We tend to spend a lot of time picking out exactly which car we want to buy, but with plenty of drivers having reason to use their motor vehicle insurance, we should also spend some time making sure we’ve got the right type of car insurance!
For example, what if you’ve only got CTP cover but you just rammed someone’s expensive sports car? Had your car stolen – but only insured for third-party property? Perhaps you’re covered for third party, fire and theft … but not flood damage. Without the right type of car insurance, being involved in a car accident can potentially set your finances (and lifestyle) back significantly. So – what are the difference types of motor vehicle insurance?
Types of Insurance
1. Compulsory Third Party (CTP)
What does CTP insurance cover? CTP gives you protection against claims for compensation if you injure or kill someone in a motor vehicle accident. The specific conditions vary from state to state, so be sure to check how it works in your state.
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What does CTP insurance cover? CTP gives you protection against claims for compensation if you injure or kill someone in a motor vehicle accident. The specific conditions vary from state to state, so be sure to check how it works in your state.
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What it doesn’t cover: CTP doesn’t insure against the cost of repairs to any vehicles or property – yours or anyone else’s.
While it is the cheapest and most basic form of cover, keep in mind that having only CTP insurance leaves you at significant financial risk in the event that you damage a vehicle or other property belonging to someone else.
2. Third Party Property
This is the most basic form of optional car insurance, and helps to provide you with financial cover if you cause damage to property rather than a person; for example someone’s prized car, boat or caravan.
What does third party insurance cover? Third Party Property covers damage caused by your car to other people’s property. It will also cover your legal costs if you become embroiled in legal proceedings as a result of the damage caused.
What it doesn’t cover: Third party property doesn’t cover the cost of any repairs or replacement of your own car, except under some limited circumstances through some insurers. So it’s similar to CTP in that it only provides cover for other people and their property, rather than you and yours as well.
3. Third Party, Fire and Theft
If you don’t want to pay for top-of-the-line insurance but do want some level of protection for your own car, Third Party, Fire and Theft insurance is the next option.
What does third party insurance cover? – In addition to covering damage to the property of others, Third Party, Fire and Theft insurance also provides some limited cover for your own car in the event that it’s damaged or lost due to fire or theft.
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4. Comprehensive Car Insurance
This is the top-level insurance cover option and will certainly give you the greatest peace of mind – but it’s also the most expensive!
What does comprehensive car insurance cover? – It covers everything mentioned in the previous insurance options above, and in addition it covers accidental damage to your own car, irrespective of who is at fault. There are also a range of optional extras, including replacement vehicles and no-excess windscreen replacement. When they say comprehensive, they definitely mean it.
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