Car insurance: Explain it to me!

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If you own a set of wheels, insurance is vital. But the terminology used in policies and contracts can be difficult to understand. Here’s what you need to know so that you can maximise your benefits and coverage.

Comprehensive insurance

The most extensive cover for your vehicle, protecting against damage caused by accidents, theft, fire, natural disasters and vandalism. It often includes third-party liability, too. (See below.) Because of the extent of the coverage, this is typically a more expensive option.

Third-party, fire and theft

Third-party provides cover for damages to other people's property, or injuries caused by your vehicle. But third-party alone doesn’t cover damages to your own vehicle resulting from an accident. Fire and theft only covers your vehicle in case of fire damage or if your car is stolen. Third-party, fire and theft is typically less expensive than comprehensive insurance and might be suitable for an older vehicle with a lower market value.


This is the amount you’re required to pay when you claim, before the insurance company covers the remaining costs. It can be split into two categories: compulsory excess, which is set by the insurer; and voluntary excess, which is an additional amount you choose to pay to reduce your premium. Understanding the excess amount is crucial as it directly affects how much you have to pay from your savings when you file a claim.

No-claims bonus (NCB)

Some insurance companies offer this discount if you don’t make any claims during a specific period. It’s basically a reward for responsible driving and a way to reduce your premium. The longer you go without making a claim, the higher your NCB and the greater the potential savings. Maintaining a no-claims record can significantly reduce your car insurance costs in the long run.

Market value

The estimated worth of your vehicle in the current market (what you would get if you sell your car today) – an essential factor in determining the coverage and pay-out in case your car is written-off or stolen. It's important to keep track of your vehicle's market value as it may change over time and affect the adequacy of your coverage.Did you know that if you own a car, 22seven can do all the hard work for you? Just add your car as an asset via our Web App to get an estimate of its current market value. Over time we’ll automatically update its value so you can keep track of those changes inside 22seven alongside all your other money stuff. To get started, visit the add manual account screen on our Web App, choose Vehicle from the account type list and follow the prompts. Don’t forget to also link your vehicle loan to 22seven if you’re still paying off your car so your net worth remains accurate.


The process an insurer uses to evaluate the risks of insuring your vehicle, which in turn allows them to determine the premium you have to pay. Insurance companies consider factors like the driver's age, driving record, vehicle make and model, location and intended use.

Policy exclusions

Specific situations or circumstances that are not covered by your policy. Common exclusions might include racing, illegal activities (duh), intentional damage or using your vehicle for commercial purposes without the appropriate commercial cover. Read the terms and conditions carefully to make sure you understand the limitations of your coverage.

Optional add-ons

Extra items you can add to boost your cover. Roadside assistance might fall into this category, offering a safety net in case of a breakdown or other emergency. Other add-ons might include hail damage, the use of a rental car while yours is being repaired, scratch and dent cover, and more. It’s worth looking through these offerings at various insurers.Remember to review your car insurance often, compare quotes from different insurers, and ask questions! Armed with knowledge, you can ensure you have the appropriate cover at the right price to protect yourself on the road.