Accident / incident
An unexpected, unforeseeable incident.
An agreed-upon amount determined between yourself and your insurer that your car is covered for during the term of your policy.
Your insurer may not offer an agreed value policy unless you meet certain conditions. For example, if the vehicle is a certain age or has existing damage.
A device that hinders thieves from stealing or vandalising your vehicle. For example, you could install an immobiliser that keeps the car from being turned on unless a unique identification code is passed from the car keys to your vehicle. Depending on your insurer, your car insurance premium could be reduced if you install these sorts of devices.
If you were involved in an accident and it occurred as a result of something you did, then you will need to make an at-fault claim. If you have comprehensive cover, your insurer should still pay for repairs of everyone involved.
In any instance where you can’t name the at-fault party (i.e. another driver/person who is to blame for the accident/incident), you’ll need to make an at-fault claim and pay an excess. An example of this would be if a tree branch falls and damages your windshield – there’s no third party to name ‘at fault’.
Car hire cover
If your car is stolen, your insurer may offer you a hire car for an agreed period. This way, your life isn’t disrupted for several weeks. The agreed period doesn’t always include the time it takes to receive a payout and may differ between insurers, so keep that in mind.
A claim is an application to your car insurer to fulfil their obligations as outlined in your policy. So if you’re in an accident and your vehicle is damaged, and the terms and conditions of your policy dictate that your insurer must pay for the repair costs, a claim gets that process started.
You should know that your insurer most likely uses their own preferred repairers and mechanics, although perhaps not exclusively so.
Comprehensive car insurance covers the cost of damage to you or by you in the event of an accident. That means regardless of who’s at fault, your repair or replacement costs are still covered – although you may still need to pay an excess. It also covers fire damage, theft and may also include other extras or benefits – up to a certain limit, as listed in your product disclosure statement (PDS). If you take out a comprehensive car insurance policy, you’re likely to be well protected (financially) on Australian roads.
Compulsory Third Party insurance (CTP)
CTP insurance (also known as Green Slip cover in NSW), is held by every driver in Australia who owns a registered passenger vehicle. It provides you with legal indemnity in the event you injure someone (or worse) when driving and are at fault. In QLD, SA, NSW and the ACT, you can choose which CTP provider you want to cover you. In every other state and territory, you can’t.
A legal agreement between you and an insurer that details the coverage you’ll receive in exchange for paying premiums.
The period following the purchase of a policy in which you can still receive a refund of what you originally paid if you decide to withdraw your interest, provided you haven’t already made a claim.
What’s included in your car insurance policy and how an insurer will help pay for costs in the event you make a claim. Different levels of car insurance policies will cover various risks.
Damage is typically the result of an accident or weather-related incident and can affect cars, property and other items. Different levels of insurance cover different types of damage, outlined under each policy’s product disclosure statement (PDS).
Depreciation is when your car’s value decreases over time. It occurs in most cars due to tear and wear, with few exceptions (e.g. classic cars).
Discounts (i.e. lower prices for insurance) apply to customers that meet specific requirements, especially those who lower/minimise their ‘risk profile’. For example, drivers who don’t drive much may qualify for a low-kilometre discount, because there’s a reduced risk of a claim if you spend less time on the road.
Driving record/claims history
Your driving record refers to both your at-fault accident record and any other driving offences. This is one of the factors an insurer will use to (a) decide whether to insure you, and (b) calculate your premium.
Duty of disclosure
A contract is an agreement between the insurer and insured that covers ‘the risk’ (i.e. the likelihood of you having to claim). You have a duty to when signing up to tell the insurer any information relevant to that risk. That means if you have, for example:
If there’s anything else relevant to your cover (e.g. your garage doesn’t lock), you must tell your insurer when taking out a policy. Your insurer will most likely ask you the relevant questions when you’re signing up, so just be honest. If you fail to provide all pertinent information or mislead your insurer about certain things, your insurer may not honour your claim.
Excess (or policy excess)
An excess payment may need to be made when you make an at-fault insurance claim before it can be processed. The amount owed will differ depending on your policy.
Green slip is what CTP is called in NSW and is a compulsory level of insurance all drivers are required to take out to drive on the roads.
Listed driver / nominated (or named) drivers
A listed driver is someone who you’ve nominated to be covered by your policy for a specific vehicle. You can name multiple people who are likely to drive the car during the term of your policy. However, premiums may increase based on a variety of factors (e.g. their age, gender, claims history). Check with your insurer as some policies will only cover drivers that are listed.
