Guide to Car Insurance
Driving without Compulsory Third Party (CTP) insurance is illegal in Australia, so all motorists must at least be insured for their personal injury liability.
Depending on where you live, you may have a choice of CTP insurer, although most people will pay for this cover through their registration fee.
As CTP only covers the cost of injuries to third parties – this means road users other than yourself – most drivers also decide to take out a separate insurance policy.
There are three main types of car insurance to choose from, and several terms that you should be familiar with.
Third Party Property Damage
Third party property policies cover your costs if you damage another person's property in your car.
It's a fairly basic type of insurance and won't pay for your own repairs but it will protect you from a large bill if you hit an expensive car (or someone's house). If your car is pretty cheap to repair, or not worth much anyway, this insurance will keep your costs down while ensuring you can pay for any damage you might cause on the road.
Third Party, Fire and Theft
Third party, fire and theft policies cover damage to other people's property, with the added benefit of cover in the event your own car is stolen, or is damaged by fire.
It's still not going to pay out for repairs to your own car, but with this policy you can claim if your vehicle is stolen or catches fire.
If you don't want to pay to replace your car in the scenario of fire or theft, but you are less worried about repairs due to accidents, this is a good middle ground.
Comprehensive Car Insurance
Comprehensive car insurance is just that: it covers most eventualities. Not only are you covered for third party damage, your own car will be covered in the event of fire, theft or an accident.
Car insurance companies often offer a host of extra features to attract customers, including roadside assistance, legal costs cover and hire car services.
As it is quite a competitive area of insurance, you may even find that a comprehensive policy is cheaper than some third-party policies.
Premiums
Your premium is the amount you will pay for your policy. Every insurer has a different way of calculating premiums, but generally they are based on risk factors.
These include:
• your age
• gender
• how long you have been driving without making a claim
• whether you have any driving convictions
• your occupation
• your postcode
• how many kilometres you drive each year.
Some insurers will give you the option of paying your premium monthly or annually but be aware that the monthly option may be more expensive.
Excess
Insurers usually include an excess on their policy and this is the amount you will have to pay on any claim you make. The higher it is set, the lower your premiums will be, but the more you will have to pay for a claim. Some insurers will let you set the excess to zero, for a bit extra on your premium.
Agreed Value and Market Value
If you have a comprehensive car insurance policy, you may have the option to insure it for its market value or an agreed value. Car insurance quotes for agreed value tend to be more expensive but your insurer will pay out an amount you have previously agreed on in the event your car is stolen or written off. On the other hand, if you have chosen the market value option, your payout will depend on the current value of the car, not what you think it's worth.
Buying Car Insurance
Many insurers offer a discount to customers who buy their car insurance online. Shopping around is also essential, as there are many different car insurers and policies on the Australian market. To find the best one for you, use our comparison tool and see how much you could save.