What is Car Insurance?

Cars are insured through an agreement or contract between two parties: the first being the insurance company, and the second being the vehicle owner. In this contract, the insurance company commits to compensating the car owner for damages and faults that occur to their vehicle or to other cars damaged by their vehicle, as agreed upon in the contract.

Types of Car Insurance

Concerning car insurance types, there are two: the first is comprehensive insurance, covering all damages caused by your car to others. As for the second type, it's comprehensive insurance, covering all repair costs for your car in case of accidents, including theft and fire. However, its financial costs might be higher compared to the former type, focusing more on newer vehicles.

Third-party Insurance

Through this insurance type, the insurance company commits to repairing damages caused by the insured vehicle to other cars. It doesn't cover repairs or compensations for the insured vehicle itself or the one causing the damages. This type is mandatory for all cars to protect the rights of affected car owners in road accidents.

The Benefits of Third-Party Insurance

1- Third-party insurance covers damages caused by the insured car to others, relieving the owner from financial burdens, providing psychological comfort.

2- The annual payment for third-party insurance is reasonable and doesn't pose a significant financial burden.

The Drawbacks of Third-Party Insurance

Among the major downsides of third-party insurance is that the insurance company doesn't cover damages to the insured car. Thus, the owner has to handle repairs personally if they caused the damage.

Comprehensive Insurance

This type of insurance obligates the insurance company to compensate or repair all damages caused by the insured car, in addition to fixing all damages to the insured vehicle itself. All vehicles involved in the accident will have their damages repaired under this insurance, making it optional for all cars, unlike third-party insurance.

Advantages of Comprehensive Insurance

1. Comprehensive insurance doesn't solely cover car repairs but also offers car insurance services to protect against any incidents at any time, such as theft and fire.

2. If the insured car causes an accident, the car insurance company will cover all repairs and compensations, relieving the owner from significant expenses to repair the car.

Cons of Comprehensive Insurance

1. One of the downsides of comprehensive insurance is that it considers the car's manufacturing date and age. It doesn't apply to older cars that might break down more quickly than newer ones.

2. The second downside is the higher annual payments required by insurance companies for this type of coverage. This poses a financial burden, especially for car owners purchasing their vehicles through banks or monthly installment plans.