We can help you get your head around the types of insurance on offer, the tips and traps when choosing a policy, and how to save money on your premiums.
Ultimately it comes down to how much it would hurt to go without your car if you ever wrote it off.
Comprehensive policies offer a couple of weeks' worth of car hire if you write your vehicle off in an accident where you're at fault.
Is it worth getting comprehensive insurance for an old car?
No one wants to be caught underinsured, but if you're paying more than 10% of the car's value every year in premiums you might want to consider a cheaper policy
Third party property is a good alternative – no one wants to be stuck paying for someone else's repair bill.
Third-party property with fire and theft cover your vehicle for a couple of calamities, letting you put aside some cash in a self-insurance savings account. By self-insuring, you don't have to deal with an insurance company when something goes wrong, but you do have to resist the urge to dip into the fund.
If your car's market value is low, you might want to consider a cheaper type of policy.
For drivers with comprehensive or fire and theft policies, the amount your insurer will pay if you write off your car depends on your agreed value or market value.
This is when you insure your car for a specific amount (within a range set by the insurer).
If your car is a total loss (i.e. written off or stolen), the insurer will pay you this amount, less the excess.
If your car is under finance, consider insuring it for an agreed value that's at least equal to the amount remaining on the loan. That way, if you have a total loss you'll be able to square away the debt before looking for a new car.
This is when you insure your car for what its value is at the time of an accident.
Selecting this option reduces your premium, but it gives you less certainty about the value of your payout in the event of a loss.
Know your excess
An excess is the amount you pay to make a claim. The higher your excess, the lower your premium.
Increasing your excess can save you money but be wary of a really high excess – it won't be worth your while to make a smaller claim.
Look for 'no claims bonus' discounts
Every insurer has a name for this: no claims discount (NCD), safe driver bonus, the list goes on. Essentially it's a discount for not making a claim. The amount of the discount varies depending on the insurer. A 'maximum' rating (which usually means no claims for five years) can save you up to 70%.
Some insurers offer a lower NCD, but will also give you a discount on their roadside assistance product.
You can often pay extra to protect your NCD, meaning if you do have an accident, it won't affect your rating. But if you have a protected no claim bonus, don't assume an 'at fault' claim won't have an impact on your premium. Some insurers increase your premium regardless. Even a 'no fault' claim such as hail damage can impact on your premium.
Some insurers let you pay extra to protect your no claims discount, so your rating won't be affected if you do have an accident.
Some companies discount the premium if you restrict the use of your car to nominated drivers or those over a certain age.
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 you may not be covered at all.
How to get other discounts
Discounts may be available if you have other policies with the same company, have an approved engine immobiliser or alarm installed in your car, 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.
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.
Some insurers will give you a discount for insuring more than one vehicle, or if you insure your home through them. This can be a good way to shave some dollars off your premium, but don't let that be the deciding factor in your purchase.
Buying a car?
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 because they're more likely to be stolen. This could add hundreds of dollars to your insurance bill each year. Even the colour of the car can affect your premium.
A lot of people remain loyal to their current insurer, which is a contributing factor in renewal premiums being raised each year.
Insurers can and do increase premiums more for renewing customer than for new customers. This is essentially a 'loyalty penalty' – the price we pay for the reluctance to switch.
Several insurers attribute the premium difference to the online discount, which is available to new customers but not to renewals sent to existing customers.
Be careful of discounts that only last for your first policy year – they're just there to get you through the door, and you'll be stung with a steep increase in a year's time.
Insurers can and do increase premiums more for renewing customer than for new customers
Always check your insurer and at least three other insurers' quotes online before renewing your premium.
Several insurers in our car insurance comparison said they'd match or beat competitors' quotes, usually as part of a campaign.
If you show more of a willingness to switch, then insurers will have to recognise this in their premiums or risk losing business to their competitors.