Have you just bought a car and are thinking about which insurance to choose?
Car insurance is something you must have under Swedish law, and there are many insurance companies to choose from. We assume you prefer to pay as little as possible for as much protection as possible. That’s why we’ve listed things to keep in mind when looking for car insurance that can save you thousands of dollars each year.
Different types of traffic insurance
To begin with, we have listed the three different traffic insurance policies that exist, as well as the protections that are included in each insurance.
The so-called traffic insurance is the very essence of car insurance that everyone must have, and if you want additional protection you can choose to add either full or half insurance.
What is a Traffic Insurance?
This basic cover covers damage to a vehicle, someone else’s property or people in traffic caused by either your or someone else’s car. You will be fined if you drive a car without traffic insurance.
What is a Half Insurance?
All semi-insurance includes all the protection that is included in the traffic insurance and in most cases theft, fire, glass, machine, rescue and legal protection insurance. This means that you are protected against theft, fires, stone shoots and engine problems (only applies to new cars).
What is a health insurance?
If you take out a full insurance, you will receive, in addition to the half-insurance, a cover that covers compensation for car damage. Carriage damage includes:
- Damage associated with a traffic accident, such as a car crash or ditch driving
- Damage from third parties
- Other external event such as a tree blowing down on the vehicle
Avoid being overinsured – therefore half insurance is usually sufficient
Both when you buy a new car or have a slightly older car, it may be worthwhile to settle for a half insurance instead of a full insurance. Below we explain why.
Scenario 1: New car
A full insurance thus includes everything that the half insurance protects against plus a car damage insurance. What many people do not know is that most new cars already have a so-called car damage guarantee for up to 3 years, which is the same as the car insurance coverage of the car insurance.
This means that if you are protected by the car damage guarantee on your new car, you can do just as well with a semi-insurance. By avoiding double insuring yourself for the first three years, you can save thousands of dollars each year.
Calculation example new car:
Suppose that the annual cost of the various insurance policies is as follows:
- Full insurance: USD 6,000 per year
- Half-insurance: USD 4,000 per year
Since the car damage guarantee is valid for 3 years, in this case you would save 2,000 * 3 years = USD 6,000 on choosing a semi-insurance on the car.
Have you purchased a car recently and are unsure if you have a car damage guarantee?
Read through your purchase agreement or inquire with your car dealer / car manufacturer and ask them. If you have a car damage guarantee and full insurance, cancel the full insurance until the car damage guarantee expires.
Scenario 2: Older car
Has the car accumulated a few years in the garage and lost in second-hand value?
Then it may be time for you to review your car insurance
If you have full insurance on the car, which means you receive compensation for car damage, and you know that the car has lost value, it may be time to switch to a half-insurance.
This is because the extra premium you pay does not compensate for the compensation you receive from the insurance company should you suffer a car damage.
What influences your decision on whether it is worth retaining your full insurance are the following factors: the value of your car’s secondary value, the cost difference between the full and half insurance, your deductible cost and even the risk that your car would suffer some type of car damage.