CAR INSURANCE

Car Insurance

Car insurance is a huge industry in Australia; it is one of the most common insurance policies held in, along with home and contents insurance.

Car insurance is classified as a general insurance in Australia, and there are 2 types of car insurances:

1. Compulsory Third Party Insurance
2. Comprehensive Car Insurance

Some States also use the word Motor insurance instead of car insurance, there are also other motor insurance polices relating to vehicle fleets such as trucks, or rental cars but they are for transportation companies.

What exactly is covered?

1. Compulsory Third Party Insurance; is a mandatory insurance required if you are driving a car. This is the insurance to cover losses or damages caused to the 3^rd parties, it covers major losses such as injuries to person and property damages.
2. Comprehensive car insurance, on another hand is not mandatory, and is the insurance for your vehicle.

What are the influential factors to determine car insurance?

Car insurance can be quite complex, premium can vary considerably, and it can be quite a surprise to see the premium initially.

Age determines insurance premium

Younger drivers, those under 25 years old drivers are regarded as more dangerous drivers, therefore, premium for their car insurance could be very expensive even for low cost vehicles.

Some policyholders register their cars under parents’ names try to lower insurance premium. But in Australia, when you fill out the application form, you have to fill out the nominated driver on insurance application form.

If there are drivers under 25 in the insurance policy, the premium will still be factored in.

Some parents do not include their children in the insurance policy to save on premium, but this means insurance companies can refuse a claim because they are not registered as drivers under the “insured”.

Claims Record and Accident Record

Insurance companies have established a system to track claims and accident records, each time you apply for an insurance policy, they will access to the database to check for past claims.

The more claims you have lodged in the past, the higher the premium. Alternatively, insurance companies will also require much higher excess for your insurance policy if you have bad record.

In addition, insurance companies will impose special conditions. For instance, if you have 2 drivers on the same insurance policy, they can impose different excess level on different driver.

Insured Car Value

The higher the insured car value, the higher the premium. Premium will also be adjusted each year according to the depreciation value. You can also request for lower value for your car, but bear in mind, this also means in an event of a claim, the payout will also be reduced.

For luxury cars or cars installed with special features would attract special insurance premium. Some insurance companies refuse to provide insurance for high-powered cars, and you need to go to specialists to apply for insurance.

Ways to reduce your insurance premium

There are also ways to reduce your premium for car insurance, a very popular way is to install security devices such as satellite/radio tracking systems or locking systems.

Additionally, parking areas will also affect your insurance premium. If your car is parked in a garage most of time, that will reduce premium, if you are inter-state or overseas all the time, and you have different address for residential and postal address; that will also attract higher premium.

Difference Across Insurance Companies

Each insurance policy is different – exclusions are different, excess levels are different. But there are also some differences to be aware of. Repair quality is a major factor why some companies have lower insurance premium.

Some insurance companies shop around and use the cheapest supplier to repair vehicles, this means, the parts they use are often second hand parts. Other insurance companies; have quality control policies in place and will use brand new parts.

Where to find cheaper insurance policies?

Car insurance is a highly competitive business, there are many channels you can obtain quotations, and it is always a good idea to compare your insurance.

1. Go directly to insurance companies and ask for quotation – sometimes they can give you a special rate if you take up the policy straight-away
2. Payments – some insurance companies offer cheaper premium if you pay upfront
3. Through insurance brokers (banks or financial planners) – you can sometimes obtain competitive car insurance policies through them
4. Combine your insurance policies together – you can combine your insurance policies together, if you have 3+ policies with one insurance company, they can usually give you a better quotation, this can save up to 15% to 30% in premiums
5. Buy online – there are many online insurance agents which works very similar to travel agent websites – competitive insurance policies can be bought online instantly. Many insurance companies do encourage customers to buy them and renew online to save costs.

Car insurance is an important insurance, do not underestimate their importance, and again, the best way to find and compare car insurance policies is also web, browse around and you can save yourself a lot of insurance premium.