How to choose the best car insurance?

It is essential to have insurance for your car so that you can drive in Portugal and abroad, keeping you safe from any accident or damage that may occur. But the common question is: How to choose the best car insurance? Know everything you should consider before making a decision.

What is car insurance for?

Car insurance is designed to protect drivers and vehicles involved in road accidents from damage. This insurance will provide compensation to the injured party if the person responsible for the accident is unable to pay.

Motor insurance consists of a contract between the insurer and the policyholder, which specifies the conditions under which the policyholder’s liability is transferred to the insurer in the event of an accident involving a motor vehicle.

Is this insurance mandatory?

Yes, in Portugal, by law, car insurance must be purchased for all land motor vehicles and their trailers, and you must have a driving licence.

As stated in article 150.º, no. 1, of the Roads Law, “Motor vehicles and their trailers may only circulate on public roads, provided that, under the terms of the special legislation, they are insured with insurance against possible damages. arising from its use.”

All drivers must have car insurance to drive and are subject to administrative penalties ranging from €500 to €2,500 in the case of a car or motorcycle and €250 to €1,250 in the case of other motor vehicles. in paragraph 2 of the previous article.

To ensure that you choose the best auto insurance that meets your needs and financial availability, you must gather recommendations from several insurers so that you can compare the entire offer on the market.

What types of auto insurance are there?

There are two types of auto insurance: liability and all-in (officially known as self-destruction), the biggest difference between the two is the amount of coverage they include and the fact that the former is mandatory while the latter is optional.

#1 – Liability Insurance

Liability insurance is mandatory by law to protect the person being transported and third parties (other than the driver) from bodily or material damage caused by the vehicle in the event of an accident.

According to the ASF (Insurance and Pension Fund Supervisory Authority), this mandatory insurance must cover at least €1,220,000 for material damage and €6,070,000 for personal injury (these limits are generally reviewed every five years ).

Liability insurance does not cover:

• • the possible injury of the driver responsible for the accident;
    Compensation for damage to the vehicle believed to be at fault for the accident;
    Compensation for all damages caused by accidents that, intentionally or through negligence, do not comply with road safety regulations.

#2 – Insurance against all risks

Insurance against all risks, on the other hand, includes, in addition to all the protections provided by law, a set of optional insurance, the price of which depends on the insurer and its financial situation.

You can activate additional coverage for better auto insurance coverage by purchasing your own damage coverage, including:

• The capital covered by civil liability insurance exceeds the mandatory minimum;
  Replace the vehicle in case of breakdown or accident;
  travel assistance;
  protect vehicle occupants (including the driver in some cases);
  Protection against acts of vandalism, theft or robbery;
  breakage of insulating glass;
  Legal protection;
  Protection against lightning, fire, explosions and/or other types of natural disasters.

How to choose the best car insurance?

#1 – Assess your needs

Before choosing the most suitable car insurance for you, you should assess your individual needs, as the coverage suitable for your situation may vary depending on your vehicle, the purpose for which it is intended and even the weather conditions of the area where you live. .

For example, assuming you live in a rainy area and are prone to flooding, it might make sense to buy coverage for this. Or, if your car is very useful, having a policy can give you the ability to replace your vehicle in the event of a breakdown or accident, as these situations may be more likely.

Before starting your simulation, you should determine what coverage you really need to reduce the impact of insurance on your household budget.

#2 – Make simulations

Now that you’ve evaluated your needs and know what you’re looking for, it’s imperative that you simulate and compare the best auto insurance coverage on the market to make sure that the offer you choose also fits your financial situation.

All insurers are free to set premiums, even for mandatory coverage. The final price can also be affected by the age of the car, the age of the driver and the number of years the driver’s license has been held.

#3 – Ask all the necessary questions

When choosing the best car insurance, do not leave any doubts to the insurance company or insurance broker so that all your doubts are clarified. According to the ASF, these entities must answer six questions:

1. What are the prices for mandatory and optional coverage?
2. What risks are covered and excluded?
3. What options are there regarding the deductible and how does this affect the price of insurance?
4. How does the penalty and bonus table work?
5. In which countries is coverage valid?
6. What criteria do insurers use to determine and update the vehicle’s value (if self-insurance) and the corresponding depreciation schedule?

It is important to make a conscious and informed decision so that you can get the most out of your chosen coverage and provide maximum protection for you, your entourage and your vehicle.

#4 – Negotiate 

After comparing the prices of available policies, coverages and fully understanding your problem, you still have the option of negotiating a discount with your current insurer or even a new insurance intermediary.

For example, you can choose to pay in full rather than in installments to get a premium discount, add additional coverage for your second car, or purchase affordable home or health insurance.

What factors affect premiums payable?

Insurers consider a number of factors when determining the premiums a covered driver pays, some of which are:

• the age of the person employed (generally younger drivers will see their annual premiums increase);
• Driver’s license date (from the start, more experienced drivers can benefit from more affordable premiums);
• The number of claims for which policyholders have been convicted in recent years;
• Vehicle Type;
• Where the vehicle is usually parked (the fact that the insured provides a garage for his vehicle ends up being more protected than a garage normally parked on public roads, which makes it possible to pay lower annual car insurance premiums);
• Car insurance purchase history (i.e. how many years ago you purchased the insurance);
  The number of kilometers traveled by the vehicle per year;
• The presence of alarms and/or other types of anti-theft devices in the vehicle;
  The number of people who normally drive the vehicle.

It is important to remember that each insurer has its own price list and may adjust based on the above factors. Therefore, the best car insurance will provide the most coverage for your needs at the most affordable price.

Also note that for the same type of insurance, with the same coverage, it is normal for prices to vary significantly between insurers.

However, if your goal is simply to get liability insurance, you may choose to look at price alone, as coverage for this product is generally more or less the same across all insurers to meet the minimum requirements. according to the law.