Congrats on selecting your new car! You’ve done all the research to figure out which vehicle suits your lifestyle the best, down to the last cup holder and chrome detail. You’ve probably read our post Choosing The Right Car For Your Lifestyle. The time has come and now you’re taking the plunge. You can’t wait to enjoy that ‘new car’ smell. Whether you’ve decided on a compact hatch for cruising around the city, a family-moving people pleaser, or you’ve splashed out on a luxury sports car, now’s the time to protect your investment and think about car insurance.
Just like cars, car insurance comes in many shapes and sizes to suit all vehicle types and life situations. It’s important to make sure that your car insurance meets your specific needs .
Choosing Your Options
There are hundreds of products on the market but basically, you can choose from the following types of cover and add extras from there.
- Comprehensive cover, as its name suggests, is the most wide-ranging cover you can get for your car. Comprehensive cover insures you for third-party property damage, including fire and theft, as well as damage sustained to your vehicle, whether you were at fault for an accident or not. Comprehensive car insurance premiums are higher because they cover more. Comprehensive policies will cover the cost of repairing or replacing your vehicle if it is damaged, lost or stolen. Comprehensive policies can vary between ‘agreed value’ and ‘market value’. Agreed value is the amount that you and the insurer agree to insure your car for at the time the policy is taken out or renewed while market value policies will provide you with the market value of your car on the day it was written off.
- Third Party Property covers you for any damage you do to another vehicle or property if you’re involved in an accident. If you don’t have Third Party Property Insurance, you will have to pay for any repairs to other vehicles or property out of your own pocket. However, Third Party Property will not cover any damage to your vehicle and will not cover the replacement of your vehicle if it is written off or stolen.
- Third Party Fire & Theft covers you in the same way as Third Party Property, with the addition of cover in the case of Fire or Theft. Some Third Party Fire & Theft policies will also cover some damage to your car if you are hit by an uninsured driver who is at fault for the incident. You will need to check the insurers Product Disclosure Statement for further details.
- Extras: For an additional premium, many insurers offer extras cover for roadside assistance, glass & windscreen repair/replacement, new for old replacement, temporary vehicle hire, and in-vehicle pet cover.
Understand Your Minimum Requirements
Every car in Australia must carry Compulsory Third Party (CTP) insurance, which is the national minimum standard. CTP insurance covers your liability for any personal or fatal injury you inflict on another person in the event of an accident, and it also covers your legal fees for any litigation that may arise from an accident . Some CTP policies will also cover the driver in their own car in the event of an accident, so check with your insurer to see if this applies to your policy .
The way you obtain CTP insurance depends on the Australian state that you live in. You may not have a choice when it comes to CTP insurance because in some states, it’s included in the cost of licensing your vehicle. For other states, you may be able to nominate a new CTP insurer at the time of registration. However, since CTP Insurance does not cover you for damage you do to vehicles or property, it’s a good idea to take out additional insurance to cover you for those costs.
Review What You Need
Different cars may need different types of cover. Think about the vehicle you’ve chosen, and contemplate the following questions to figure out the level of cover you might need.
- Is your car a brand-new luxury SUV or a pre-loved student sedan? Or perhaps you’ve opted for a vintage sports car?
- Is your car large or small?
- Where do drive your car, and how often?
- Where does it get parked?
- Will you be the only driver, and if not, how many drivers will there be? Will there be any drivers under the age of 25 covered by your policy?
- Do you want cover for your car if it is stolen or written off in an accident?
- Do you drive in the city or take your car off-road?
- Do you have enough savings to cover replacing your car if it’s damaged or stolen?
- Will you able to use those savings to pay for repairs to someone else’s vehicle if you cause an accident?
If you suspect that you may not be able to cover the costs of any repairs or replacements in the event of an accident or theft, it’s best to opt for the most comprehensive level of car insurance. This way, you’re safe and sound, financially-speaking, no matter what happens on the road.
Compare And Contrast
Compare your options. Take into account what you need, what you want to be covered for, and the types of vehicle-related situations you may find yourself in. Read each Product Disclosure Statement (PDS) carefully to make sure the level of cover matches what you need. And, as always, don’t be afraid to shop around until you find the right policy for you.