Buying a car and car insurance: important aspects
Buying a car is a large financial expense, and maintaining it is also a significant expense. In addition to expenses for fuel, repairs, safety accessories, and more, there is a fixed annual expense that can reach thousands of shekels a year: car insurance.
How many of you delved into the details of the car insurance policy before purchasing it, how many of you looked at the fine print, and with your hand on your heart, are you sure that in the moment of truth the insurance policy you purchased will meet your expectations, save you high financial expenses, and prevent emotional distress?
Competition in the insurance market often works in the customer’s favor. If you act wisely, if you understand what you are purchasing, if you conduct a professional market survey and are not tempted to buy the first offer, if you know what you can add to the insurance policy and what you can forgo, you can purchase the optimal insurance policy that suits your needs exactly.
Car insurance – What is the difference between compulsory insurance, third-party insurance and comprehensive insurance?
There are three types of car insurance: compulsory insurance, third-party insurance, and comprehensive insurance.
Compulsory insurance
According to the Motor Vehicle Insurance Ordinance of 1970, every motor vehicle driving on the country’s roads is required to have compulsory insurance. Driving without compulsory insurance is a violation of the law, the penalty for which can be months in prison or a large fine. When buying a second-hand vehicle, compulsory insurance must be taken out immediately upon transfer of ownership. It is forbidden to drive even one meter without compulsory insurance, and the insurance forms must be in the car at all times during the trip.
Compulsory insurance covers all bodily injuries to anyone involved in an accident, the at-fault driver, the injured party, pedestrians, or anyone who suffered direct damage from the incident. With compulsory insurance, there is no need to prove fault in the accident; anyone who suffers bodily injury inside or outside the car is entitled to compensation.
The mandatory insurance is paid by the insurance company that insured the vehicle. If the vehicle was not insured or there was a hit-and-run accident, you can sue the “Karnit Company”, a government insurance company in which all insurance companies are partners.
The terms of coverage of the policy are uniform and have been determined by the Insurance Supervisor. The difference between the policies is only in the price of the policy, which is determined according to various factors such as whether the insured driver has committed traffic violations in the last three years, the driver’s age, whether the driver is a new driver, and more.
There is no deductible in compulsory insurance, except for motorcycle insurance. Due to the high cost of motorcycle insurance policies, many insurance companies have begun to offer a deductible in exchange for a reduced premium.
Third party insurance
Third-party insurance covers damage caused by your vehicle to a third-party’s property, which can be anything such as a vehicle damaged by you, a building’s fence, an electric pole, and more. Third-party insurance is not mandatory insurance, but if you want to sleep well at night, it is recommended to purchase it since the damage that may be caused by your vehicle can reach hundreds of thousands of shekels and if you are not insured with third-party insurance, you will be required to bear the costs yourself. Third-party insurance is also worth taking out for an old vehicle since it does not cover the damage caused to your vehicle, but to the vehicle or property that you damaged.
Third-party insurance prices are not uniform, so before you purchase third-party insurance, it is important to conduct a market survey, compare data and costs. The limits of coverage and liability of insurance companies differ from company to company and are detailed in the policy. Usually, the average coverage is about two hundred and fifty thousand shekels and it includes legal expenses. If you want to increase the coverage, you can do so by adding a few dozen shekels to the premium payment.
Third-party insurance includes a deductible. The amount of the deductible depends on several factors such as claims history, involvement in accidents, the driver’s age, and more.
Comprehensive insurance
Comprehensive insurance covers financial damage that may be caused to your car due to a number of reasons, such as car accidents, theft, fire damage, natural damage, vandalism, etc. The amount of the premium depends on a number of factors, such as the value of the vehicle, the age of the vehicle, previous traffic violations or accidents, statistics on thefts of the insured type of vehicle, and more.
Car insurance is not mandatory. If you drive an old car, it is worth checking the feasibility of comprehensive insurance.
When you purchase comprehensive insurance, it is important to pay attention to the deductible section and the coverages offered by the insurance company, such as towing services, a replacement vehicle, windshield repair, legal defense, etc. The more coverage, the higher the monthly premium, sometimes, but the more complete the return you will receive for your money.
What is important to pay attention to when purchasing comprehensive insurance?
