Do you need comprehensive insurance for your car?

When looking for motor vehicle insurance there are three different types of policies available:

  1. Comprehensive Insurance
  2. Third Party Property Damage Insurance
  3. Third Party Property Damage, Fire and Theft Insurance

If you have an old car or one that is not that valuable you may choose Third Party cover only. Third Party Property Damage covers you against any damage your vehicle causes to another person’s vehicle or property. Third Party Property Damage, Fire and Theft offers additional cover for loss or damage caused by fire or theft to your own vehicle.

Neither Third Party Property Damage or Fire and Theft insurance covers your vehicle for accidental damage. However most third party policies include a limited amount of Uninsured Motorist Cover. This provides for limited cover for your vehicle, usually between $3000 and $5000, for when you are involved in an accident with an uninsured driver and the accident is not your fault.

Comprehensive insurance covers all types of damage and loss including fire, theft and accidental damage as well as damage your vehicle causes to another person’s vehicle or property. Accidental damage covers damage as a result of incidents such as collisions and hail damage. Comprehensive cover is highly desirable if your car is reasonably new or valuable.

Almost 90 per cent of motor vehicle insurance claims are for collisions (source ISA June 99). Although theft claims account for a significantly lower proportion of all claims, theft claims are considerably more costly. This is an important statistic to consider if you live in a high theft area. It is wise for all drivers to insure their car for at least third party property damage. Colliding with another car or into someone else’s property can prove extremely costly. Ultimately it is up to you to decide how much value you place in your vehicle. Assess your needs and circumstances before deciding which type of insurance policy is right for you.


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