When you own a car, it is essential to have insurance. If you do not have insurance, you will have to pay a large amount of repair costs yourself if you get into an accident. However, there are many types of insurance, so you may have had trouble deciding which one is best.
This article explains the different types of car insurance. In addition, it also explains special clauses that will give you more comprehensive coverage, so it’s a great reference for anyone wanting to review their current insurance.
Understand the differences and types of compulsory and voluntary insurance
First, let’s understand the different types of car insurance and their differences, because the coverage and subject matter vary greatly depending on the type of insurance.
In particular, many people who have just gotten their driver’s license may not know what insurance they need, or may have little knowledge about insurance. Use the information below to learn more about car insurance.
There are two main types of car insurance:
There are two types of automobile insurance: “compulsory insurance” and “optional insurance.” The coverage and mandatory participation differ for each type.
Compulsory automobile liability insurance is an insurance that all car owners must purchase, and it only covers bodily injury damages. On the other hand, voluntary insurance is not a legal requirement, but it is characterized by its ability to cover a wider range of risks, such as property damage damages and compensation for the driver himself. Understand the difference between the two and choose the insurance that is right for you.
Here we explain these insurances in more detail.
Compulsory automobile liability insurance is a type of insurance that all car owners are required to have. This insurance covers only bodily injury damages and aims to provide relief to victims of accidents.
However, the scope of compensation is limited and does not cover property damage, injuries to the driver, damage to the vehicle, etc. Therefore, the current situation is that many people cannot receive sufficient compensation with compulsory automobile liability insurance alone and therefore take out additional voluntary insurance.
Voluntary insurance is insurance that you can take out to cover high compensation amounts that cannot be covered by compulsory insurance, or to deal with a wide range of risks. Unlike compulsory insurance, this insurance is optional.
The insurance does not only cover bodily injury and property damage, but also various other types of compensation such as vehicle insurance and passenger injury insurance. By joining, you can significantly reduce the financial burden in the event of an accident, so many car owners also join voluntary insurance.
Benefits of joining optional insurance
Many people take out voluntary insurance because compulsory insurance alone does not provide sufficient compensation, but what are the benefits of voluntary insurance?
In fact, voluntary insurance has the advantage of being able to leave the response in the event of an accident to a third party, and has compensation that can handle a wide range of risks. In addition, there are special clauses that can handle troubles when you are not driving, so you can own a car with more peace of mind.
Here are three main benefits you can get by taking out optional insurance:
If you sign up for voluntary insurance, in the unlikely event of an accident, the insurance company will investigate the situation and negotiate with the other party on your behalf, leading to a smooth resolution. Since you do not have to negotiate a settlement yourself, the mental burden will also be reduced.
In particular, in the case of serious or complex accidents such as chain reactions, specialist knowledge is required, so support from an insurance company is a major benefit.
One of the benefits of voluntary insurance is that it covers things that compulsory insurance cannot. Compulsory insurance only covers bodily injury, but voluntary insurance can cover a wide range of damages, including property damage, personal injuries, and vehicle damage.
For example, if you cause damage to someone else’s car or property, or if your car is badly damaged in an accident, you can use your insurance to cover the cost of repairs, helping you avoid unexpected, costly expenses.
Another benefit of voluntary insurance is that it offers special clauses that can handle accidents and troubles that occur even when you are not driving. For example, you can prepare for a variety of situations, such as being involved in an accident while walking or having your car damaged while parked.
In other words, if you sign up for voluntary insurance, you will receive support for problems related to your car in your daily life. For this reason, many people sign up for voluntary insurance because they feel that the coverage provided by compulsory insurance alone is insufficient.
When deciding which optional insurance to take out, consider your driving style and the risks involved, and choose the appropriate coverage.
There are two main types of voluntary car insurance
There are two main types of voluntary automobile insurance: “agency-based automobile insurance” and “direct automobile insurance.” If you understand the characteristics of each, you will be able to choose the insurance that suits you.
