Best Car Insurance Company – How Does Car Insurance Work

What Is car insurance?

Car insurance is an insurance contract that covers the risks created by driving a car in the event of causing an accident. How Does Car Insurance Work

car insurance
car insurance

There is a basic modality, the contracting of which is mandatory for the owners of all vehicles, called compulsory Car insurance that covers the civil liability of the owner and the driver of the vehicle —in the event that they are not the same person— for damages and injuries caused to third parties. It also includes apostolic defense up to certain limits. This modality is regulated in detail by state regulations.

Insurance companies – Life Insurance – Car Insurance No. 01 Insurance

Along with this basic modality, other voluntary supplements can be contracted: what is called voluntary civil liability insurance , which covers possible compensation to third parties above the amounts included in the compulsory insurance; occupant insurance , the same as the previous one but specifically for the occupants of the vehicle; own damage insurance or all-risk insurance , for damage that the insured’s own vehicle may suffer; window insurance , for damage to the windows of the vehicle itself, is a subspecies of the previous one; driver’s accident insurance , which is life insuranceof the driver himself, since he is not covered by compulsory insurance; legal defense insurance as long as it is not covered by the compulsory one; travel assistance, etc.

There is also the “excess” variant that is used above all in all-risk car insurance that instead of covering the total loss, only does so from an amount that the insured supports.

Car insurance is an insurance contract that covers the risks created by driving a car in the event of causing an accident.

There are no basic modalities, they are called coverages and their characteristics are the following:

Civil Liability Coverage Of Car insurance 

Civil Liability Coverage
Civil Liability Coverage

this coverage only covers the damage or injuries caused by the vehicle that is insured to third parties, whether in their property or persons, the theft of the vehicle and its damages are excluded.

Limited Coverage How Does Car Insurance Work

Limited Coverage
Limited Coverage

this coverage covers damage or injuries caused by the insured vehicle to third parties, whether in their property or persons, and the theft of the vehicle is also covered. Damage to the insured vehicle is not covered by this coverage.

Comprehensive Coverage: How Does Car Insurance Work

Comprehensive Coverage
Comprehensive Coverage

This coverage covers the damage or injuries caused by the vehicle that is insured to third parties, whether in their property or persons, the theft of the vehicle is covered and damage to the insured vehicle is also covered.

In each coverage, including the legal defense, the amount for which the insurance company will respond is specified.

There are other coverages that each person chooses, just like the previous ones, if they need them or not, these are:

  • Adaptations or conversions
  • driver accidents How Does Car Insurance Work
  • Roadside Assistance or Roadside Assistance

In work accidents they also have entities that cover risks in case of not doing so you can sue to the point of being able to redeem your rights.


Technical principles
What requirements are needed to be an insurance company before the SSN?


In Spain , Car insurance is regulated by Royal Legislative Decree 8/2004, of October 29, which approves the consolidated text of the Law on civil liability and insurance in the circulation of motor vehicles. 1 This regulation indicates that all motor vehicles in the Spanish state must have insurance that covers, at least, Compulsory Civil Liability . This obligation affects all motor vehicles registered with the General Directorate of Traffic , even when they do not travel on public roads.

The main objective of the Compulsory Civil Liability insurance is to cover any damage to third parties that we may cause while driving our car. The damages caused to third parties, as stated in the Regulation of the Compulsory Civil Liability Insurance in the Circulation of Motor Vehicles, can be of two types:

  • Physical or personal: It is the damage caused to people, either to any of the occupants of another vehicle or to a pedestrian .
  • Materials: Any damage caused to another car, property or street furniture . How Does Car Insurance Work

According to what is established by the V European Car Directive, the coverage of this insurance does not include damage caused to material goods of third parties with whom there is a relationship of affinity or kinship up to the “third degree of consanguinity or affinity” between the driver of the vehicle and the person to be compensated. In order to avoid fraud, the Compulsory Civil Liability insurance will not cover any accident in which the affected third party is a family member of the driver contracting the insurance. Another aspect that is not covered is damage to the driver of the vehicle, whether physical or material.

Currently 36 insurance companies in Spain sell car insurance. 2 The conditions vary substantially depending on each insurer, the type of insurance chosen and the model of vehicle to be insured. Other factors can also have a considerable influence on the conditions offered by the different insurers to each client: The age and accident history of the regular driver, their place of residence or the power of the vehicle can be determining elements when setting the premium. risk of each client.

The Insurance Compensation consortium

The Insurance CompensatioCn onsortium
The Insurance Compensation insortium

The figure of the Insurance Compensation Consortium arises in Spain to cover those claims that have been caused by natural phenomena or to compensate the person affected by a claim when the opposing company is not responsible or has not been able to be identified. This type of situation can occur in the case of accidents caused by vehicles without insurance, stolen cars or hit-and-runs in which it has not been possible to identify the offender.

