Car Insurance in Australia: What you need to know
If you own a car or intend to buy one, in most states you are legally required to have basic car insurance (CTP.)But beyond being required, car insurance is designed to protect you in the event of an emergency. Choosing car insurance can seem like a daunting task, but it doesn’t have to be. Once you understand the basics of car insurance, choosing the policy that is right for you can be much easier.
Read an article on the Questions that Insurers will ask you and how to Save Money on Car Insurance.
Types of car insurance:
Third Party Insurance: The minimum type of car insurance policy is referred to as "third-party" or "third-party property" insurance. If you injure another person or cause damage to their property, this insurance covers the costs involved for them.
Third Party Fire and Theft Insurance:
The next most inclusive type of car insurance also includes fire and theft insurance which, as the term indicates, covers the costs if your car is stolen or subject to a fire. Note, however, that it does not cover your damage associated with being in an accident or as the result of vandalism.
Liability Insurance:
Liability insurance covers what you are legally responsible for paying when you hurt another person in an accident, including medical treatment, rehabilitation and perhaps even lost wages. Liability insurance is often included with most policies. Remember to ask about it when getting a quote.
Comprehensive Insurance:
Comprehensive insurance pays for the damages associated with a wide variety of incidents including collisions, theft, and fire, but it also may cover the value of any items stolen from your car (not just if your car itself is stolen), medical expenses you may incur from your injuries (unusual), as well as personal accident protection.
When comparing car insurance policies and coverage, price can vary a great deal.
And although price can vary from insurance carrier to insurance carrier, several factors come into play when determining the premium you will have to pay.
These include:
What kind of car you drive – The cost of potential repairs to your car directly correlates to the power under your hood. In other words, the better your car, the costlier it will be to repair, the more likely it is to be stolen or broken into, and the higher the insurance premium you are likely to have to pay.
Your demographics – Statistically, a person living or working in a lower economic area is more likely to have their car stolen as compared to someone who lives in an upper-class neighbourhood, and therefore may be subject to a higher insurance premium.
Your age and experience – Car insurers will usually charge a younger person a higher premium because statistics show that younger drivers have more accidents and are therefore a higher risk than more experienced drivers. Conversely, more mature drivers may qualify for a discounted rate if they have had good driving records.
An important thing to know about auto insurance in Australia is the concept of excess. An excess is an amount you pay each time you make a claim on your insurance policy. There are three basic types of excess: basic, age, and special.
Read an article on how to Save money on Car Insurance
Basic excess:
When you make any claim against your car insurance policy, you will have to pay the excess outlined in your policy. The amount of basic excess will depend upon the kind of insurance policy you have. In many cases, your basic excess amount can be varied. If you opt for a higher basic excess on your insurance policy, the amount of your premium is reduced. If, however, you do make a claim you will have to pay a higher excess.
Age excess:
This is another excess paid on top of, not instead of, basic excess. It applies to any driver on your policy who is under 25 years of age or who is over that age but with 2 years of driving experience or less.
Special excess:
Some insurers will apply a "special excess" to an individual driver or in response to a specific incident. Again, this is a fee levied on top of your basic and/or age excess.