How important is third party car insurance
For years people have been writing letters to the editors of newspapers and phoning talkback saying that third party car insurance should be compulsory.
We're not going to go into answering that question here, but one thing we do know for sure; if you're driving your car without at least third party insurance, you are crazy!!
A lesson learned
Let me tell you a story about our youngest daughter's most horrifying moment. We had an old blue Corolla. Three children had learned to drive in it and they were pretty good drivers. It was an old car, but it was a good car. Mechanically, it went well and there was very little evidence of rust.
One day our daughter came home, parked the car in the drive and went inside. Minutes later, she heard a crash. She'd forgotten to put the handbrake on! The car had rolled backwards and into our neighbour's house.
Amazingly, there was very little damage to the car. However, the house didn't fare so well. The car was now sitting in the front bedroom. The cost to repair the house was $27,000!
As I talked with our daughter about this I pointed out, "If you didn't have insurance, you would be paying that off at $100 a week for the next five years."
What is third party car insurance?
Third party car insurance is insurance you take out to repair or replace any damage you do with your vehicle, it doesn't cover damage to your own vehicle.
There are two types of third-party insurance;
- Basic third party insurance insures the damage you may cause to another person's vehicle or property with the insured car.
- Third-party fire and theft is slightly more expensive and insures damage to other vehicles, and to yours if your car if it is damaged by fire or stolen.
So, while your car isn't covered, any damage your car causes is.
That makes third party car insurance ideal for cheaper cars. The Corolla I told you about was only worth $1,000. To insure it was going to be about $500 a year because of the age of our children. Third party insurance, however, was only $150 a year - and it was worth every cent for our family.
Should third party car insurance be compulsory?
The Government seems to be weakening on this issue. Some politicians are saying they want to see compulsory third party insurance on cars, and most New Zealanders agree with them.
What many people don't realise is how inexpensive third-party insurance can be to buy and how expensive having no insurance can be in the event of an accident.
I think our family's story should be a warning to every car owner; you may think you'll never have an accident of any sort, but they happen, and when they do, they can be very expensive.
Insure your car and avoid debt!
If you have a vehicle, insurance is vital. Remember, when you insure something such as a car, it is not the car you are insuring. You are insuring yourself so that, if you cause damage with that car you will not be placed under the pressure of a debt you may never be able to escape from.
Vehicle insurance is not about insuring your car - it's about insuring yourself against a lifetime of debt!
If you are uninsured because you find it too expensive, phone an insurer and ask for a third-party insurance quote - it's worth it for your own peace of mind.
The team at Futurisk would love to talk to you about all aspects of your personal finances and insurances. Click here to contact Futurisk.
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