Motor insurance, also known as car insurance and
automobile insurance, is a contract between a motor owner and an insurance
company. The insurance company takes on the risk of damage or losses associated
with the vehicle in exchange for a set price known as a premium.
There are many kinds of motor insurance which vary in the kinds of risk they cover
and the degree of cover.
There are 3 basic
vehicle insurance options
namely; 3rd Party, Fire & Theft, and comprehensive cover.
Third Party cover is the lowest form of risk cover available and is legally
compulsory in many countries. With this form of motor insurance, if you are the
cause of an accident and damage is inflicted on another vehicle or person the insurance
policy provides financial compensation to the affected persons. If your vehicle
is damaged, this type of insurance will not compensate you.
3rd Party – Fire & Theft provides additional cover against fire damage to
the vehicle and if it is stolen. This type of policy provides additional peace of
mind, but also does not compensate you if your vehicle is damaged in an accident.
Comprehensive motor insurance as the name suggests covers the insured for
almost all cases of damage or loss associated with the vehicle. It provides the
same cover as 3rd Party, Fire & Theft as well as for accident damage to the vehicle.
There are numerous discount options available, but the no-claims discount is one
of the most popular and widely marketed. This discount is given to drivers who haven’t
claimed on their policy for a number of years (usually between 2 to 4 years). This
type of reward benefits both the insured and insurer.