Advantages and disadvantages of car insurance and judgment criteria

Isn't it whether to set "vehicle insurance" or not when you are worried about contracting or reviewing car insurance? It is a reassuring compensation in the unlikely event that it compensates for the repair costs of your beloved car, but if you set it, the insurance premium will rise. This page introduces the basic knowledge of vehicle insurance, as well as data on vehicle insurance for those who have automobile insurance contracts with Mitsui Direct General Insurance. Please use it as a hint when you are wondering whether you need car insurance.

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The role of car insurance is to compensate for the repair costs of your own car:

  • Vehicle insurance is one of the basic coverages of automobile insurance, and it compensates for repair costs when your car suffers damage due to an accident.
  •  For example, let's imagine that you are hit from the side by a car at an intersection and the door of your car is dented or otherwise damaged. In such cases, if you have vehicle insurance, the repair costs will be compensated.
  •  Here are some examples of how you can receive car insurance benefits (coverage varies depending on the type of car insurance you have purchased): You can see that it will compensate for a wide range of damage to your precious car.

Main examples covered by vehicle insurance:

  • A car accident caused damage to the car
  • The car was damaged when it collided with the guardrail without turning the curve.
  • The car was submerged in the flood and the car was damaged
  • I had a prank and scratched my car
  • I damaged my car by failing to put it in the garage or park it.
  • car was stolen
  • The car was damaged in a hit-and-run

Coverage depends on the type of car insurance you have purchased. In the case of Mitsui Direct General Insurance, in the "Limited Type", examples of "2.", "5." and "7." above are out of the scope of compensation.

Car insurance covers your own fault:

Let's take a closer look at the benefits of having car insurance. First of all, car insurance covers your own negligence.

When I saw an example of a car hitting me from the side at an intersection, I thought, "If the other party in the accident had automobile insurance, the other party's 'property liability insurance' would compensate for the damage on this side.

" There may be people Certainly, if the other party in the accident has auto insurance, you will often be able to compensate for the damage with the other party's property damage insurance. However, it is important to note that the other party's liability insurance alone may not cover all of the damage.

Compensation obtained from the other party of the accident is the amount corresponding to the legal liability that the other party should bear. 

This amount is offset by the percentage of fault between the other party and you, so unless the other party is 100% at fault, you will be responsible for your own fault. For example, let's say that in an accident that caused damage to your car worth 1 million yen, the percentage of fault was 60:40 for the other party. In this case, the amount to be compensated by the other party's property damage insurance is 400,000 yen. less than the actual amount of damage.

In this way, car insurance is useful when the compensation from the other party is not enough to cover the damage to your own car. Car insurance will also pay for your own negligence, so you can cover the reduction due to negligence offset. In addition, if the insurance amount (upper limit of insurance payment) set at the time of contract is 600,000 yen or more, it is possible to cover all damages by using vehicle insurance.

Compensation for damage caused by self-inflicted accidents, natural disasters, etc:

  1. Another big advantage of setting "vehicle insurance" is that it will compensate for damage caused by "self-inflicted accident", "natural disaster", "theft", and "hit-and-run".
  2. As an example, consider the case of a single-handed accident in which a car fails to turn a curve and collides with a guardrail, causing damage to the car. In this case, since the other party of the accident does not exist, you cannot receive compensation from the other party's "property liability insurance". 
  3. Any damage caused to your vehicle will be your responsibility. The same applies when you fail to park or put in a garage and scratch your car. Even in these cases, if you have a car insurance set, those damages will be compensated.

In addition, damages due to natural disasters, theft, and hit-and-run are considered as cases where damages cannot be obtained from others. For example, if your car is submerged in heavy rain due to a typhoon and breaks down, there is no one to compensate for the repair costs. Even in such cases, you can receive insurance money by setting up car insurance.

Coverage depends on the type of car insurance you have purchased. In the case of Mitsui Direct General Insurance, only the "general type" covers damage caused by a single accident, failure to park or park in a garage, or hit-and-run.

How are you all doing? Rate of setting "vehicle insurance" (vehicle insurance coverage rate) and judgment criteria:

As I have explained so far, it is a very reassuring “vehicle insurance” in case your car is damaged, but there are also disadvantages. That is, if you set up car insurance, your car insurance premium will go up. Balancing coverage and premiums is critical to successfully setting up auto insurance. No matter how much coverage you have, if the burden of insurance premiums is too heavy for you, you may need to decide whether to set it or not.

So how do you decide whether or not you should buy car insurance? As reference data, let's take a look at the rate of vehicle insurance set (vehicle insurance attachment rate) at Mitsui Direct General Insurance.

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Vehicle insurance set rate (vehicle insurance coverage rate):

Set: 57.8% Non-set: 42.2%

Data from automobile insurance policyholders of Mitsui Direct General Insurance (as of October 2017).

Totals may not add up to 100% due to rounding to the second decimal place.

At Mitsui Direct General Insurance, the set rate of vehicle insurance was 57.8%. It can be seen that more than half of the respondents believe that it is important to be well prepared for damage to their car in the event of an accident. 

The main points when considering a set of vehicle insurance are listed below, so please refer to it when deciding whether to set it or not by comparing it with your own car life.

Prepare for repair and repurchase costs:

If you can afford to prepare for the cost of repairing your car in the event of an accident or the cost of purchasing a new car with savings, etc., the benefits of car insurance will be reduced. On the other hand, if you can't afford to pay for repairs or repurchase right away, it's common to think that the benefits of car insurance will be greater.

driver's driving skills:

If the driving skills of a person who drives a car are immature, the risk of damage to the car due to a self-inflicted accident or a mistake in parking or parking is considered to be high.

 If you are worried about a single accident or self-inflicted accident, it may be said that the benefits of setting up vehicle insurance are also great. At this time, it is important to consider not only your own driving skills but also the driving skills of other drivers.

Preparedness for natural disasters:

Also consider how much natural disaster risk exists in the area where you drive. For example, if you drive or park your car near a river, you may want to consider the risk of submersion due to flooding. In addition, in snowy areas, vehicle insurance is considered to be more useful as it covers damage caused by falling snow.

Preparing for theft and mischief:

If you often park your car in an outdoor parking lot, the chances of it being damaged by theft or vandalism inevitably increase. 

In other words, the benefits of setting car insurance will increase. Popular car models such as the Prius, Aqua, and Hiace are said to have a high probability of being stolen. You will need to judge the risk depending on the parking location and the model of your car.

In addition, whether or not it is necessary to repair or repurchase immediately when damaged, and whether it is a new car or a used car will be the criteria for judgment. Please consider the balance between the necessary compensation and insurance premiums in your car life and make an appropriate decision whether to set or not.

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