Hello guys, did you know that it is required by law that any financed vehicle have insurance? Is this because the bank is trying to protect its investment while you're still paying it off? Pretty much. You don't want to have crashed a car, lost a car, had it stolen, or experienced any one of the acts of nature that happen and still be held responsible for that car. So, the bank wants to ensure that they will get their money back should anything go wrong because it's fair to say that if you're financing the car, you pretty much can't afford it outright. Pretty much.
One of the questions that we get quite often hear is, what are the different types of insurances? Today, we're talking about comprehensive insurance. So, guys, can you tell me a little bit about what comprehensive insurance is?
In simple terms, comprehensive insurance is a complete cover for the vehicle. It guards against fire, theft, and complete loss due to an accident. It isn't going to cover mechanical issues, that's why motor plans, service plans, and the like exist. But it is going to protect you in the event of an accident. What it's also going to do is pay for damages caused by the accident to a third party. The third party is the person you bump into or the wall that you drive into or the streetlight that you happen to take out. That's a bit of a tough one.
Okay, so imagine you're driving on the freeway, traffic stops, you don't, and you drive into the person in front of you. What is your insurance going to cover in this event? The insurance will cover the damage to your vehicle and the damage to the vehicle that you drove into. You will just be liable for an excess amount, and unfortunately, your premiums are going to go up after that. With each and every insurance claim, it also puts a mark against your name. So if you can afford to, if it's just a small bumper bashing and a little bit of a paint trade, sometimes it's better not to get the insurance involved. But comprehensive insurance is going to cover the damage to both vehicles.
Now, what about things like acts of nature, such as flooding, fire, hail, or a tree falling on your car? Will the insurance policy cover that? Most times, yes. Sometimes an act of God isn't covered, but you just need to really read the finer details in your insurance policy. With many of them, if it seems really cheap and too good to be true, it usually is. They will launch a massive investigation into how you were negligent. They will naturally want to try and prove negligence on your part, that you left it parked in a river or next to a river with the handbrake down, something of the sort. If it is completely outside of your control, they may very well pay out, but they're going to look for a reason not to. Most insurances are going to do that. It is just a business, and this is also to prevent fraud, which is a very, very big problem. Absolutely.
Well, there you have it, folks. Comprehensive insurance is a little bit more expensive than the other types. Make sure you read your policy. It's probably the best sort of policy that you can have if you have a very expensive car. Absolutely. If you have a vehicle that you know you can't afford to replace outright, get a comprehensive insurance policy. It really is worth it. If you're not prone to accidents, you can take a slightly higher excess, and that will bring your premiums down. Otherwise, you can haggle a little bit and get a good premium with a respectable excess.
That's about it. Actually, shop around and just make sure that you go with a reputable company. Avoid all fly-by-night brokers. All I'm going to say is read your policy, make sure you know the fine print, be very, very, very wary of guys who are offering you deals that are too good to be true, and yes, just speak to a broker. Speak to a broker, speak to the insurance companies directly. There you have it.
