In a perfect world, we might not need car insurance. There would be no potholes, no slippery streets, no intoxicated or reckless drivers and therefore no crashes. Unfortunately, we don’t live in a perfect world; we live in a world where accidents take place and we have to invest a lot of our hard earned money in our monthly insurance charges.

At least there are companies that still offer cheap car insurance quotes and we do not have to spend our complete paycheck on this less than enjoyable expense.

Prior to looking around for cheap car insurance quotes, you must have a basic understanding of what insurance policies entails, so that you don’t fall for a smooth insurance firm and end up spending more than you originally anticipated.

If an insurance company is trying to offer you a “Balance of Third Party” policy, don’t take your wallet and run for the hill. This is actually a legitimate policy! The Road Accident Fund act pays out in the event of death or injuries to third parties involved in an accident. All motorists contribute to this fund through a levy that is included in our fuel purchases. Most insurance providers leave out the “balance” part of this plan and just refer to it as “Third Party Insurance” – it is the exact same thing. The driver who caused the crash will be accountable for paying for his own repairs, while this form of insurance will only cover the innocent party. This is a relatively cheap car insurance policy and insurance coverage is restricted, but at least in the event you cause an accident you won’t have to worry about finding money to pay for injury that the other party sustained due to your carelessness.

The insurance representative or broker can further befuddle you with the term “Basis of Indemnity”. Exactly what does it mean if a firm promises to indemnify you against a loss for which you are covered? This is a very important part of short term insurance (auto insurance is also a form of short term insurance coverage) and it is vital that you understand the concept: This essentially means that the insurer will make sure that you, the insured, will be in pretty much the same financial position as you were before the loss took place. This essentially mean that you won’t in a worse position than before the accident or other injury, but you will also not be gaining through it – just think about how many chance takers will then attempt to gain from insurance! Insurance providers will most likely replace the lost or damaged item, pay for the repair, reinstate the item, or pay out a lump sum payment to take care of the damages and injuries.

This is just two phrases that you must be aware of when you shop around for cheap car insurance quotes. There are many other terms and lingo that you should become acquainted with – make sure that you are not sold a cat in the bag by falling for smart sales pitches!

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