How to choose car insurance that’s right for you

Getting to and from work, dropping the kids off at school, and picking up the groceries - if you’re like most Australians, you probably rely heavily on your car to get through your day-to-day. If something went wrong, doing without a car would be a major inconvenience. And if you don’t have the right insurance, it could also be a major expense.

Confused about car insurance? Let us break it down for you.

Types of insurance

There are four main types of car insurance:

  1. Compulsory third party
  2. Third party property
  3. Third party property, fire and theft
  4. Comprehensive

Compulsory third party

Compulsory third party (CTP) insurance covers you if you are in an accident that causes death or injury to another person. As the name suggests, CTP insurance is compulsory, every driver in Australia has to have it. CTP insurance is governed differently in each state and territory, in Queensland you can choose to include your CTP in your car registration costs.

Third party property

Third party property insurance covers the repair or replacement costs of damage to another person’s property caused by your car and your legal costs.

Third party property, fire and theft

Third party, fire and theft insurance covers the repair or replacement costs of damage to another person’s property caused by your car. It also provides cover for damage to your own car caused by theft or fire.

Comprehensive

Comprehensive insurance covers the lot - damage to another person’s property caused by your car and damage to your car caused by theft, fire or accident.

What type of insurance do I need?

For most people, third party property insurance makes sense. According to ASIC’s Moneysmart site, the average cost of repairs for vehicle damage caused by an accident is $3,000. But if you’re in an accident with a high-end sports car the costs are more likely to be in the tens of thousands of dollars. If you can’t afford this much money, third party property insurance is the way to go.

If you couldn’t afford to replace your own car should it be damaged or stolen, and if you need your car to get around, then fire and theft or comprehensive insurance is the right option.

How to choose a policy

The right policy will be different for everyone, so to get the best deal and make sure you are adequately covered, it pays to think about how your car will be used and do your research.

Car insurance policy providers consider many factors when setting premiums including the make and model of your car, where you live and your age. Some providers offer "usage-based insurance", calculating your premium based on how you drive your car, where your car is driven and where it is usually parked. Another option is “pay as you drive” insurance with the premium calculated using the number of kilometers you expect to drive in the coming year.

Many policies also include extras, for example:

  • Uninsured motorist cover for damage to your car if you are in an accident with an uninsured driver and you’re not at fault.
  • New car replacement
  • No claim bonus schemes

Many policies also have specific exclusions, for example:

  • Damage caused by an unlicensed driver
  • Damage caused by a driver under the influence of alcohol or drugs; and
  • Damage from mechanical failure, modifications, depreciation, rust and wear and tear

When comparing policies, it’s not all about cost. It’s important to read the product disclosure statement of any policy you are considering so you know exactly what is covered and what isn’t.

Be honest with your insurer

When you’re applying for car insurance it’s important to be accurate and honest with the information you provide. Misinformation can result in the insurer refusing to pay when you make a claim.

You should also let your insurer know if your situation changes. For example, if you:

  • have additional people who will be driving your car
  • decide to use your car for work purposes (for example, to make deliveries or as an Uber driver)
  • make any changes or modifications to your car (for example, paint it or add tinted windows)
  • move house.

Making a claim

If something goes wrong it’s important to contact your insurer as quickly as possible. They will provide you with support and information about how to make a claim. Keep their information in the glove box of your car, so you always have it to hand.

When you make a claim you should provide as much information as possible, including the details of anyone else involved. Depending on the seriousness of the accident you may also need to lodge a police report and provide this to your insurer.

Still confused? Talk to us

QBANK car insurance is easy to arrange, simple to claim and competitively priced. To find out if one of our insurance options is right for you call 13 77 28.

Posted in

Car Buying

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