Car insurance<\/p>\n\n\n\n
Please note that this article is not written by a qualified\nor licenced financial planner so it should not be treated as professional\nadvice. When it comes to matters such as insurance, it is recommended that you\nspeak to a financial professional before making any decisions.<\/p>\n\n\n\n
Although slightly off our usual topics, I figured it would\nbe a good idea to put together an article related to car insurance as it\nrelates to Australian car owners. It is a topic often sidestepped by many as it\nis seen as quite a pain and most people know someone (if not themselves) who\nhas had issues dealing with insurance companies in the past.<\/p>\n\n\n\n
When dealing with car insurance, it is important to know exactly\nwhat you are paying for. It can often be tricky to know exactly what you are\ngetting. This article hopes to dispel some of that. Of equal importance is what\nyou are not paying for.<\/p>\n\n\n\n
If done correctly, car insurance makes a great safety net\nwhich can get you out of trouble on a rainy day and provide peace of mind. If\ndone incorrectly, it can be a real headache and could cost you dearly.<\/p>\n\n\n\n
There are many different companies offering what seems to be\nmany different kinds of insurance policies, but at the end of the day, there\nare 4 main types of car insurance available to private buyers in Australia<\/p>\n\n\n\n
1\/ Compulsory third party, or CTP.<\/p>\n\n\n\n
As implied by the name, CTP is compulsory and must be held\nby anyone who owns a registered car in Australia. CTP is the most basic level\nof car insurance cover. It covers death or injury that happens to anyone\ninvolved in a car accident. It does NOT cover damage to any vehicles or any\nproperty. <\/p>\n\n\n\n
2\/ Third party property<\/p>\n\n\n\n
Third party property insurance would be purchased in\naddition to Compulsory Third Party (CTP) insurance. As the name implies, third\nparty insurance covers the property (up to an agreed value) owned by others\nthat you damage if you are found to be at fault. It is generally recognised\nthat this should be the minimum cover you should have. What it does not cover\nhowever, is any damage to your car if you are found to be the party at fault.<\/p>\n\n\n\n
3\/ Third party fire and theft<\/p>\n\n\n\n
This insurance is a step up from third party property. It\ncovers everything the previous 2 types cover, plus any damage to your own car,\nprovided it was caused by fire or theft. It does not cover any accident damage\ndone as a result of an at fault accident. Make sure you read the policy as many\nThird Party Fire and Theft policies do not cover contents stolen from a car\nthat were not part of the car (ie: wallet, phone).<\/p>\n\n\n\n
4\/ Comprehensive<\/p>\n\n\n\n
As the name implies as well, comprehensive insurance can\ncover your vehicle regardless of who was at fault as well as any damage done to\nanyone else\u2019s property and death or injury. This is generally seen as the top\nlevel of cover for car insurance in Australia.<\/p>\n\n\n\n
On top of the 4 main types of insurance, insurers may choose\nto offer add-ons such as free hire car when your car is getting repaired, your\nchoice of repairer etc etc. Have a close look and see if what is being offered\nis worth the extra money you are paying<\/p>\n\n\n\n
There are also a few other terms you will need to be\nfamiliar with in order to navigate this maze:<\/p>\n\n\n\n
Policy:<\/p>\n\n\n\n
Policy is basically the insurance contract. The policy\nholder, is the one who pays the premium for it. In very simplified terms the\ncontract states that the policy holder will pay a certain amount for the policy\nand if certain conditions occur, then the policy holder will be paid out a\npreviously stated sum, which will be either an agreed value or market value<\/p>\n\n\n\n
Premium:<\/p>\n\n\n\n
Premium is basically what you have to pay in order to hold\nthe policy. Nowadays most insurance companies price their premiums using online\nalgorithms based on information you submit to them when applying for the\npolicy. A few examples of information they will ask will be:<\/p>\n\n\n\n
Based on your answer to their questions they will work out a\npremium. As I\u2019m sure you have noticed, you could play around with the answers\nto these questions to give yourself a more favourable premium. As tempting as\nthis is, do not do it. If you are found to have been dishonest (ie: manipulated\nthe algorithm) it becomes viable ground for the insurance company to void the\ncontract completely. Make sure you answer these questions truthfully, even if\nit costs you a couple more dollars upfront.<\/p>\n\n\n\n
Most companies will also give you the option to pay the full\namount upfront or make weekly or monthly repayments. If you can pay the full\namount upfront, it will usually save you a bit of money. <\/p>\n\n\n\n
Agreed or market value<\/p>\n\n\n\n
When filling out the form to get your premium, some insurers\nwill give you the option to value your car in 1 of 2 ways. Either as agreed\nvalue or at market value. <\/p>\n\n\n\n
With agreed value, the insurance value of your car is\ndetermined when the policy is started. You will know for the whole length of\nthe policy what your car is insured for.<\/p>\n\n\n\n
