Which car insurance policy for you?
Even if you drive a bomb you don’t think is worth insuring you’re still wise to take out some form of insurance. There are a number of different types:
Compulsory third party (CTP or green slip insurance) is the most basic cover and every car must have it. It provides essential cover against claims for compensation if you injure or kill someone in a motor accident.
- If your car is not worth much you may think taking out CTP is enough. However, it doesn't cover you for damage caused to other people's property such as if you're unlucky enough to run into a Rolls.
Third party property is the least expensive option. It covers you for the damage you may cause to another car and may include limited cover for damage caused to your car by an uninsured driver.
Third party property, fire and theft also covers you if your car is stolen or burnt.
Comprehensive car insurance is the best cover option but also the most expensive. It includes the cost of crash repairs or replacing your car, even if you're at fault.
Tip: In all states but NSW and Queensland, compulsory third party insurance is provided by only one state-owned or government-licensed insurer. In NSW and Queensland it's offered by a number of insurers and it pays to shop around. For an online price guide go to: www.maa.nsw.gov.au or phone 1300 137 600 (NSW); www.maic.qld.gov.au or phone 1300 302 568 (QLD).
To begin selecting a car insurance provider, please visit our car insurance comparison article.
Tips and traps
Shop around – we found huge variations.
- In NSW insurers quoted for young male drivers excesses up to $1400 compared with a standard excess of $600. And some discount the age excess for young women. Excesses for young drivers who aren't named on the policy can be even higher.
Trap: Don’t get conned into an insurance policy with a really high excess – it won’t be worth your while when making smaller claims.
Look for ‘no claims bonus’ discounts
- We found savings of up to 70%.
Trap: Don’t assume if you have a protected no-claim bonus an 'at fault' claim won't have an impact on your premium, some insurers increase your premium regardless. Even with a ‘no fault’ claim such as hail damage you can suffer an impact on your premium.
Get a discount for restricting drivers
- Some companies discount the premium if you restrict the use of your car to nominated drivers or those over a certain age.
Trap: If you take this up you shouldn't let an excluded person drive – if they have an accident it’s you who’ll pay a high additional excess or may not be covered at all.
Know your discounts
- Discounts may be available if you have other policies with the same company, have an approved engine immobiliser or alarm or take out insurance online. Long-term customers, pensioners, people aged 50 to 70 and young drivers who've completed a skilled driver’s course may also receive discounts.
Trap: Insurers don’t automatically reward loyalty or make discounts available. You have to ask a company for discounts when shopping for a policy. You should shop around at least every one to two years to make sure you get the best deal. We've heard from members who got an online quote from their own insurer and found that it was cheaper than their renewal slip.
Car buying tip
When shopping for a new car, especially if you’re trying to decide between different models, it’s worth checking out what the insurance would be on each. Some models attract a much higher premium, for example, because they’re more likely to be stolen, a factor which can add hundreds of dollars to your insurance bill each year.