, however, are now offering supplemental insurance products (at additional cost) that extend coverage for vehicle owners providing ride-sharing services.

What other types of auto insurance coverage are typical?

While most basic, legally mandated auto insurance covers the damage your car causes, it does not cover damage to your own car. To cover your own car, you should consider these insurance coverages:

  1. Third-Party Car Insurance

If you own a car and want to drive on Nigerian roads, Third Party Car Insurance is the minimum level of cover required by law.

However, the cover provided by this type of policy is very basic. Third party cover simply agrees to pay for damage caused to other people’s property, or compensation or costs related to injuries they sustain, in an incident adjudged to be the fault of the covered driver.

So this cover would pay out if you caused an accident and injured another driver – or their passenger.

But it does have its limitations, as it does not cover the cost of repairs to your own vehicle, and would not cover you if your vehicle was stolen or damaged by fire – meaning you would have to fork out yourself.

For this reason, third party insurance may be better suited to a motorist who drives an older car – rather than someone who owns a sporty little number.

2. Third Party Fire and Theft Insurance

If you’re looking for a greater layer of protection than that offered by the third party only cover, you could consider third party fire and theft car insurance. This type of policy offers the same level of cover as that offered by the third party only policies, but in addition, it also offers protection against loss or damage if your own car is burnt or stolen.

If you own a cheaper vehicle, you may want to consider opting for third party fire and theft insurance rather than fully comprehensive cover as this could work out cheaper.

But, once again, the key is to do your research, as premiums will vary according to a range of factors including the make and model of the car, along with any safety features.

3. Comprehensive Car Insurance

If you’re looking for the greatest level of cover from your car insurance policy, you should consider fully comprehensive car insurance. This includes cover for damage to your own vehicle as well as any damage suffered by others from a range of causes, including accident, fire, and theft.

This is a greater level of protection than the cover offered by both third-party only and third party fire and theft car insurance.

That said, don’t assume that all comprehensive policies are the same, as some will cover the policyholder to drive another vehicle, or to drive their own car overseas but not all will.

As a motorist, you need to take a moment to scour the terms and conditions to ensure the cover is right for you.

Similarly, while some policies will offer additional features such as breakdown cover, legal expenses cover and courtesy cars, Strike, Riot And Civil Commotion (SRCC), flood protection etc. These juicy offers will not be included in every policy, so you need to check this. If these features are important to you, you should find out at the outset if they are available – or whether you can purchase them as add-ons. But before buying any additional benefits, ask yourself whether you are going to actually make use of them; if not, you are wasting money buying a cover that is of no use to you.

 


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