With market value, this figure is taken from a number of\nfactors including recent sale prices of similar cars.<\/p>\n\n\n\n
It is up to you to choose which of these 2 options works\nbest for you. From personal experience, I have found the \u2018agreed value\u2019 to be a\nlittle on the low side for many of the policies I have taken out. The upside is\nthat is has been agreed on upfront and there is the certainty of knowing how\nmuch the car is insured for. With market value it can be a bit of a wildcard as\nto what the value of the car will be should you ever have to make a claim.<\/p>\n\n\n\n
Excess<\/p>\n\n\n\n
In the contract there will be a thing called excess. Excess\nis the amount you will have to pay in order to make your claim. You will only\nhave to pay excess when making a claim against the insurance policy. Excess can\nusually be anywhere from about $500 and up. It works like this: If you had a\npolicy where the excess was $500 and you were involved in an at fault accident,\nyou would have to pay the excess (in this case $500), and the insurance company\nwould cover the rest of the costs.<\/p>\n\n\n\n
Generally speaking, excess and premium often act together in\ninsurance policies. If you opt for a lower excess, your premium will generally\nbe higher. If you opt for a higher excess amount, you can usually expect to see\nyour premium drop. <\/p>\n\n\n\n
In an ideal world you wont be making a claim so you would\nset the excess figure quite high in order to pay a reduced premium, however it\ndoes not always go like this.<\/p>\n\n\n\n
A few extra tips:<\/p>\n\n\n\n
Always keep your insurance paperwork handy. Do not throw it\nout when it comes in the mail. It is a good idea to keep this in the glove box\nof your car.<\/p>\n\n\n\n
Make sure you get it all in writing. From time to time there\nmay be reasons for your policy to change. You might switch to a new bank so\nthey have to now take money from a different account each month, you might\nupgrade to a newer car and have to tweak your policy. Anytime there are any\nchanges, regardless of how small, make sure you get it in writing from the\ninsurance company. I don\u2019t believe they are being deceptive, but when you speak\nwith someone over the phone, it could be going to a call centre overseas and\nnot be followed up on, leading to a miscommunication that could cost you your\ncover. Get everything in writing mailed to you.<\/p>\n\n\n\n
Don\u2019t be afraid to shop around for a better deal. Don\u2019t just\ntake the first offer. Don\u2019t just automatically renew your old policy. Jump\nonline, fill out some forms and compare what you are getting for your cover.\nMost insurance companies use a very similar set of algorithms so the prices\nmight not vary too much but it would still be worth investigating. Even better,\njump on the phone to them and talk to someone. Believe it or not, insurance\ncompanies are keen for your business, if you have them on the phone they may be\nwilling to give you a better deal than what is being shown online. They may\nrather sign you up at a discount than risk losing you altogether. Just see the\nabove point though, get it in writing.<\/p>\n\n\n\n
Be truthful about the information you give. When filling out\nforms that are asking for information, tell the truth. Lying on these forms can\nallow the insurance policy to cancel your policy. It might cost you a bit more\non your premium but it would be much better than having the policy cancelled on\nyou when you go to make a claim because you lied about your driving history. <\/p>\n\n\n\n
In the event of an accident, do the right thing. Although\nthis kind of goes without saying, make sure you get the details of all other\nparties involved and take photos of the scene from all angles. Report the\nincident to the correct authorities and notify insurance companies asap. A dash\ncam can be a good investment if you can afford one.<\/p>\n\n\n\n
Know what cover you are after before you start searching.\nThis will save you a lot of time and legwork if you get this sorted up front.<\/p>\n\n\n\n
Read the fine print. Although most of these policies are\nquite standard, take the time to read through the fine print of the contract\nand understand what you are and are not covered for. If you are unsure, ask. <\/p>\n\n\n\n
The subject of car insurance can be daunting to some. If\nthis is you, the best thing you can do is get informed. Learn the jargon, know\nthe types of insurance, what they cover and don\u2019t be afraid to shop around and\nask questions.<\/p>\n","protected":false},"excerpt":{"rendered":"
Car insurance Please note that this article is not written by a qualified or licenced financial planner so it should not be treated as professional advice. When it comes to matters such as insurance, it is recommended that you speak to a financial professional before making any decisions. Although slightly off our usual topics, I […]<\/p>\n","protected":false},"author":1,"featured_media":1048,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-450","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"yoast_head":"\n