Here we will explain in detail about agency-based car insurance and direct car insurance.
Agency-type car insurance is car insurance that is contracted through an insurance company’s agency. You can feel secure because the person in charge will directly consult with you and explain the coverage details before signing the contract.
If you are involved in an accident, the response is smooth, and the staff will guide you through the procedures and how to respond, as well as provide assistance with settlement negotiations, providing extensive support.
Even if you don’t know how to choose insurance, a person with specialized knowledge will suggest the best plan for you, so even those with little knowledge can join with peace of mind. Therefore, it is recommended for those who want thorough support or are unsure about choosing insurance.
However, since agency-type automobile insurance incurs labor and operating costs, premiums are often set higher than direct-type insurance.
Direct car insurance is car insurance that can be purchased directly via the internet or telephone. By purchasing insurance via the internet or telephone, sales costs can be reduced and premiums can be kept low.
Since the procedure can be completed online, it is perfect for those who want speed. In addition, the insurance coverage can be freely customized, so you can choose the coverage you need.
You can easily compare plans online, so consider plans from multiple insurance companies and choose the insurance that offers the best value for your money.
However, accidents are generally handled through call centers and online services, so it is not suitable for people who prefer face-to-face support. Also, you have to decide on the details of your compensation yourself, so you will need to have some knowledge about insurance.
Voluntary insurance to compensate the other party
We have explained that automobile insurance is divided into compulsory insurance and optional insurance. Among them, optional insurance includes “personal injury insurance” and “property damage insurance” that compensate for damage to the other party in the event of an accident.
These are important insurances that compensate for damages that cannot be covered by compulsory automobile liability insurance alone. Let’s take a look at what they specifically include.
This insurance covers any damages that exceed the compensation limit of compulsory automobile liability insurance when you injure a pedestrian or passenger in an accident. Therefore, it is essential to prepare for accidents and fatal accidents.
For example, if a fatal accident occurs, a large amount of compensation may be claimed. Since there is a maximum limit for compulsory automobile liability insurance, any amount exceeding that limit will be covered by third-party liability insurance.
It also covers medical expenses and permanent disability, providing appropriate compensation to victims.
In addition, if a settlement negotiation service is included, the insurance company will negotiate with the victim on your behalf, preventing any trouble from occurring.
Property damage insurance is insurance that compensates for damage to the other party’s car or building in an accident. It also covers repair costs and loss of business, so be sure to set a sufficient amount of compensation in preparation for expensive damages.
For example, if your car crashes into a store or factory, you may have to pay damages due to business interruption in addition to repair costs. Since there are cases where a large amount of compensation is required, we recommend choosing unlimited property damage compensation.
In addition, damage to traffic lights or guardrails is also covered. In such cases, there is a possibility that local governments or companies will claim for damages, so if you join, you will be able to receive generous compensation.
Voluntary insurance to cover yourself and your passengers
Compulsory insurance is further divided into insurance that provides compensation for yourself, your passengers, and your vehicle in the event of an accident.
From here on, we will explain the main types of optional insurance.
Personal injury insurance is insurance that pays for injuries sustained by you or your passengers when you are involved in an accident. This insurance covers you regardless of the cause of the accident, even if you are negligent.
The benefit is that it covers not only the car itself, but also medical expenses, hospitalization costs, and loss of business caused by an accident.
In particular, even if the other party is negligent, you can receive compensation within the scope of the insurance amount regardless of your degree of negligence, which can reduce the burden incurred as a result of the accident. For example, if you suffer minor injuries in a vehicle collision, you can receive the necessary compensation from your own insurance before receiving compensation from the other party’s insurance.
This insurance is important in case of an accident, so it is worth considering taking out.
Passenger injury insurance provides compensation for injuries to all people in a vehicle at the time of an accident.
For example, if a driver has an accident and a family member or friend who was in the car with them is injured, passenger injury insurance will cover the medical expenses of the family member or friend and loss of work.
