You've probably wondered what the difference is between car insurance and vehicle protection. 

This is a very important question.

After all, Brazil currently has more than 80 million registered vehicles.

However, only 25% has any type of car insurance or vehicle protection. 

And hiring this type of service often generates many doubts and questions among vehicle owners.

Ultimately, a large number of people don't know the difference between vehicle protection and insurance.

Thus, it is relatively common for a service intended to provide peace of mind to people to end up becoming a headache.

Although they may seem similar at first glance, car insurance and vehicle protection have many differences.

Therefore, in order to show you the difference between the two types of protection for your car, our experts have created a special article.

In it, you will learn once and for all the difference between car insurance and vehicle protection. 

So, what do you think? Ready to check it out? 

So, let's go! 

To begin discussing the difference between car insurance and vehicle protection, let's start by talking about the latter. 

Vehicle protection is a product sold by associations that offers various protective coverages for vehicles. 

People who hire this type of service share the risks of an entire group.

In other words, this means that they pay a monthly fee for the contracted coverage, and if any claim occurs, the money to cover the losses comes from a mutual fund. 

When the fund does not have sufficient funds, then everyone in the group must bear the costs. 

Now imagine the following situation:

You purchase vehicle collision protection, have an accident, and the repair cost is R$ 2 thousand. 

If your monthly payments are up to date, the association will withdraw the money from the common fund of those who have contracted vehicle protection. 

This money will then be used to cover your losses. 

However, if there are no funds in the fund, the value is divided among all members. 

If a protection plan has 20 members, each one will be responsible for R$ 100 of their loss. 

So, the repair is done. 

Continuing our article on the difference between car insurance and vehicle protection, now it's time to talk about car insurance. 

Auto insurance is a product sold by insurance companies that must be registered with SUSEP – the Superintendence of Private Insurance. 

Anyone who buys car insurance automatically becomes a customer of the company.

Thus, the insurance company assumes the risks involved in the contracted coverages. 

With this type of protection, when a loss covered by the policy occurs, the insured party has their loss covered by the insurance company. 

If the damage is minor, the insurance company only charges a deductible to repair the vehicle. 

The deductible is simply the cost the customer is responsible for in order to have the vehicle repaired.

It is stipulated in the contract, either as a fixed amount or a percentage.

So, if your deductible is R$ 1,000, and the repair costs R$ 3,000, you only pay R$ 1,000 and the repair is done. 

The other R$ 2 thousand is paid by the insurance company. 

In addition, it is also possible to obtain compensation for total loss in auto insurance. 

In other words, it's considered a total loss when the damage to the car exceeds 75% of its list value. 

Therefore, in this situation, the insured receives the full value of the vehicle to purchase a new one.

Full compensation is also paid when the vehicle is stolen or robbed and not recovered.

As we just showed you, there is a big difference between car insurance and vehicle protection. 

However, our experts will now delve deeper into important points about the difference between these two products. 

The primary difference between car insurance and vehicle protection is the membership fee.

Signing up for vehicle protection is faster and less bureaucratic. 

In this case, only an inspection of the vehicle is carried out. 

Then, there's the payment of the membership fee and that's it: the protection is already in effect. 

However, the enrollment process is different for auto insurance.

In addition to the inspection, it is necessary to wait for the insurance company to release the insurance, and from then on, the first installment is paid and the coverage begins. 

Risk analysis is another issue that highlights the significant difference between car insurance and vehicle protection plans. 

Generally speaking, anyone can purchase vehicle protection insurance. 

This is because there is no analysis of the risk profile of either the driver or the car.

However, when taking out car insurance, the insurance company analyzes the entire profile of the insured and the car.

In other words, the driver's age, driving experience, where the vehicle is parked, and the type of car use are all taken into consideration.

In addition, the car is also evaluated, mainly to determine if the vehicle is a target for theft.

Therefore, with these factors, the insurance company can determine the likelihood of the vehicle being involved in an accident.

The franchise cost is defined precisely.

Auto insurance includes a detailed policy outlining the rights and responsibilities of both the customer and the insurance company. 

However, in vehicle protection plans, there is no such thing as an insurance policy. 

What exists is a contract of mutual responsibility, where it is established that the risks are divided among the partners. 

Coverage is a key element that clearly highlights the difference between car insurance and vehicle protection. 

In this respect, the basic coverages of auto insurance are similar to those of vehicle protection plans. 

However, extra coverages, such as protection for windows, taillights, headlights, or green card, are only found in auto insurance. 

Vehicle protection plans are usually advantageous in relation to the monthly cost. 

That's because the cost of hiring a new insurance company is lower than that of car insurance. 

However, their protection is less. 

In the case of car insurance, monthly payments are fixed and based on the driver's and vehicle's profile. 

In auto insurance, the rule dictates that the insured receive compensation within a maximum period of 30 days, as established by law.

In the case of vehicle protection plans, the consumer is compensated according to the existing cash flow. 

Therefore, the waiting time for payments is usually longer. 

Furthermore, the full insurance payout is based on the market value of the vehicle.

In other words, insurance companies use the Fipe Table to guarantee reimbursement. 

In vehicle protection plans, payments are below market value.

Ultimately, the amounts depend on the association's cash flow. 

Here we have a big difference between car insurance and vehicle protection!

Those who have car insurance and do not file a claim with the insurer accumulate points annually. 

These annual points become discounts upon renewal.

But this doesn't happen with vehicle protection. 

Therefore, even if there are no claims, the consumer does not gain any advantage when signing a new contract. 

In auto insurance, the insured can request cancellation of the product at any time. 

Therefore, you only need to pay the amount proportional to the period of use of the service.

However, in vehicle protection plans, contracts typically list a minimum term of 180 days. 

When a contract is cancelled before the deadline, the user pays a penalty. 

So, after discovering the difference between car insurance and vehicle protection, you're probably wondering:

Which is more worthwhile: car insurance or vehicle protection?

The answer here is quite obvious.

Vehicle protection is a palliative measure that easily becomes ineffective.

Although it is cheaper, it is common for customers who purchase this type of car insurance to end up stranded.

Therefore, we can say without a shadow of a doubt: when it comes to protecting your car, look for an insurance company.

However, before looking for an insurance company, do your research and look for one that is registered with SUSEP – the Superintendence of Private Insurance. 

This ensures security for both sides in terms of payment and service provision. 

When it comes to protecting your vehicle, the ideal solution is to have an insurance company. 

As important as purchasing car insurance is finding an option that is both affordable and functional.

So now that you know the difference between car insurance and vehicle protection, and which one is worthwhile, our experts are here to help you.

Pier Auto Insurance is one of the most functional insurance options available today.

With affordable prices that fit any budget and a range of coverage options, it has won over many people across Brazil.

So, to learn more about this option and find out how to sign up, just click the link below!