When you’re in the market to purchase a vehicle, you can expect that there will be consumer protection plans attached to cover the vehicle against certain risks. The two most common plans are Car Insurance and a Motor Warranty. The first is offered by insurance companies and the latter by the vehicle manufacturer, although insurance providers also sell variations of Motor Warranties.
It’s easy to assume a Car Insurance policy and a Motor Warranty are the same. While each product is meant to protect you and/or your car and can overlap under certain circumstances, they are actually very different things. This blog article explains what Car Insurance and Motor Warranties cover.
The mechanics of a Car Insurance policy
A Car Insurance policy, for which you pay monthly premiums, is a plan you can take out as soon as you become the owner of a car. It covers repairs under specific conditions, usually when you have been involved in a car accident. Depending on the type of insurance (see below), the policy can also provide financial cover in the event of theft, hijacking or fire.
Most insurance companies offer tailor-made Car Insurance policies of which Comprehensive, Third Party Only, and Third Party, Fire and Theft are the basic options. It’s important to consider how each will suit your particular needs and circumstances. Payment terms and claim procedures vary with each company as does the monthly premiums for each type of insurance.
- Comprehensive Insurance – offers the highest level of protection and provides cover for most risks to your vehicle including accidents, fire, fire theft, hijacking and damage to other parties.
- Third Party Only Insurance – if you are liable for an accident, this type of insurance pays for the damage to other parties and their vehicle/property.
- Third Party Fire and Theft Car Insurance – this plan extends beyond liability cover to include theft and damage as a result of fire and hijacking.