Market value is calculated at the time of a claim. It’s based on the car’s condition (immediately prior to any accident) and what it costs to replace your vehicle compared with the same make and model of similar age and condition.
Essentially, it means what your car is worth in the market is the limit of what you’d receive back from an insurer if you made a claim.
Alterations to your vehicle in an effort to change how fast it is or how it handles are considered modifications. Some modifications will increase your monthly premium, as greater speed usually means a higher risk to the insurer. It can even risk you being disqualified from cover entirely.
New car replacement
You will receive a replacement vehicle of similar make and model in the event your car is written off (i.e. deemed too expensive by the insurer to repair), as opposed to a simple cash payout. There are conditions to this, which you’ll be able to locate in your product disclosure statement (PDS).
No claim discount (or bonus)
If you do not make an insurance claim over the life of your policy, your insurer may offer you a no claims discount (sometimes called an NCD) when it’s time to renew your policy. If you don’t claim for multiple years, the savings may compound. While this can be great for some drivers, make sure a new policy doesn’t end up giving you more (or at least comparable) cover for less money.
A no-fault accident is where your insurer dictates the third party (i.e. the other driver/s) was at fault. You must provide your insurer with their details, so make sure you collect them at the time of the incident.
Personal injury cover
Compulsory Third Party (CTP) insurance covers the costs if you injure or kill someone in an accident, but doesn’t cover your own injuries. For that, you’ll need to find a policy that includes personal injury cover.
The cost you pay to maintain your car insurance. You can usually pay monthly or annually.
Insurers will rate you based on your claims history and this affects how much you pay. If you are claim-free for many years (disregarding claims where you weren’t at-fault), you’ll eventually achieve ‘Rating 1’. If you then have to claim (and are at fault), you may go down a rating (i.e. Rating 2, all the way down to Rating 6). Some insurers offer ‘Rating 1 for life’ if you take out a policy with them while holding a Rating 1. This can mean you will be classed as a rating 1 driver no matter how many claims you make in the future.
The driver who uses the insured vehicle most throughout the term of the insurance policy is known as the regular driver.
Some written-off vehicles can be repaired, inspected to ensure they’re roadworthy and then re-registered. However, it will never hold the same value again, due to the fact it has a history as a repairable write-off. You can sometimes organise with your insurer to keep your vehicle if it’s a repairable write-off.
If you source a car to drive while yours is being repaired, you’ll receive compensation from your insurer for that period. You will, however, need to let your insurer know you’re doing this.
Risk is a common insurance term. In relation to car insurance, it’s defined as the likelihood of a policy-holder (i.e. a driver) making a claim that results in the insurer needing to pay out that claim. The insurance policy covers this risk. If that likelihood is low, then you are a low-risk driver and will be a more attractive prospect to insure. Furthermore, you may attract a cheaper premium.
Airbags, antilock brakes, parking sensors – all these things are considered safety features because they actively work to keep you safe while you’re behind the wheel of your car.
The total amount of money your vehicle is insured for. You can’t receive more than this amount when claiming.
A third party is the other individual/s involved in your claim (i.e. the other drivers on the road). An uninsured third party driver is someone without their own insurance policy to cover the damages to your car. You can take out a policy that will include your repair costs in these circumstances, called comprehensive cover.
Third Party Property cover
This covers the repair costs if you are at fault and damage someone else’s car or property. It doesn’t include cover to help pay the repair costs of your vehicle.
Third Party Fire & Theft
Third Party Fire & Theft provides coverage if you damage someone else’s car or property (and are at-fault), as well as if your vehicle is damaged by fire or stolen. Be mindful that you can only claim up to a certain amount.
Vehicle identification number (VIN)
A vehicle identification number is unique to each vehicle. You should run a car history report (Personal Property Securities Register [PPSR] or Register of Encumbered Vehicles [REVs] check) on any second-hand vehicle you consider purchasing. This ensures it’s not under encumbrance (i.e. the car hasn’t been paid off), that it hasn’t been written-off in the past or stolen. Your car’s VIN can typically be found inside your car door and on your registration.
Write-off (or total loss)
A vehicle is written-off when the insurer deems it too expensive to repair. It doesn’t necessarily mean it’s unrepairable. In the instance where your car is written-off and you have a Comprehensive policy, you’ll be paid out or receive a similar vehicle.
Anything of value inside the car. For example, if you left a wallet or handbag on the seat.
Young or inexperienced drivers are statistically more likely to claim on their car insurance policy than experienced drivers. Because of this, insurers charge higher premiums for young drivers to compensate for the additional risk they’re taking on.