Car insurance is a great example of a ‘set and forget’ cost. We tend to apply for it when we receive our licence or get a new car and then automatically renew it each year without giving it too much thought. However, there are some potentially big savings to be made by reading through that paperwork every now and then. For example, a comparison and review of 30 vehicle insurance policies conducted by consumer group CHOICE found that adult couples could save over $500 a year, on average, by changing their insurance policies to better suit them. That’s a handy lump sum to put in the bank! Let’s talk insurance…
What types of insurance are there?Before you shop around, you need to decide on what type of car insurance best suits you. The main types available are:
* Compulsory Third Party (CTP). CTP is compulsory cover and gives you protection against claims for compensation if, heaven forbid, you happen to injure or kill someone in a car accident. However it doesn’t cover the cost of repairs to any vehicles, so a crash could really set you back financially.
Third Party Property. This covers damage caused by your car to other peoples’ property, however it doesn’t cover the cost of any damage to your own car.
* Third Party, Fire and Theft. In addition to covering damage to the property of others, this also provides some compensation if your car is damaged or lost due to fire or theft. However it doesn’t cover the cost of repairs to your vehicle if it’s involved in a traffic accident.
* Comprehensive. This is the top-level insurance-cover option and in addition to covering everything mentioned above, it also covers accidental damage to your own car. Comprehensive cover will give you the greatest peace of mind, but it’s also the most expensive!
How can I compare policy prices?Whether it’s clothes, electronics or financial products, the internet makes it so easy to shop around. There are some great online comparison sites and while none of them offer all products on the market, trying two or three different sites should give you a good idea of what’s available. Some of the larger comparison sites are www.infochoice.com.au, www.mozo.com.au, www.canstar.com.au and www.ratecity.com.au.
It’s also worth doing some extra reading: CHOICE publish a car insurance comparison report each year, and Canstar also regularly rate various car insurance policies according to features, service and value. Plus it’s also useful to ask friends and family members who they insure with and whether their claim experiences have been positive – word of mouth can be a valuable research tool!
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What other questions should I ask?The difficulty in shopping around for car insurance is that policy coverage differs from company to company. Two important questions worth thinking about before you sign up are:
* Do you want agreed or market value? You can choose to insure your car for an agreed value (a specific dollar amount) or market value (what your car is worth at the time of the accident).
* What exactly is included under the ‘standard’ cover? Theft and accident are obvious inclusions, but you should also ensure that you’ll be covered for weather events such as hail or floods and incidental damage such as vandalism. You may also want to consider extras such as a replacement hire car while yours is being fixed, roadside assistance and insurance cover for personal contents within the car.
Ultimately, shopping around for car insurance may take you between two to three hours – but if it can potentially save you $500 a year, then that’s time well spent (no pun intended!).
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