Car insurance is legal in almost every country in the world, whether it is regulated, is another story. Because of the legalities of driving on public roads, a person wanting to purchase a policy must therefore have a clear understanding of what it exactly entails.

What it essentially does, is provide you with cover so that you would not be left with an enormous bill to settle if you were involved in an accident. We all know how expensive it is to get proper panel beating done and to have bumpers and lights replaced is nearly as costly as the car itself.

Hence the different levels of cover which is available in the market today:

It is called Third Party Insurance, and is the minimum level of cover you are obligated to have. This type will only cover liability to others involved in the collisions for instance; passengers, occupants of the other vehicle and pedestrians. Your policy will also cover damage to any property.

Included in this, you may also find Third Party Fire and Theft Insurance, which is similar to the one above, but includes protection against theft, damage caused by theft and fire damage.

By far the most popular and which offers the most cover, is Comprehensive Car Insurance. It includes the above two options and adds on protection over windscreen replacement, personal effects in the car like clothing for example. Then there is also natural causes like the weather and some will include riots and such. So depending on your personal needs, the insurer will offer a package which covers just that.

Of course there are a wide range of policies on offer today and the premiums will vary as certain aspects or influences will dictate what premium you will pay. So basically the higher their risk is, the more premium you will pay. Take for example things like what make and model vehicle you drive - here they look at book value, then they will consider if you live in a high risk zone where theft and break-ins of vehicles are prolific. Your age and driving history and claims history, will also come into play when calculating your premium

You might have heard people talking about a no-claims bonus and often wondered what this actually means. Well essentially it is a reward system which insurance providers have in place, provided you have made no claims whatsoever within a period of time stipulated by them. How they honor that bonus is up to each company, but many offer pay back schemes or lower premiums.

Important to a policy holder would be the amount of excess one has to pay when repair to ones car becomes necessary. Here companies might want a different amount per item. For instance, a certain amount will be stipulated for windscreen replacement, or panel beating. Ensure that you know what your excess is for various claims, so that you are not caught off guard when the time comes. In today’s fast pace life and tension on our roads, one cannot be without car insurance, it has become a necessity for all drivers.

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