Why is Car Insurance Important?

When it comes to protecting important investments, your car should be one of them. Therefore, taking a good insurance deal for your car is a must. Ignorance and religiosity has made people lose opportunities and deals. Some have this belief that no ill will befall them. But the truth is that when you take out a considerable amount of cash to invest in a property, it helps you protect yourself against losing the money you have invested.

This article will help you learn about the importance and necessity of having a car insurance.

First, what is insurance?

Oxford Dictionary defines Insurance as “an arrangement by which a company or the state undertakes to provide a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a specified premium”. Therefore, if you look for ways to protect yourself and your properties from the financial losses that may result from a likely future accident, damage, theft, or any uncertain loss, then you are insuring against those losses.

Companies that take it upon themselves to help you manage this risk for a fee are reffered to as insurance companies and the payment they take from you to help manage these risks is called Premium.

What is Car Insurance?

Car insurance as the name implies involves the insurance policy you take to protect yourself against any financial burden that might result from damage to your car either as a result of an accident, vandalism, or theft. There are 4 types of car insurance covers which are:

  • The two party only cover.
  • Third party fire and theft cover.
  • The act only cover
  • The comprehensive insurance.

However, in Nigeria only 2 types of vehicle insurance policies are offered by insurance companies which are: the third party only cover and the comprehensive insurance.

  1. The third party only cover

This insurance takes care of the third-party damages that were caused by the insured. It covers collision and non collision damages as well as theft, fire or loss attributed to the insured party but will not cover any of this for the insured persons car or property. So in an event that you crash into someone’s car and you are at fault, the third party vehicle insurance will cover the cost of repairs to the other driver’s car you damaged but will not cover the cost of repairs for your own vehicle.

The advantage of this cover is that, the policy is reaped by the third party for damage, loss, death, and disability for which the insurance purchaser is liable. The disadvantage is that it doesn’t cover any damage or loss suffered by the insured.

2. Third-party fire and theft cover

This insurance gives the third party as well as the insured the same cover in the event of a collision causing damage, while it is inclusive of redeemable claims in the event of car theft or fire for the insured. In the event of attempted theft resulting in damage, the insured could also make claims.

One of the advantage of this insurance is the cover both the insured and third-party get during accident. Also, the insured could make claims for loss, vandalism, fire, or car theft. However, the third party cover is limited to damage resulting from accidents in this package.

3. The act only cover.

This is also known as third party liability cover or motor third party insurance. This is what is mandatory under law for all car owners in Nigeria, and it adequately covers the liabilities incurred by the policy buyer for third-party death or disability, damage to third party’s property or loss as a result of an act of the policy purchaser.

The merit of this plan is that it protects the insured in the event of a crash without recourse to if the insured was the faulty one or not. But it, unfortunately, is limited to car crash or collision induced damage.

4. The Comprehensive insurance

This is considered the best of insurance policies because it ensures that the insured is catered for in the event of damage from both collision and non-collision sources. It also covers car theft, fire, attempted theft resulting in damage, vandalism, and much more.

This insurance cover is very advantageous as it offers so many benefits that the third party insurance does not cover. It is also not limited to collision induced damages like third party insurance. However, this is the insurance cover with the most expensive premium.

Knowing about the types of car insurance will enable you to make the right choice for your type of vehicle. In addition, here are 3 main reasons you need to get a car insurance

  1. Insurance takes care of your financial liabilities in the event of an accident.
  2. High mental disorder across the population.
  3. The Terrible state of Nigerian Roads.

With all this, I hope you understand why getting a car insurance is pertinent and having a car insurance before you take your car to the road, if not, you’re liable to be sued in the event of an accident or damage occurring.

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