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Do you have car insurance? You probably have compulsory third party insurance (your green slip), however, this is just one type of insurance in a whole eco-system. In this article, we’ll unpack and explain what comprehensive car insurance is, and answer some of the questions our team get asked by everyday drivers like you.
What is comprehensive car insurance?
Comprehensive car insurance can help cover the cost of repairs to your vehicle in the event of accidental damage, malicious damage, theft, fire, hail, and third-party damage – regardless of whose fault it is1. Some policies will even cover certain items inside your car, such as a car seat or baby capsule if damaged in a collision.
What does it cover?
While it’s important to review the Product Disclosure Statement (PDS) to understand what is included or excluded for your policy, generally, comprehensive car insurance can help cover the cost of repairing your car in the event of:
Collisions: if you’re involved in a collision, comprehensive insurance can help cover the cost of repairs for your car as well as other cars involved.
Accidental damage: this can cover mishaps that impact your vehicle that isn’t related to another vehicle. Things like scratching your door. hitting your letterbox on your way out of your driveway.
Weather damage: mother nature can do quite a bit of damage to your vehicle. Comprehensive insurance usually helps cover damage due to fires, floods, storms, hail, and other elements.
I already have compulsory third party insurance. What is the difference?
Compulsory third party insurance is, well, compulsory. Any further insurance coverage you take out in addition is entirely up to you. Before you compare car insurance, you should know the types of car insurance available.
There are four types of car insurance in Australia:
Compulsory third party insurance (CTP): Depending on where you live, this might also be called a green slip. This will cover any person you might injure in an accident but doesn’t cover any damage to property (such as their vehicle or yours).
Third party property: this helps cover the cost of damage to other people’s property but generally does not cover damage to your own vehicle.
Third party fire and theft: the next level up from third party property insurance, additionally can help cover your vehicle in the event it’s stolen or catches fire.
Comprehensive: comprehensive car insurance typically includes all eligible claims in relation to the above, with the addition of cover for damage to your vehicle if you’re involved in a collision.
How much insurance you have is up to you. It’s important to remember that if you find yourself in a situation where you need to pay for damage to someone else’s car, taking out a comprehensive car insurance policy could save you a lot of money in the event of an incident occurring2.
Theft and vandalism: Car theft is more common than you might think – from March 2019 to 2020, there were 60,165 registered vehicles stolen in Australia3. If your car is stolen or vandalised, comprehensive car insurance could replace or repair it.
Third party property damage: if you damage someone else’s vehicle or property, you’ll be covered up to your policy’s limits.
Helpful Tip:
With young kids, having a car to get from A to B is absolutely essential. If I was stuck without a car, my life would be thrown into disarray. Which is why I always have comprehensive car insurance. It gives me peace of mind knowing that in the event of an accident – regardless of whether it’s my fault or not – we would have access to roadside assistance and a hire car to keep our lives in order, while we wait for our car to be repaired or replaced. Some policies will even cover things like baby seats and car seats if they are damaged in an accident.
Canna Campbell, Financial Planner & Founder of SugarMamma TV
What other extras can I get?
With some insurers, you can pay a slightly higher monthly premium for additional services. These extras could include things like:
Windscreen & window glass cover: this type of add-on typically allows you to repair or replace your windows or windscreen when damaged once a year without paying an excess or for a reduced excess.
Roadside assistance: if you get into trouble, this could help with things like towing, lost keys, or dead batteries. Before you get stranded on the side of the road, make sure you understand what your policy does and doesn’t cover in this area. This can be found in the terms and conditions of your cover.
Hire car: if you are without your car during a claim, your policy might cover a hire car so you can still get around while you wait up to the timeframes allowed.
Value: this could include the ability to choose from an agreed value or market value if your vehicle is totalled or stolen and not revered.
How much does comprehensive car insurance cost?
A range of factors will make up the cost of your policy. Insurers use complicated algorithms that are impossible to debunk completely, but we can share some of the common factors that could come into play. These include:2
Your age: Sorry, young drivers. If you’re under 25, you’ll likely pay more for car insurance. On the flip side, you could save money by restricting drivers under a certain age from your policy.
Your driving record: Insurance companies figure that people who have never been in an accident are less likely to do so in the future (makes sense, right?). The opposite is also true – so if you’re missing points on your license or have a history of collisions, expect to pay more.
Your vehicle: Certain cars are considered less safe to drive, or are more expensive to fix. Usually, these cars are also more expensive to insure. Modifications to your vehicle may also bump up the premium. What you use your vehicle for can also come into play. If you rarely use your car, you might pay less. If you use your car daily or to conduct business you may find yourself paying more.
Your address: You could pay more or less depending on where you live, and where your car is parked during the day or stored overnight. If your car will spend a lot of time in a neighbourhood with more crime, or in a high-risk area for bushfires, you may pay more.
Your excess: excess is the amount you pay to make a claim on your policy. Some insurers put the excess on a sliding scale, where you can choose to pay a higher premium to have a lower excess in the event of a claim, or by choosing to increase the excess you could pay less per month.
While some of these factors might be out of your control, there are things you can do that could lower your premium. Other than getting older, keeping accident-free is the best way to help keep your monthly costs lower.
What doesn’t it cover?
When shopping for a comprehensive insurance quote, be on the lookout for exclusions. In many cases, exclusions to comprehensive car insurance are common sense. Things like:
Driving under the influence: driving over the legal limit will get you a big fat “denied” stamp on your insurance claim, no matter who your insurer is.4
Driving an overloaded vehicle: driving a car with more passengers or weight than it can legally hold is typically excluded. If you’re planning on towing a trailer or caravan, make sure you know your vehicle’s towing capacity before you take off.
Unlicensed drivers or unregistered vehicles: if you don’t have a valid license, or your license has expired, you shouldn’t be behind the wheel. Same goes with a vehicle with no rego. Like drink driving, this is illegal and usually won’t be covered by any insurer5.
Other exclusions apply to your vehicle and its condition. Exclusions in this category include:
Modifications: like we mentioned above, modifying your car can increase the price of your insurance policy. Failing to disclose modifications to your insurer can result in a claim being refused.
General wear and tear: car insurance is there to help you in unexpected circumstances, like a car crash. Your car deteriorating and having issues over time is expected, which means it generally isn’t covered.
Breakdowns: this one surprises some people. A lot of car insurance won’t cover you if your car breaks down. However, many insurers will offer the option of adding roadside assistance to help you with some basics to get back on the road if your car breaks down.
There are other exclusions that might apply to your policy – in fact the exclusions section of your policy will likely be pages long. But grab a cuppa and read it all, because you’re ultimately responsible for understanding the Product Disclosure Statement, which outlines the specifics of your policy.
Ready to compare policies?
If you’re ready to shop for comprehensive car insurance, buckle up. There are a lot of different insurers, and it can be tricky to navigate through the world of premiums, excesses, exclusions and policy features. But we’re here to help you compare comprehensive car insurance online from our range of policies, or answer any questions you have over the phone. Call us on 13 19 20 to get started.
Canna is a qualified financial planner, the founder and director of SASS Financial Services, a boutique financial planning firm, and the founder of SugarMamma TV. She is Channel 9's exclusive 'money expert', and best-selling author of The $1000 Project & Mindful Money.
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