5 things to know before choosing car insurance

Did you know Aussies own a whopping 18 million vehicles? It makes sense when you think about how big our country is (imagine walking everywhere!). But while driving can make our day-to-day lives easier, unexpected things can happen when we least expect them, so having the right car insurance goes hand in hand with being on the road.

Because no one has a crystal ball when getting in their car, it’s important to protect yourself against any accidents or injuries to others while driving. Even if you think you’re a Supercars-quality driver – and let’s be honest, most of us do – sometimes accidents are completely out of your control.

Car insurance is just one of the ways you can protect yourself from the unexpected. But before you sign on the dotted line, here’s what you should know about insuring your car.

Nail the terminology

Hit the books and find out all the most common terms associated with car insurance. Here are some of the most important ones:

  • Accident: An event that is unexpected or unforeseeable.
  • Agreed value: The amount your car is covered for over the length of a policy – this is an amount that’s agreed on between both you and the insurer. However, some providers don’t offer this as an option.
  • Claim: Any application you make to your insurer after an accident, so long as it’s covered under your policy.
  • Comprehensive cover: Coverage for the cost of damage – either to you or caused by you – after an accident. You’ll probably still have to pay an excess, but at least your repairs will be covered whether you were at fault or someone else was.
  • CTP: Compulsory third party (CTP) insurance is the minimum cover that every driver in Australia needs. It’s illegal to not have it. It covers you in the event someone is injured during an accident you’re responsible for.
  • Excess: When you make a claim and you’re at fault, you usually have to pay an agreed excess before your claim can be processed.
  • Premium: Your ongoing payment (either fortnightly, monthly or annually) to maintain your car insurance policy.
  • Risk: The likelihood of you making a claim that the insurer will have to pay out on. This may be different between a number of providers.
  • Write-off: When the cost of your car’s repairs are considered too expensive to be worth fixing. If you have comprehensive cover you could be paid out a specified amount or given a similar vehicle.

Read your PDS

We understand it might seem like a chore, but reading your product disclosure statement (PDS) is actually a good thing. It will help you understand exactly what you’re getting into, as well as what’s covered and what isn’t.

Under Australian law, your insurer must include all the terms and conditions of the policy in the PDS or a policy document included with the PDS. It also has to be written in plain English – so you shouldn’t need expert help to understand the nitty-gritty details.

Remember, though, that the PDS isn’t customised to your specific needs or your financial situation. Because of this, it’s recommended you read several PDS from various car insurers. That way you can make the most informed decision for your circumstances.

If you’re confused by anything in a PDS, simply call the insurer and ask for more information. They should be happy to explain everything in more detail, so you can be confident you’re choosing the right policy for you.

Figure out how often you drive

These days, drivers are lucky enough to have a wealth of car insurance options at their feet. And one alternative policy that’s on the rise is Pay As You Drive (PAYD) insurance.

PAYD is defined by The Australian Securities and Investments Commission as: “The premium is based on the number of kilometres you expect to drive in the coming year. If, during the year, you think you will drive further than planned, you can 'top up' your kilometres for an additional cost. However, if you exceed your elected kilometres and don't tell the insurer, your level of cover may be reduced.”

So, if you have a fair idea of the number of kilometres you’ll probably drive in the upcoming year, you might end up with a lower premium than with other insurance levels.

Decide on comprehensive or third party cover

Aside from PAYD, you’ll find most car insurers offer three different levels of cover. But obviously the higher the coverage you want, the more you’ll pay in premiums. Here’s how they stack up:

  • Comprehensive: The gold-standard of car insurance! It will cover the cost of damage to your vehicle and any others involved in an accident, as well as fire and theft cover.
  • Third party property, fire and theft: Covers any damage to other people’s vehicles if you’re responsible for the accident, but it doesn’t cover damage to your own car. However, you will be covered in the event your car is stolen, damaged by fire or is maliciously damaged.
  • Third party property damage: This is a step above the mandatory CTP insurance, covering the cost of repairs to property damage you cause. It’s usually the most affordable option, but remember your own car damage won’t be covered if you’re at fault.

Harness the power of comparing quotes

We hate to break it to you, but there’s no one-size-fits-all approach to getting car insurance. In fact, we reckon you should shop around in order to find the product that suits your current lifestyle and driving needs.

Not all car insurance products are created equal, and although most providers will offer comprehensive, third party property damage, and third party property, fire and theft policies, they may not have the same inclusions across the board.

That’s why it’s important get a variety of quotes from different providers – and of course to read the PDS!

Comparison sites like Choosi can break down complex policies into easy-to-digest info, covering everything from premiums to whether they will let you choose an agreed value, and even the availability of roadside assist. Be aware that comparison sites generally do not compare all insurers in the market, but they are required to disclose which products are available through them so you should take steps to understand this.

Life without a car could be a huge inconvenience – imagine trying to manage school drop off, grocery shopping and getting home late from work without a set of wheels! Having the right car insurance can help you get back on the road faster after an accident, and will give you financial peace of mind knowing that a portion of the repairs cost is covered.

Be confident that you’re properly covered in the event of an accident or stolen car. If you’re ready to find your ideal policy, start comparing car insurance with Choosi today.