Fact: Car insurance is tricky business.
Just like buying a car, there’s no one-size-fits-all policy and it takes a bit of shopping around to ensure you’ve got the best deal. With a wide range of policies available on the market, it’s important to find a product that suits your individual needs and circumstances.
Before committing to a policy, make sure you’re up to speed on what your policy means by asking your insurer to clarify any of your concerns. To help you understand the basics, we’ve rounded up 10 of the most commonly Googled questions about car insurance – so you don’t have to!
You’re welcome.
1. What are the different types of car insurance?
Compulsory Third Party (CTP)
In Australia, this form of car insurance is required by each state and territory. It covers your liability and the liability of anyone else who drives your vehicle for injuries you may have caused to other road users in a motor accident. It doesn’t cover the cost of damaged vehicles or property, or loss of vehicles. In NSW, CTP is often referred to as a ‘green slip’.
In some states, CTP is included in the cost of registration but in others it needs to be purchased seperately.
Comprehensive
This insurance covers damage to your own vehicle and other people’s property, as well as theft and some other risks, plus legal liability arising from damage to someone else’s property caused by the use of your car.
Third Party Property
This insurance covers damage to other people’s property and legal liability, but not damage to your own vehicle. In order to cover both your own vehicle’s damage and others, you need comprehensive car insurance.
2. What type of car insurance do I need?
Australian law only requires drivers to have Compulsory Third Party Insurance. In other words, it’s illegal to drive a vehicle that does not have this form of insurance. However, it’s a good idea to opt for additional car insurance so that in the case of an accident, you’re not left out of pocket.
Why? If you end up crashing into a pricey car such as a Mercedes, you won’t be left with an astronomical bill (and a whole lot of stress).
If you borrowed money for your car from a bank, your lender may require you to take out additional insurance.
3. How long does it take to get a quote?
This will depend on your car insurer.
For example, Stella Car Insurance, a new car insurance brand that’s designed for women, by women, allows you to simply request a quick quote online. In less than five questions, you can get an estimated quote for your monthly and yearly comprehensive car insurance rate.
4. What are included benefits?
Different policies will include different product benefits, leaving it up to you as to whether or not you want to seek additional benefits from your insurer.
Specifically designed for women, Stella Car Insurance includes product benefits such as a payment of up to $2,000 for damaged or stolen baby gear, and up to $1,000 for your personal belongings that are in your car if they’re stolen or damaged in an accident.
Giving female drivers the option to customise their cover, Stella offers optional extras such as roadside assistance, arranging a hire car and excess-free windscreen.
To find out what benefits are worth adding to your cover, speak with your insurer about your personal situation.
5. How are premiums calculated?
Every insurer will have their own way of calculating premiums, based on the following:
The type of cover and excess you have chosen, including additional benefits
The type of vehicle being insured
The location where the car is stored
The driving record and insurance history of the drivers
The age of the driver
The intended use of the vehicle
Whether you have nominated a market or agreed value for your vehicle (see question six)
Modifications made to the vehicle
6. What’s the difference between ‘Market value’ and ‘Agreed value’?
When choosing a car insurance policy, you’ll have to decide whether to insure your vehicle for an agreed value or for its market value. But what’s the difference?
Market value:
The value of your car in your local area immediately before the incident, as determined by your insurer. To calculate the market value, your insurer may use recognised industry guides and consider things like the make, model, age, kilometres travelled, both factory-fitted and legal after-market modifications and accessories, and the general condition of your car.
Agreed value:
The amount you and your insurer agree to insure your car for during the period of insurance shown on your Certificate of Insurance.
7. Do I need to list all drivers on my insurance policy?
Your car insurance policy will determine whether or not others who drive your car are covered.
Some insurers will cover anyone who drives your car, while others will charge an extra excess in addition to other excesses. This is usually the case if the driver is under 25, or over 25 but with less than two years driving experience.
8. What is an excess and when do I have to pay an excess?
An excess is the dollar amount you will have to pay towards a claim. Your insurer will cover the remaining costs, up to the limits stated in the insurer’s PDS. For example, if your repair costs $10,000 and your excess is $500, you will pay $500 towards the repair and your insurance company will pay for the remaining $9,500.
Generally, an excess is usually not charged when you aren’t at fault in an accident and have the responsible party details.
9. What is a no-claim discount or bonus?
Following a period when no claims are made, a driver may be eligible for a no-claim discount. These discounts will depend on your insurer and your policy, so always compare final policy prices when deciding upon a policy.
10. Will modifications affect my insurance?
If asked by your insurer about car modifications then it is your duty to disclose all information on the modifications. If not asked, you do not need to disclose.
^ Any advice provided is general advice and does not take your personal circumstances into consideration. Please read the Stella product disclosure statement (PDS) available at stellainsurance.com.au for the terms, conditions, and exclusions before purchasing this insurance. Stella Underwriting (ABN 72 633 811 319) is an Authorised Representative (AR 001282046) of Allstate Insurance Pty Ltd (ABN 82 073 267 053, AFSL 239010) which is acting (under its own AFSL) on behalf of the product issuer, QBE Insurance (Australia) Limited (ABN 78 003 191 035, AFSL 239545)
