Traffic Insurance: What it is and why you need it
Traffic insurance, also known as liability insurance, is a type of insurance that covers the damages to the property or life of the other party in the event of an accident, depending on the rate of fault. It is mandatory in most countries and is required for cars, trucks, motorcycles, and other road vehicles.
The primary purpose of traffic insurance is to protect the driver and third parties from financial loss in the event of an accident. The insurance covers the material and bodily damages caused by the vehicle to third parties on the highway. It does not cover damages caused to the driver’s own vehicle or to the driver themselves. For this, a separate policy called Casco insurance is required.
The premium for traffic insurance varies depending on the type of vehicle, whether it is commercial or not, and the province where it is registered. The premium is normally paid in advance, and the policy is issued for one year. The policy serves as a receipt, and any damages that occur during the insured period will affect the premium to be paid in the following year.
In the event that no damage occurs, a no-claims discount is applied to the next period’s insurance premium. This discount increases from year to year, and the maximum discount rate is 20%. It’s important to note that the no-claims discount follows the person operating the vehicle, not the insured vehicle.
In addition to the mandatory traffic insurance, there are additional coverage options that can be added as another policy. These options vary depending on the insurance provider and the legal regulations of the region. Some common optional coverages include:
Personal accident insurance – This coverage provides compensation in the event of accidental death or disability to the driver or passengers of the vehicle.
Comprehensive coverage – This coverage provides protection for damages caused to the insured vehicle in addition to the liability coverage.
Third-party liability coverage – This coverage protects the insured against legal liability to a third party in the event of death or bodily injury caused by the insured vehicle.
It’s important to note that traffic insurance policies may vary in each region based on legal regulations. It’s recommended to consult with a licensed insurance agent to understand the specific conditions of car insurance in your region.
In conclusion, traffic insurance is a crucial aspect of owning a vehicle. It not only protects the driver from financial loss but also provides peace of mind knowing that you are covered in the event of an accident. It’s important to understand the coverage options and consult with a licensed insurance agent to ensure that you have the right policy for your needs.