It pays to know a little bit about car insurance. Why? Because in a country as vast and inviting as ours, we’re bound to spend plenty of time on Australian roads. An ABS report states we travel an average of 13,800 kilometres per year (as of 2014). That’s roughly 8 return trips from Sydney to Melbourne!
With all that driving, if pays to have protection and peace of mind, and finding a great car insurance policy that will provide you exactly that. We’re here to answer any pressing car insurance questions you have, which is why we’ve assembled this FAQ.
By law, every car owner in Australia must have Compulsory Third Party (CTP) insurance (also called Green Slip insurance in NSW), a bare minimum level of cover. You are not required by law to hold more extensive cover than this (e.g. comprehensive cover), but it’s a good idea to consider these types of policies as they provide greater protection overall.
If you’re unsure of whether or not you’ll get any value from this type of cover, consider the following: the Insurance Council of Australia states that Australians are claiming on their comprehensive insurance policies more than they have in years, and the size of these claims (i.e. the cost to insurers) is increasing.
Source: Australian Insurance Council, General Insurance Industry Trends, January 2015
N.B. According to the AIC, “The numbers in the series do not represent dollar values or frequencies. They represent the percentage change in the index numbers between two consecutive or distant quarters. This provides an indication of the underlying trend change in premiums, claims frequency, claims size and cost per policy.”
It would seem an increasing number of us as policyholders actively use comprehensive cover when needed … but you can’t claim if you don’t have cover.
CTP insurance covers your liability against personal injury caused by you in a motor vehicle accident or incident. So, if you are in an accident, and are at fault, and someone gets injured, your CTP protects you. It does not cover damage to vehicles or property, which is why it’s important to have comprehensive car insurance to protect you if your car is damaged, stolen or if you damage a third parties vehicle or other related property .
Comprehensive car insurance provides you with the highest level of protection available, and insurance premiums are reflective of this. If you have taken out a loan to purchase your vehicle, you may be required to take out comprehensive car insurance as a condition of the loan.
Many car insurance policies offer optional extras, usually at the expense of a more expensive premium. Some common optional extras are windscreen cover, the leasing of a rental car if your vehicle is being repaired, and complimentary roadside assistance.
What it costs for your insurer to replace your car with one that is of similar make, model, age and condition as your own. As your car’s value changes over time (notably due to depreciation), its market value changes. If you write off your vehicle, you cannot receive a payout or new car replacement in excess of this market value – if you car was worth $10,000, you won’t receive anything more than that (minus the excess you pay).
An excess payment is the amount you will need to pay if you make a claim on your car insurance. Your excess can vary depending on your needs and your policy. Some policies allow you to have a higher excess in exchange for a lower premium, or no excess at the expense of a more expensive premium. Excesses may only need to be paid in claims where you are deemed to be at fault by your insurer or when there is no third party.
Your car insurance premiums can be calculated according to a range of policy information, , including (but not limited to):
Much of the above depends on the insurer and the individual policy.
For Comprehensive policies, insurers may allow a No Claim Discount (or bonus) which rewards drivers based on a good driving history. This NCD can be carried between policies, and is represented as a rating (e.g. rating 1, if you haven’t claimed in five years or more).
Claiming on your car insurance is a simple process. Make sure you store your insurance details in your car at all times – your glove box is an obvious spot – so they are always at hand in case you’re involved in an accident. Exchange insurance details with other parties involved in an incident, and then contact your insurer. If necessary it may pay to take pictures on the location of the accident and the damage.
Most insurers provide a 24/7 claims lodgement and assistance over the phone while others also offer online claim lodgement. Give them a call and they’ll talk you through the next steps to lodge a claim.
Assessing the damage to your car?
The severity of the damage may determine how your car is to be assessed. If the incident is minor, you may be asked by your insurer to take your vehicle to one of several nominated repairers who will undertake repairs.
If the incident is more severe, your vehicle may need to be assessed by your insurer’s assessor. If your vehicle is not in a driveable or roadworthy condition due to the nature of the damage, your insurer may arrange to have it towed directly to their facility for a claims assessment.
Always read the insurers Product Disclosure Statement (PDS) which outlines the conditions of cover including information about:
Choose a policy that best matches your individual circumstances. When considering car insurance, the biggest question to ask yourself is: if your car were severely damaged or written off, could you afford to replace it? If not, you’re probably best off considering a comprehensive policy. As its name suggests, comprehensive insurance provides a high level of protection when it comes to coverage.