What is car insurance?

If you have a car, you already know that you must have it insured with good car insurance: every owner is obliged to take out and maintain a policy that covers, at least, the driver’s civil liability arising from damage, both personal as materials, caused to third parties as a result of an act of circulation.

From there, many additional coverages can be contracted depending on your needs and circumstances (age, type of car)

INSURANCE TO THIRD PARTIES

It covers the damages we cause to other people or their property.

Third-party insurance:

It includes compulsory civil liability, complementary civil liability, and the legal protection of the motorist. Travel assistance is also usually included.

Extended third-party insurance:

In addition to the previous third-party insurance coverage, windows, theft, and fire can be added. This modality also includes the range of extraordinary risks that the Insurance Compensation Consortium is responsible for.

The two central guarantees are compulsory and complementary civil liability insurance.

Compulsory civil liability insurance

It is the insurance that every vehicle should have. It covers most of the damages that we cause to third parties or their property, such as injuries to a cyclist and dents in the opponent’s car. The number of damages we cause will hardly exceed the current limits of compulsory insurance.

The compulsory car insurance coverage is established by law. It is valid for Spain and all the countries of the Multinational Guarantee Agreement, signed by all the countries of the European Union, as well as Andorra, Croatia, Iceland, Norway, and Switzerland. This means that your insurance continues to protect you if the accident occurs in one of those countries. Although the limits and exclusions will be governed by the compulsory insurance regulations of the country in question unless in Spain they are higher, in which case the Spanish will apply.

Supplementary civil liability insurance

This insurance is additional non-compulsory coverage, although all insurers already include it together with the compulsory insurance within the package (“third-party”).

This modality is subject to what is agreed in the policy conditions and not to regulation (as with compulsory insurance).

The difference with compulsory insurance is that it covers the damages that we cause to third parties from mandatory insurance limits.

You may have exclusions other than compulsory insurance or additional coverage, such as damage caused by minor children driving without parental permission, trailers, the insured as a pedestrian or cyclist, or as a driver or passenger of another car, etc.

COMPREHENSIVE INSURANCE

If the car is new, it is advisable to take out comprehensive insurance or own damage insurance. In addition to all of the above, this modality covers damage to our vehicle due to other possible causes, such as acts of vandalism, damage caused to the car by ourselves, or when there is no identified person responsible.

Companies usually offer the possibility of contracting this modality with a franchise. If an accident occurs, the insured will bear part of the expenses.

This insurance is usually valid in the countries of the European Union, and, in addition, some companies extend it to the countries of the green card.

Along with these more common coverages, others can be added, such as:

• Substitution vehicle. A vehicle is offered if you cannot use yours due to an accident or breakdown. This modality is usually expensive and has limitations that should be reviewed, but you may be interested if you cannot do without the car.
• Management of fines. They carry out the procedures to manage and appeal the penalties.
• Accident insurance for the driver or occupants. Compensates if the passengers or the driver suffer physical damage in an accident.

Essential aspects to take into account when hiring car insurance.

Bonus-malus

The basis of the bonus-malus system is to reward good drivers (those who do not report) with discounts and penalize bad drivers with premium increases. Each insurer applies the approach differently, and the bonuses are reached by staying in the company for a specific time that depends on each one.

One of the significant advantages of bonuses is taking them from one company to another. There is a file, the Automobile Insurance Historical File (SINCO), in which insurers share the incidents that their clients have had, in which damage has been caused to a third party. Thanks to this system, users can change their insurance, and the receiving insurer of the new client can access their history as an insured, which will allow them to customize the price according to their profile. This also makes it easier to take discounts from one company to another, although the value may be modified with the change since there is no standard.

Value of compensation in case of total loss

Total loss compensation (and personal damage coverage) can vary greatly depending on the company and the car’s age. Usually, the first two years are offered at the new value, which is the best since it is the current list price. Then the acquisition value, then the replacement value, the improved value. And finally, the market value is equivalent to the dealer’s purchase price.

Franchise

It applies to comprehensive insurance and is a fixed amount, a percentage of the claim or a combination of both, from which, in the event of an accident, the company will cover the claim. This significantly reduces the price of insurance.