Just because you’re the new kid in the car insurance yard doesn't mean you can't be in the know. To help you understand we’ve listed some topics on the finer points of car insurance. Find out what coverage is available and whether it might suit your needs.
Types of Car Insurance?
There are the common types of car insurance policies:
This covers the cost of repairs or replacement to your own vehicle and property whether you are at fault or not. It can also cover the cost of emergency repairs, transportation costs and damages caused by other drivers.
Third Party Fire & Theft cover
Third Party, Fire and Theft covers you for loss or damage to your car if it is stolen or catches fire in addition to your liability for damage caused by your car to other people's property.
Third party property cover
Covers damage that you have caused to another person’s vehicle or property. It does not cover the cost of damage to your own car.. It usually includes legal costs, limited damage by uninsured drivers, cover for a substitute vehicle and claims service.
Compulsory third party insurance (CTP)
Otherwise known as 'green slip' insurance, CTP is required of every registered driver in Australia. It indemnifies drivers who are legally liable for personal injury to another party in the event of a car accident. This can include other drivers, passengers, cyclists and pedestrians.
Each State has a different process for CTP and Registration see your State Government for details.
Additional coverage options
Besides the standard cover provided some Insurers will have additional features and benefits available, they may include New car replacement, protected No Claim Bonus choice of repairer.
You should look at each policy and see that the features and benefits are what you are looking for in an insurance policy.
What is the difference between Agreed and Market Value?
Most insurers will also give you the option of market or agreed value in the event that your car is written off.
- Market value represents the market value of the car at the time of the claim, taking into account the condition of the car based on its age, make and model.
- Agreed value is the value of the car as agreed by both you and the insurer and is fixed until the policy renewal date.
Read our tips on saving money on car insurance.
What is Excess?
Excess is the amount you’ll have to pay in the event of a claim.
For example, if your excess is $500 and your claim is worth $1,200, you will pay the first $500 and the insurer the remaining $700. Normally this is paid directly to the mechanic or garage making the repairs. In the event of a more serious accident, in which your vehicle is written off, the excess amount will typically be deducted from the final claim payment.
If the accident was not your fault, you should be able to reclaim your excess payment from the insurer of the responsible party. That is, provided they are insured!
Generally speaking, there are three basic types of excess:
This is the minimum payment that you are obliged to make in the event of a claim. The excess amount will be specified on your Certificate of Insurance.
This is an additional amount, on top of your fixed excess, that you agree to pay in the event of a claim. Increasing your excess effectively reduces the financial risk carried by your insurer, which should thereby lower your premium.
Age (inexperienced driver) excess
Where an insurance policy features an inexperienced driver, or drivers under the age of 25 years, a higher excess will normally apply. This includes nominated drivers as well as the principal driver.
Things to think about when considering your excess:
- It may be worth increasing your excess simply to save money on your insurance premium. But before you do, consider the car you drive and what would happen in the event of a claim. For instance, if you drive an old, low-cost vehicle it may not be worthwhile to increase your excess. After all, you don’t want to pay out more than your vehicle is worth!
- In the event of an accident, consider the difference between your claim amount and your basic excess. Always look at the impact a claim may have on your No Claim Bonus entitlement and the effect on premiums in future years.
Make a Claim
If you are in an accident, here are some tips to remember when making a claim:
At the scene of the accident
- Stay on the scene of the accident but do not admit fault.
- Record names, contact details and registration numbers of the other drivers involved.
- Record the police report number, if applicable.
Before you make a claim
- Consider the ramifications of making a claim on your policy.
- Be clear on your excess obligations.
- Does your insurer offer a no claim bonus?
When you make a claim
- Report all details of the accident to your insurer as clearly and as soon as you can.
- You may be required to complete a formal claim form thereafter.
- Provide supporting documentation where you can.
- Make sure your insurer acknowledges receipt of your claim.
- Respond to any questions relevant to your claim assessment.
- Keep informed of the progress of your claim and make sure you are advised of the result within a reasonable period of time.
Buying Car Insurance
At its most basic, insurance should protect you and your family against the effects of a loss to your person or property. But with the different cover options available, it can get a bit more complicated than that. Read our tips for buying car insurance.
Top tips for buying car insurance:
- Compare coverage quotes
- Establish what coverage you require
- Understand the benefits of car insurance
- Learn the lingo – our glossary will help
- Know your vehicle and your driving history
- Determine how much you can afford
- Review insurance company credentials
- Review the fine print of your policy
- Find out how to lower your premium
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