What are the different types of car insurance? For those who are new to the world of car insurance, you should know that there are basically only two forms of car insurance, one that is compulsory by law and the second that is at the owner’s discretion. The second form of discretionary car insurance falls into two sub categories third party and comprehensive. Here is a brief run down on these different types of car insurance.

In South Africa the law requires that every car on the road have some form of insurance cover. This form of basic insurance is known as compulsory, simply because it is. Compulsory insurance only provides cover for any other car or cars that you will have been involved in an accident with. The cover includes damage repair to the other parties’ car as well as a certain level of injury insurance to people who were in the car at the time of accident.

Compulsory insurance does not allow in any way for repairing damages to your car if you are involved in an accident, or your car s stolen and never recovered. This is why most car owners take out what is known as third part insurance which will cover their car if it is stolen or damaged in an accident. Third party insurance is not compulsory and taking out this form of insurance is entirely at the owner’s discretion.

Unlike compulsory insurance which is calculated according to the age and experience of the driver or drivers, third party insurance takes into account the value of the car. The criteria for calculating the car’s value will be taken into account when the premium is calculated and will include the car’s age, its current condition, the age and driving record of the owners and drivers, as well as where and how the car will be garaged when not in use, as well as the type of alarm system the car has, if any.

Most car owners are sensible enough to take out third party car insurance including cover against theft. Although their car will not be worth much, the cost of the insurance premium will also be pro rata, and they will have the peace of mind of knowing that should their car be stolen, damaged or written off they will be able to repair or replace it.

Obviously the higher the value of the car the more expensive it is to arrange compulsory cover. In most case, owners of high value cars also have no choice but to take out comprehensive cover, as they will more than likely have taken a loan or a bond to finance the purchase and their bank will have insisted on it.

Comprehensive cover for a high value car can be an expensive business, especially if the driver is young, or has some blemishes on their driving record. All in all taking out insurance coverage for a car should not be taken lightly or grudged in any way. The independence and enjoyment that owning a car brings should more than help to offset the costs.