Cars can be a source of pride and joy, but for many people they’re also an essential part of life. No-one likes to think about bad things happening to their wheels, but knowing you’re covered if something does happen can give you peace of mind.
Car insurance can minimise the impact to your hip pocket and inconvenience should the unexpected happen. Here are four things to keep in mind when deciding which policy is best suited to you.
1. There are different levels of coverage
Broadly, there are four different types of coverage in regards to cars:
- Compulsory Third Party (CTP): You’re required by law to have this (also known as a greenslip in some states), and it covers injury or death as a result of an accident for which a driver is responsible. CTP insurance is mandatory in all states and territories of Australia and is linked to the vehicle registration process. CTP does not provide any cover for the physical damage to the car or the damage to other people’s property.
- Third Party Property Damage: This covers damage caused by your car to other people’s property (for example their car or fence). Even if your car is not worth much, this can save you a lot of money if, for example, you have a collision with a luxury car or a house.
- Third Party Property Damage, Fire and Theft: This covers your car if it’s damaged by a fire or is stolen, and also provides cover for any damage done by your car to other people’s property.
- Comprehensive: This covers damages to your car as a result of events like collision, flood, fire, storm and theft. It also covers you for any damage caused by your car to other people’s property.
2. The excess is very important
‘Excess’ is the amount you may need to pay whenever you make a claim on your insurance policy. The insurer then covers the costs beyond that excess amount. Every insurer offers a different level of excess, and you may be able to adjust your excess to reduce your premium payment – higher excesses will typically mean a lower annual or monthly payment. Keep in mind that should something happen, you’ll need to be able to cover whatever excess amounts are showing on your policy documents or listed in the Product Disclosure Statement (PDS).
3. You can reduce your premium
There are a couple of ways you can cut back your premium payments, but keep in mind that doing so may mean taking on some risk.
Increasing your potential excess payments is a common way to lower your premium. However, should you have an accident you may be left further out of pocket due to the higher excess you’ll then have to pay.
Your insurer may also have other options available to help keep your premiums down, such as a discount for making your payment annually rather than monthly or the ability to use credit card Awards points for a rebate on your premium. Another option may be to restrict drivers to only those over 30 years old.
4. Accuracy is important
It’s important to be honest and upfront when answering questions from an insurance company. If you provide details that aren’t correct or truthful, this could cause issues with any claims you may make down the line. Also be sure to update your policy should things change.