Car Insurance Basics

2007-03-08 10:33:40

( Automobiles )



There is no perfect driver; a momentary loss of focus could result in a hazardous situation to you or others near you. Therefore, as required by law, any vehicle you own must be insured against possible road accidents. Without car insurance, you could be faced with bills and damages that you need to pay over a period of time, cutting off a portion of your allowance or salary which could have been used for other things.

Basically, this is how it works: You pay the insurers a sum of money known as a premium, and they agree in return to pay you out upon certain events, like a road accident. You are known as the First party to this agreement and the insurers are the Second party. Anyone else involved in the insurance account is referred to as Third parties. The same goes for all other persons involved in the car accident. To apply for insurance cover, you must complete a proposal form providing details on yourself and the car you want insured. When they have reviewed the form, the insurers will say whether they agree to insure your car, and state the annual premium required and the scope of the cover they will provide you.

Everything about car insurance cover is stated in three important documents. The first is the cover note, which you receive after your first payment to the insurers. This certifies that you have the minimum insurance required by law and gives details on the cover provided. This is only a temporary document until you receive your certificate of insurance. Even so, it is illegal to drive without the cover note. The second important document is the certificate of insurance (COI). This comes together with the policy, and it states who may drive your car and for what purpose. The last is the policy, which contains full terms of your contract with the insurers, and gives details on what is covered or excluded in your car insurance.

If the COI is misplaced, you should inform it at once to your insurers. If you decide to change your car, you may have to return your COI and obtain a new one to go with your new car. The premium may then be adjusted to match your vehicle. Otherwise, you’ll only receive the minimum cover stated by law. You should also return the certificate if the insurance is cancelled by you or the insurers.

There are many situations you’ll encounter that can bring you financial loss. Having your car insured puts you one step ahead of these situations. Knowing the principles behind it keep you from being in the dark. Keep in mind that good auto insurance is safe auto insurance.


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