In parallel, on some occasions no insurance company wants to take charge of protecting a certain client, or, even if the client has a valid policy, the company decides to stop providing said guarantee to the insured driver.

If any of the above situations occurs and the driver cannot find any company that insures him, he can ultimately turn to the Insurance Compensation Consortium . This body will be in charge of covering the risk when the client has received at least two refusals from the insurance companies.

The only product that the Insurance Compensation Consortium can offer is the Compulsory Subscription Motor Vehicle Civil Liability insurance, which only covers damage caused to third parties. In this way, coverage such as personal damage, vehicle theft, claim for damages or legal defense, among others, are excluded. How Does Car Insurance Work


In the Argentine market there are four types of policies that have been categorized for a better organization and interpretation of the offer:

Limited Coverage
Limited Coverage

Coverage A: Called Civil Liability , it is a basic and mandatory coverage. Also known as third-party insurance, it is responsible for damages and/or losses that the owner of the vehicle could cause to third parties and/or their property. The minimum sum insured for this coverage is set by the National Insurance Superintendency .

Coverage B: In addition to Civil Liability , this Policy covers total theft, total fire and total destruction of the vehicle due to an accident . It is also known as total damage insurance.

Coverage C: In addition to Civil Liability , this coverage covers total and/or partial theft, total and/or partial fire and total destruction of the vehicle due to fire or accident . It is also known as Full Third Party Insurance, you can hire as additional coverage for hail damage, wheel theft and glass breakage ( rear window , windshield , and door glass) How Does Car Insurance Work

Coverage D: In the case of wanting the maximum level of coverage, the most appropriate thing would be to opt for coverage D, known as All Risk insurance. It is usually recommended for 0 km cars , at least during the first 3 or 4 years. This Policy includes all the coverages of option C with its additional ones and adds the damages of partial destruction due to fire or accident with Excess.

The Franchise can be Fixed or Variable. In the Fixed Excess, the Policy has an established amount in pesos and in case of being responsible for an accident , that amount will be the one that the insured must pay for the repair of his vehicle. The Variable Excess is a percentage of the value of the vehicle in the Policy (Sum Insured) or of the vehicle itself 0 Km. 3 How Does Car Insurance Work

Using the services of online comparators, you will be able to make an insurance comparison by analyzing values, coverage, services and assistance from each of the different insurers. This is the most effective way to find the most appropriate insurance according to the specific characteristics of your vehicle, the driver’s profile and the desired level of protection.


As of October 2014 in Mexico , in some states, civil liability Car insurance was made mandatory. These are 15 states (including Mexico City). With the reform of the Law of Roads, Bridges and Federal Motor Transport, it is mandatory that cars model 2008 onwards have insurance to travel on federal highways. The minimum coverage that must be available is civil liability and must be able to cover the minimum amount of $100,000 pesos . 4

How Does Car Insurance Work
Comprehensive Coverage

In case of not having insurance, the driver will be subject to a fine of between $1,400 and $1,800 pesos. As of 2016 it is mandatory that all vehicles from 2005 onwards have Car insurance, with a value of $135,690.

As of 2017 in Mexico you can already take out Car insurance per kilometer and pay only for the kilometers traveled. This type of insurance exists for limited and broad coverage. Some of the insurers that have launched this type of Car insurance are: AIG , Seguros Atlas and HDI.


In Chile , Car insurance is compulsory in the event of personal accidents. Provides coverage in case of death and bodily injury that are a direct consequence of accidents in which the insured vehicle is involved. It is an insurance required and regulated by Law No. 18,490 and created by the Superintendence of Securities and Insurance . SOAP insurance can be purchased directly from an insurer or online on their websites or through a POS system.

The compensation amounts are:

  • Death: 300 UF per person
  • Total permanent disability: 300 UF per person
  • Partial permanent disability: up to 200 UF per person
  • Hospital medical expenses: up to 300 UF (level 03 FONASA ) 5


In Colombia , compulsory Car insurance, better known as SOAT, provides coverage in case of death and bodily injury that are a direct consequence of accidents in which the insured vehicle is involved, there are different insurers where the policy can be quoted 100% virtually at Like comparators to buy SOAT online that facilitates the acquisition process by users. 6

Types of insurance


Dominican Republic

In the Dominican Republic there is a basic modality whose hiring is mandatory for all car owners and drivers. How Does Car Insurance Work

This modality is regulated in detail by Law 146-02. It stipulates in part that compulsory Car insurance also covers injuries caused to third parties, including legal defense up to certain limits.

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