Windshield insurance – Although a standard comprehensive insurance policy includes insurance for cases of broken windshields, since each call to the insurance increases the premium the following year and damage to windshields is very common, it is advisable to take out additional windshield coverage insurance so that in the event of a broken windshield, you will not have to activate the comprehensive insurance.
New for Old – Special insurance that is only available for vehicles up to twenty-four months old. If your vehicle is stolen, you will receive financial compensation that will allow you to purchase a new vehicle of the same type.
A replacement vehicle is a vehicle that you receive in place of a vehicle that was stolen or destroyed. Pay attention to what type of vehicle you will receive, when you will receive it, and for how long.
Settlement garages are garages that work with the insurance company and, naturally, their obligation is to the insurance company and not to you. Since settlement garages want to save insurance companies as much money as possible, the parts they use are usually not original parts. Therefore, when signing the policy, pay attention to the deductibles that vary between treatment at the garage of your choice and treatment at the settlement garage. At every garage where you service your vehicle, insist on using original parts if there were any in the vehicle before the accident.
Towing insurance covers the costs of towing a vehicle in the event of a breakdown or accident. It is important to check that the insurance covers towing a vehicle from anywhere in the country and for the waiting time that the towing company undertakes.
It is important to check whether the company’s service providers meet accepted standards of service and quality.
How can insurance costs be reduced?
The differences between the prices of comprehensive insurance policies are very large. If you do thorough market research and compare the different companies, based on equal data, you can save a lot of money per year.
You do not have to purchase all your car insurance from one insurance company, but if you purchase a package that includes all types of insurance from the same insurance company, and perhaps also additional insurance such as home insurance, health insurance, and more, you can negotiate the amount of premiums and ask for discounts.
When purchasing comprehensive insurance, you are not required to purchase all of the coverages offered by the company. If, for example, you do not need a replacement vehicle, you can forgo it. The less coverage you purchase, the lower the premium price will be.
If you have purchased comprehensive insurance, you do not have to purchase third-party insurance as well, since coverage for damaged vehicles is included in the comprehensive insurance.
Young driver insurance increases the price of insurance. Ask your insurance agent to suggest ways to reduce costs, such as insurance for weekends only when the young driver is a soldier, etc.
The amount of the deductible lowers or increases the cost of insurance. You must weigh the cost against the benefit. If you come across a particularly cheap quote, check the amount of the deductible. It is not recommended to choose a high deductible that will make the operation of comprehensive insurance unprofitable.
Insurance companies offer discounts and benefits to certain sectors and organizations. Check at your workplace, consumer club, or other places to see if you are eligible for discounts, and if so, take advantage of them.
summary
In conclusion, car insurance provides protection in the event of an accident, theft, or any problem with the vehicle. Don’t miss out on purchasing insurance that suits your needs so that in the event of an accident, you will have the means to deal with the damages that may occur.
Additional aspects to consider
When you are considering the different options for car insurance, there are several additional aspects that are important to consider:
- Driving history: If you have a history of accidents or traffic violations, this can affect the cost of your insurance.
- Type of vehicle: Expensive vehicles or vehicles with a history of theft may require higher premiums.
- Residential location: If you live in an area with a high rate of accidents or thefts, this may affect the cost of insurance.
- Vehicle use: If you use your vehicle for work or long trips, this may affect the cost of insurance.
Customer Service and Support
It is important to check the level of service of the insurance company. Do they have customer service available? Do they offer support in the event of an accident? Good service can save you a lot of headaches when needed.
Recommendations and reviews
Read recommendations and reviews of the various insurance companies. Opinions from previous customers can give you a clearer picture of the quality of service and coverage the company offers.
Faq
- What is compulsory insurance? Compulsory insurance is insurance that covers bodily injuries to all those involved in an accident, and is mandatory by law.
- What is third party insurance? Third-party insurance covers damage caused to third-party property as a result of an accident involving your vehicle.
- What is comprehensive insurance? Comprehensive insurance covers damage to your vehicle, including accidents, theft, natural damage, and more.
- How can insurance costs be reduced? You can reduce insurance costs by comparing prices, choosing appropriate coverage, and checking for discounts.
Car insurance is an integral part of modern life, so it is important to understand the different options and choose the policy that best suits your needs.
