Definition of car insurance, policy types, and features

Car insurance

If you want to drive quietly in your car you need to have insurance that covers at least the civil liability required by law. To help you, in this guide we give you all the answers you need to know before signing such a contract.

What is car insurance or an insurance policy?

In the event of an accident or theft, your car must be protected with some type of contract that allows the insurance company to indemnify you for damage suffered or caused.

In this sense, a policy or car insurance is a modality used in most countries and that allows you to cover the risks that may arise while driving.

It is a contract between the driver and an insurance undertaking setting out the conditions under which the company will pay the compensation corresponding to the policy chosen by the interested party.

The insurance policy must include all coverages and assumptions that have been agreed with the insurer, as well as the compensation to which you will be entitled in case of an accident, your personal data and the information of the insured car.

What kind of damage does car insurance cover?

Generally, insurance companies offer different types of policies, which can collect two or more insurance while depending on the coverage included in each of them.

In this sense, it is important to know that the coverages are divided according to what or to who has been affected by the accident:

  • Insurance with coverage to the person:
    • Mandatory / Voluntary Civil Liability
    • Legal Defense Coverage
    • Driver’s Insurance
    • Travel Assistance
  • Insurance with car coverage:
    • Own Damage
    • Robbery
    • Fire
    • Moon Coverage
  • Insurance with supplementary coverage:
    • Defense in fines
    • Driver’s License Withdrawal
    • Repair loan
    • Replacement vehicle
    • Big damage

What types of car policy are there?

It is true that each company handles its own insurance names according to the different coverages they offer.

However, in order to be able to better market their policies, companies have grouped these packages and reached 4 general denominations:

Car insurance to Third Parties

Third-party car insurance is a type of policy that is covered by Compulsory Civil Liability insurance, which is indispensable in all policies.

This type of insurance provides cover for personal and material damage that, as a driver, you may cause to a third party in the face of a claim.

Many times, this insurance can be supplemented with Voluntary or Supplemental Civil Liability insurance, insured legal defense insurance, and Driver Insurance.

Extended Third Party Car Insurance

As the name implies, Extended Third Party Car Insurance is a type of policy that enjoys the same coverage as car insurance to Third Parties but allows you to contract additional coverage according to your own needs, such as insurance against theft, fires, moons, among others.

All Risk Car Insurance

All Risk car insurance collects coverage for the first two types of policies in addition to coverage called Own Damage. The latter guarantees all material and personal damage spawned to both third parties and the occupants of the vehicle responsible for the accident.

Without a doubt, this type of insurance is the most complete and the most expensive, since it includes all the existing coverage modalities.

It is important to know that All Risk car insurance covers anything from minor damage such as bumps and scratches to serious accidents such as total car loss.

All-Risk Insurance with Franchise

Generally, All-Risk Insurance with Franchise is one of the most economical on the market. This is because coverage is shared responsibility.

This means that the insured is who sets a particular excess and to which Own Damage coverage applies.

In the event of a claim, the insurance company will only pay the difference between the damages recorded and the amount of the excess.