You do not have a choice when deciding whether you need or do not need car insurance. It’s mandatory, and when caught without it, citizens are in deep trouble. So obviously you must take out a policy. But which policy you ask?

Every car traveling on the road is covered under compulsory insurance. If they are not, the vehicle’s owner is in deep trouble. Unlike third party insurance or comprehensive insurance, compulsory insurance is designed to cover other cars or individuals hurt in an accident. It does not protect the vehicle the car is insured under.

Compulsory insurance is expensive, because it does not represent the replacement value, but instead takes into account the damage that may be caused to other vehicles involved in the accident and personal injury claims.

What if you are involved in an accident, but it’s the other driver’s fault? Then there compulsory insurance is liable to pay for the damager done to your car. In fact, insurance company’s hold a lot of sway to who is responsible for the accident as well as driving age and experience.

A car owner can insure their car against damages in an accident through third party insurance. This type of insurance covers damages to your car when you are involved in an accident that only involved your vehicle. The insurance company will pay out most claims on these types of accidents after deducting the deductible from your policy.

The higher amount of deductibles you agree to pay in the event of an accident, allows you to reduce the cost of your annual insurance by more than if you had a low amount of deductibles. A “No claims” bonus is awarded to the driver every year they avoid an accident in a third party insurance policy.

The most popular form of car insurance, known as comprehensive insurance, covers the damages to vehicles in the accident as well as theft situations. The insurance is calculated based on the value of the vehicle, the age of the driver, age and condition of the vehicle, where it’s parked, as well as the strength of the security or lack thereof.