What types of insurance are required when buying a car?
2 Answers
When purchasing a car, you normally need to buy the following types of insurance: Compulsory Traffic Insurance: Compulsory traffic insurance is a mandatory insurance required by the state. Without it, you cannot legally drive on the road. Third-Party Liability Insurance: Third-party liability insurance covers economic compensation that the car owner must pay to a third party for personal injury or property damage caused by a car accident. Vehicle Damage Insurance: This insurance covers the portion of damages that exceeds the limit of compulsory traffic insurance. It is essential to purchase this insurance, and the coverage should not be too low. Generally, it is recommended to have a coverage of at least 300,000 RMB. Vehicle damage insurance is used to cover the loss of your own vehicle. No-Deductible Insurance: No-deductible insurance specifically covers the portion of the claim that would otherwise be subject to a deductible under standard auto insurance policies. Auto insurance policies typically include a 20% deductible rate. If your vehicle is totaled in an accident and cannot be repaired, purchasing no-deductible insurance ensures that the insurance company will fully compensate for the vehicle's loss.
When I bought my car and just got my driver's license, the salesperson hurriedly said that compulsory traffic insurance must be purchased, as it's required by national law—without it, you can't drive on the road. Then there are a bunch of optional commercial insurances, like vehicle damage insurance to cover repair costs if your car gets hit, and third-party liability insurance to cover accidents involving other people's cars or injuries, with a recommended coverage of at least 500,000 yuan. A friend suggested adding passenger liability insurance in case passengers get injured. New drivers are often persuaded to buy more, but I think these core coverages are enough. Don’t forget the vehicle and vessel tax is often included in the insurance policy—getting it wrong might lead to fines. In short, don’t cut corners; insurance is for your peace of mind, especially when you’re nervous driving for the first time. Having coverage makes you feel more secure.