The attractive point of this insurance is that it reduces the mental burden on all passengers in the car and provides quick support. This insurance is essential if there is a possibility that people who are vulnerable to the effects of an accident, such as children or the elderly, are in the car.
Self-inflicted accident insurance is insurance that provides compensation even if you do not collide with another vehicle. For example, it applies to accidents that you cause yourself, such as hitting a guardrail or utility pole while driving, or hitting an obstacle on the road.
This type of insurance does not cover damage to other vehicles or people, but only covers damage to yourself.
Even if the accident is due to your negligence, it can be said to be effective in covering the risk of causing an accident while driving, as it will cover vehicle repair costs, medical expenses, and in some cases loss of business.
It is especially recommended in cases where there are many single-vehicle accidents or if you are not confident in your driving, as it provides peace of mind.
Uninsured motorist injury insurance applies when the other party does not have third-party liability insurance or does not provide sufficient compensation.
This insurance comes in handy when the other party in an accident is uninsured or when the compensation is insufficient due to a large percentage of fault. In particular, as accidents involving uninsured vehicles are increasing, this insurance is essential to avoid the risk of not receiving sufficient compensation.
By purchasing this insurance, you can receive appropriate compensation for damages suffered by yourself and your passengers, even if the other party does not pay sufficient compensation after an accident. It is a valuable ally, especially when driving in urban areas or crowded places, as it reduces the risk of collision with an uninsured vehicle.
Voluntary insurance to cover car
If you are looking for optional insurance that will cover your car, you should sign up for “vehicle insurance.”
Vehicle insurance is a voluntary insurance that covers damage to your vehicle caused by accidents, theft, and natural disasters, and you can choose a plan based on the scope of coverage. It covers repair costs in the event of an accident or theft, reducing your financial burden.
General vehicle insurance also covers repair costs after an accident and damage caused by natural disasters such as typhoons and snow.
In addition, the total loss vehicle special policy will cover the cost of purchasing a new car and the residual value if your vehicle is completely damaged and cannot be repaired.
As such, there is optional car insurance available, so choose a plan that suits your driving environment and risks in case of an accident.
Special clauses that provide even more generous compensation
In addition to the basic coverage of optional insurance, you can add special provisions to customize your insurance to better suit your needs.
Special clauses are used to strengthen basic coverage, and can range from enhancing coverage to limiting the scope of coverage to reducing insurance premiums. Adding special clauses can greatly increase your sense of security.
Here we will explain three special clauses that will provide you with more comprehensive compensation.
The attorney’s fees special clause is a special clause that covers the attorney’s fees required when negotiating a settlement or litigating in a case of a hit-and-run accident.
For example, if you are involved in a hit-and-run accident and have difficulty negotiating with the perpetrator or making arrangements with an insurance company, this will cover the cost of hiring a lawyer.
In addition, if you have any problems with claiming after an accident or if you need to adjust the degree of fault, you can get the help of a lawyer, which will make negotiations go more smoothly. We recommend adding this special clause, especially if negotiations with the other party are complicated.
Personal liability insurance is a special policy that covers damages caused to others due to accidents or troubles that occur in daily life.
For example, it covers all kinds of liability that arise in everyday life, such as bicycle accidents, pets injuring others, or children damaging other people’s property.
By adding this special clause, you will be able to live your daily life with peace of mind, knowing that you will be compensated even if you cause damage to someone else in an unexpected accident.
This special clause can help support the financial burden, especially if you live with your family or have pets at home, as unexpected accidents and troubles are more likely to occur.
The Family Bike Special Clause is a special clause that provides compensation for mopeds of 125cc or less that are driven by the named insured or their family members. This special clause provides compensation for bodily injury and property damage caused by motorcycle accidents, as well as compensation for injuries.
If you have a family member who regularly uses a moped, adding this special clause will cover liability and medical expenses in the event of an accident. Since mopeds are said to be particularly prone to accidents, using this special clause will help you prepare for the unlikely event of an accident.
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