Vehicle protection and auto insurance: see the difference!

New car in the garage! This is the desire of many people and in order not to put their vehicle at risk, people end up opting for protection.

This extra care will ensure that, in cases of theft, theft or collision, you will not have to pay all the expenses. However, when hiring the service, there are some options on the market and not knowing what they are can create future problems.

The best known is car insurance, but there is another modality, vehicle protection. The second becomes confusing and even improperly called insurance.

But, what is the difference between vehicle insurance and protection?

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car insurance

Insurance is a regulated service and is only offered by companies that are accredited by the Private Insurance Superintendence (Susep).

To offer this type of protection, the company must meet a series of requirements. Furthermore, the insurer must be a service provider company.

Therefore, if a person wants to have car insurance, they must contact the insurance company that will provide the available options. Based on this, a proposal is made for what will be contracted.

The person agreeing and the insurance company as well, coverage will be made available. All of this is described in a policy that must ensure compliance with the agreement.

An annual amount must be paid to ensure that the insurance is valid, this is also called the premium.

If the insurance is activated, there will be a deadline for the insured to make the communication and send the documentation. The insurer will also have a deadline to compensate the consumer.

Vehicle protection

Vehicle protection works in a slightly different way, despite the intention being the same, to compensate the consumer.

However, it is not a company regulated and supervised by Susep. It is a cooperative or association that intends to compensate participants.

Vehicle protection normally has a fixed amount to be paid every month, which is usually cheaper than insurance. Because of this, it ends up attracting a lot of people.

The amount paid is used to form a kind of fund and when members suffer an accident, this amount is used to repair the damage. It's as if everyone shared the expenses to carry out the repair or pay for the damaged car.

It works in a very different way than insurance. This is because in insurance, all risk is transferred to the insurer, whereas in vehicle protection, the risks are shared with all associates.

Another issue is that vehicle protection only takes into account the vehicle model to establish the amounts to be paid, not considering the other criteria that are analyzed by the operators.

Vehicle protection x auto insurance

The differences are not just limited to the way the service is contracted and the amounts paid. There are other issues that need to be discussed.

It is not uncommon to see people who have vehicle protection take a long time to receive compensation as the deadline for payment can be much more flexible or even not established at all.

Another issue is that these companies are not supervised or monitored, making them act in the way they wish.

There are associations that are serious and offer vehicle protection, but unfortunately, the number of lawsuits filed against many of these companies continues to grow.

In return, insurance companies comply with some legal requirements and are supervised. For the insured, this ends up being extra security when hiring protection for the vehicle.

So, when you're buying your next car, remember these differences and research the company's reputation.