If you want to circulate quietly in your car, it is necessary that you have insurance that covers, at least, the civil liability required by law. To help you, in this guide we give you all the answers that you should know before signing a contract of this type.

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 compensate you for the damages 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 company which establishes the conditions under which said the company will pay the compensation corresponding to the policy chosen by the interested party.

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

What type of damage does car insurance cover?

Generally, insurance companies offer different types of policies, which can gather two or more insurances at the same time, depending on the coverage that each one includes.

In this sense, it is important that you know that the coverage is divided according to what or who has been affected by the loss :

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

What types of auto policy are there?

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

However, and to better market their policies, companies have grouped these packages and have come to 4 general names:

Third-party car insurance

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

This type of insurance offers coverage for material and personal damage that, as a driver, you can cause to a third party in the event of a claim.

Many times, this insurance can be complemented with Voluntary or Supplementary Civil Liability insurance, Legal Defense insurance for the insured, and a Driver’s Insurance.

Extended Third Party Car Insurance

As its name indicates, Extended Third Party car insurance is a type of policy that has the same coverage as Third Party car insurance but allows you to contract additional coverage according to your own needs, such as insurance against theft, fire, moons, among others.

Full Risk car insurance

Full Risk car insurance includes the coverage of the first two types of policies in addition to the coverage called Own Damages. The latter guarantees all material and personal damages that are generated both to third parties and to the occupants of the vehicle responsible for the accident.

Undoubtedly, this type of insurance is the most complete and the most expensive, as it includes all existing coverage modalities.

It is important for you to know that Full Risk car insurance covers everything from minor damages such as bumps and scratches to serious claims such as the total loss of the car.

All Risk Insurance with Excess

Generally, the All Risk insurance with Excess is one of the cheapest on the market. This is because the coverage is shared responsibility.

This means that the insured is the one who sets a certain franchise and to which the coverage for Own Damages is applied.

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

Compare before signing

If you want to save on car insurance but without losing coverage, we advise you not to rush. The market offers many options and the best thing is to compare all the policies that suit your needs and budget.


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