Have you heard that there is more than one way to insure your vehicle? Are you familiar with the term vehicle protection? And what is the difference between it and conventional insurance?
This is a common question, since the modalities are often quite similar in some aspects.
But it is important to understand very well how each one works to make the best decision regarding your vehicle and drive with more peace of mind, knowing that you will have financial support if you face any adversity.
This essay will focus on discussing just that! Here, you can discover the key distinctions between vehicle protection and insurance, as well as which is most appropriate for your situation. Look it over!
What is vehicle protection?
It offers a service similar to car insurance, but instead of having an administrator, it works through non-profit associations or cooperatives.
This means that, by joining this system, you will become an associate of it and not a customer.
In vehicle protection, expenses are shared among members. To this end, a financial fund is created, made up of the monthly fees paid by members.
In cases where a vehicle belonging to someone in this group needs protection, that is, if it has been involved in an accident or has been stolen or stolen, coverage is provided using the resources raised for this fund each month.
As it is non-profit, vehicle protection generally costs less than car insurance , as we will see later. Furthermore, reimbursement is made directly to the member when there is an accident.
What is auto insurance?
This is the service best known to most people who want to protect themselves when buying a vehicle, whether outright or through car financing . Car insurance is a product offered by insurance companies and is regulated by the Private Insurance Superintendency.
When you become a customer of these companies, you will have financial coverage for accidents , theft, robberies and other added services, depending on the plan contracted and what is stipulated in the policy. This way, you avoid damage to the vehicle in the event of accidents.
When taking out insurance, you pay a stipulated amount according to the car model, year of manufacture and driver profile. Should you need to use it, you will pay the policy’s deductible (if any); the insurance company will cover the remaining cost.
There will also be compensation if there is a total loss of the asset (in accidents, this occurs when the damage costs more than 75% of the vehicle’s market value or when it is stolen or stolen, but not found by the police authorities).
What is the difference between insurance and vehicle protection?
Understanding the details of each one and the difference between insurance and vehicle protection is essential to making the best choice for your car. To make learning easier, we will show the difference between insurance and vehicle protection separated by topics. Check it out!
Accession
In vehicle protection, an inspection of the vehicle is enough to subscribe to the service offered. After paying the fee charged by the association, your car will be protected.
In auto insurance , the first installment will only be paid after inspection and approval from the insurance company.
Risk analysis
Associations that offer vehicle protection do not carry out risk analysis of the driver’s profile , so anyone can join the group. Car insurance offers more protection in this sense
, as insurers analyze your profile, consider your experience in traffic and other risk factors, including even where the car is parked. It is from this information that the values of the installments and the deductible are determined.
Policy
In vehicle protection, the relationship between the association and its member is established through the signing of a mutual liability contract. This means that the risks of accidents are shared.
In the case of auto insurance, a detailed policy is offered on the coverage contracted, stating all the duties and rights of both the insurer and the client.
Roof
In this regard, there is no difference between insurance and vehicle protection. In general, you will find coverage against theft and robbery, accidents, compensation for victims, if any, 24-hour assistance and even fire. However, car insurance usually offers additional options, such as locksmith services, glass replacement, taillights, etc.
What are the advantages of each?
You can see that the services are very similar and, therefore, it is easy to confuse the two. But, knowing the difference between vehicle insurance and protection, you can see that car insurance has some advantages .
These benefits start with the guarantees offered. In auto insurance, the relationship is between a company and its customers, which gives more responsibility and commitment on the part of insurers . Furthermore, the service is regulated by Susep, which establishes strict rules for these institutions.
Vehicle protection may even be cheaper in principle, with lower monthly fees than general insurance. But in this case, you will have more responsibility for payment, as you are an associate and not a customer.
For example, insurance is required by regulation to pay claims within 30 days. In automotive protection, this period can be extended, as it depends on the association’s cash flow.