Looking for a car insurance policy is less appealing than shopping for a car. We think most people will agree, there are so many different options available, and not one clearly defined policy that’s the obvious choice. Be wary of the cheapest options in the market, because these policies might not be right for your personal circumstances, or provide the best cover. You always have options, so exercise that mindset and find the product that’s right for you.
Like with any contract, always be sure to read the documentation in-full before signing the agreement. Make sure you understand what the cover entails. If you’re unsure of any aspects of the policy, speak to the insurer so that you do.
There are four main types of general motor vehicle insurance available in Australia.
Comprehensive
This is the safest option for any motorist should they desire full coverage and peace of mind. The cover includes full repair of your vehicle and other unfortunate scenarios such as theft, fire, collision, weather and malicious damage. You would usually choose comprehensive insurance if your car is relatively new and expensive. If your car is not in a good state of repair, insurers may not cover you.
Comprehensive car insurance is highly competitive, with companies offering a wide range of inclusions and extras, ranging from windscreen protection, through to the use of hire cars. This full cover is the most expensive option but provides a great policy which typically includes theft and other risk-related legal expenditure if necessary.
Compulsory Third Party
Each state and territory has a mandatory motor vehicle accident personal injury insurance scheme. In some states, it’s known as Compulsory Third Party Insurance (CTP). This form of insurance protects any person that you may injure during an accident, such as cyclists, pedestrians, and other road users. Each jurisdiction’s scheme has different legislation, operates in a different way, and covers different things, so please be aware.
Things to consider:
- This form of insurance is mandatory across Australia
- You must take it out at the time you register your car (in some places such as South Australia, the insurance is part of your registration fee so you are automatically covered but in many other places, it is a separate fee)
- It is illegal to drive a vehicle that does not have this form of insurance
Be aware you are not covered for damage to your vehicle, other vehicles or theft of any contents within the vehicle. This policy does not give you any legal liability benefits other than personal injury to others caused by your driving. In some places, the mandatory motor vehicle insurance will only cover third parties who are injured, and not the driver who is injured and responsible for others in the vehicle who are also injured. Down to the basic nature of this policy, vehicle owners risk financial and personal loss hypothetically, should they fail to take out other forms of insurance alongside their mandatory cover.
Third Party Property
Provides cover for damage caused by your vehicle, or to other vehicles and their property, however not your own. Cover of this nature is recommended if your car is of a low valuation, so you are not susceptible to paying the costs, should your car inflict damage on somebody else’s vehicle of a higher value. Some insurers will also cover a specified amount of damage caused to your vehicle if you are in a collision with an uninsured driver.
Third Party & Theft
This insurance exercises the protection of third party property policies, additionally fire and theft coverage up to a certain limit. This is typically a cost-effective option for new or younger drivers that are taking to the road with a lesser valued vehicle.
What are premiums?
A car insurance premium is a total cost of maintaining your car insurance policy. Everything from the type of car you drive, to your age and gender, insurance companies use a variety of factors when determining your premium amount. Every insurance company approaches premium calculation in their own way. That’s why is it always a good idea to be mindful which factors they may consider.
Below are a few examples:
- The type of cover and excess, including any options you have added to the policy
- The location where the car is stored overnight or during the day
- The age of the driver
- The driving record and insurance history of the drivers (any preexisting existing penalty points)
- The type of vehicle being insured (make, model, year)
- The intended use of the vehicle (such as private or commercial use)
- Whether you have nominated a market or agreed value for your vehicle
- Alterations to the vehicle
How to reduce premiums?
There are a number of options to consider when trying to bring down those premiums. These include:
- Park safely. Secure parking (either off-street or in a lock-up garage) can reduce the risk of theft, vandalism, flood or storm damage claims
- A clean driving record reduces the risk of you making a claim
- Buy a car fitted with alarm devices to reduce the risk of theft and damage, or have them installed if this is feasible
- The more you drive the more you are at risk. Some insurers will offer lower premiums for drivers who do not use their car frequently
- Limit the number of drivers you nominate on your policy, especially if they are under 25
- Choose a higher excess
- Choose to insure for market value instead of nominated value
