So you’ve bought a car! Welcome to the sometimes complex and confusing world of car insurance. Car Insurance is what’ll protect you financially if you damage your, or someone else’s car (which most of us may do at some point). You are required to have Compulsory Third Party Insurance to legally drive your car.
It’s totally normal to have no idea how to go about getting the best Car Insurance for you and your new ride. Don’t worry; we’ve got some tips to help you navigate your way through green slips, premiums, excess, and everything else in between.
Car Insurance is basically a contract between you and the insurance company that says you will pay a premium – aka, the sum of money you pay for your insurance cover – and in exchange the insurance company will cover some or all of the costs in the case of an accident. Car Insurance can not only cover damage to the car, but a number of medical costs too, depending on the policy.
There are different types of Car Insurance and different levels of coverage in each policy, which is why you need to do your research and read up on a bunch of insurance providers before making any decisions.
Compulsory Third Party (CTP) Insurance
CTP Insurance is known colloquially as a Green Slip. Every registered vehicle in Australia needs this form of insurance, so this is the bare minimum you’ll need to drive!
CTP covers you for any legal liability for injuries or deaths inflicted on others as a result of an accident you are responsible for. This includes other pedestrians, motorists, motorcyclists, cyclists and passengers. CTP does not cover driver injury (unless it is deemed as ‘catastrophic’), damage to your own car or property, damage to other people’s cars or property, theft or fire damage to your own vehicle. It is the most basic car insurance available and as such is also the cheapest.
Third Party Property Damage Cover
This type of policy covers damage you may inflict on other people’s vehicles and property. In the event of an accident, Third Party Property Cover will help ensure that you are not out of pocket for any damage that another car or property suffers as a result of your driving, minus your excess (don’t worry, we’ll talk about excess later). However, this type of policy does not cover damage to your own car.
Third Party Fire & Theft Cover
This policy type covers everything in Third Party Property Cover, with the addition of any damage or loss you experience as a result of a fire or theft. This does not cover damage as a result of an accident.
This covers everything previously mentioned in Third Party Property Damage Cover, and Third Party Fire & Theft Cover, plus any repairs or replacement to your vehicle in the case of an accident, regardless of whether or not you are at fault!
Depending on what extra options you select as part of your policy, you may also be entitled to coverage of a rental car after an accident or an excess free windscreen claim. This higher cover comes at a higher price though; Comprehensive Cover is generally the most expensive insurance option.
So you’ve had an accident, your car is looking worse for wear and you need some repairs done that are going to cost you a pretty penny. If you want your insurance company to reimburse you for the costs of the repairs, you will need to file a claim.
The insurer will review your claim to see if the event or circumstances are things covered by the policy.You might need to provide proof it is a genuine claim and the insurer will need to check the claim meets the terms and conditions of your insurance policy. The claims process is generally a quick and straightforward process which can be done over the phone, or; depending on your insurer, it may be done online.
If your claim is accepted, your insurer will organise for your car to be repaired, or if it is a total loss (i.e. it can’t be fixed) they will pay you the amount your car is insured for.
Put simply, an excess is the amount of money you agree to pay your insurance company in the event that you make a claim. Insurers add this into policies to discourage you from making a claim on every little scratch to your car.
An example: If your policy has an excess of $300 and the repairs of your fender bender costs $500, then the insurer will cover the remaining $200.
The Age Excess
Most insurance policies include an extra excess that applies when a driver under the age of 25 is driving at the time of the accident (which is probably you). In any case, make sure you read the fine print of any policy you consider and factor this into your costs.
Excess vs. Premium
The premium is the annual amount you pay for your insurance cover. Generally speaking, the larger the excess amount, the lower the premium. In fact, most policies allow you to voluntarily increase your excess in order to lower your premium. Careful though, if you increase your excess too much it may end up being more expensive than the repairs you require.