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Looking for car insurance but don't know where to start?
Our comprehensive guide will help you make an informed decision.
So, what is car insurance?
Simply put, car insurance helps you out when you get into sticky situations. An insurance provider will give you coverage in the event of a car accident, theft, or other related incidents. In return, you give them a periodic fee. You can get these types of car insurance in Australia:
Comprehensive car insurance is that best mate that helps you out when you're in trouble. If you want top cover, this is the option for you. It covers theft, vandalism, storms, flood, hail, fire, key replacement, emergency accommodation, hire cars, accidental damage (to name a few) - plus everything that's covered by cheaper policies.
Best for: Those who want peace of mind, knowing that they have the highest cover available.
This gives you that little bit extra cover against life's uncertainties. As the name suggests, this cover type ensures you are protected if your car is stolen, as well as covering you for fire damage. You're also covered if your car causes damage to someone else's property.
Best for: Those who need a bit more cover without the pricetag.
The most basic policy. This provides coverage for any damages you may cause to someone else's vehicle or property. However, it won't cover the expense of repairing damages your vehicle incurs as a result.
Best for: First-time drivers, cheaper cars, and those on a budget.
Commonly known as greenslip insurance, CTP is mandatory for every registered driver in Australia, and is included in your car rego in many states. It offers protection to the driver who is at fault for a motor vehicle accident which led to another person being injured. If you need cover for things like damage to your car, theft, or even a breakdown on the side of the road, you’ll need to look at some of the more comprehensive cover options mentioned on this page.
Best for: Everyone - it's mandatory!
What other types of car insurance can I get?
What will I actually be covered for?
|Damage to other people's property|
|Storm or flood|
|Emergency accommodation, transport and repairs|
|Replacement of keys|
|Contents inside the car|
|New car replacement|
What if I want extra cover?
- Roadside assistance. Roadside assistance is a little like that guardian angel that comes and saves you when you've broken down or have a flat tyre in the middle of the night. It helps you with a wide variety of issues, including breakdowns, locking yourself out of the car, towing, battery jump-starts, and fuel delivery. You can take this out for a little bit extra on top of your existing policy. In some instances, roadside assist is included in your comprehensive cover.
- Personal effects. This gives you cover for your personal belongings at the time of an accident. Imagine that your shiny new laptop gets damaged when you have a collision. This type of cover will ensure that you're not out of pocket. Be wary of the terms and conditions surrounding this cover. You often won't be covered if your car is broken into and things are stolen.
- Hire car after an accident. After an accident, your car could be out of action for weeks. If you rely on your car everyday, this could be problematic. Taking out accident hire car cover ensures that you don't have to deal with the unpredictability that comes with not having a car.
- Windscreen cover. Repairing a windscreen can cost you hundreds of dollars. When you consider the damage that a just small pebble can do, it makes windscreen cover even more ideal. For a few extra pennies, your insurer can cover the costs of this.
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- Take advantage of discounts. Look around to see if you can get a loyalty discount or a deal for new customers. Some insurance providers will also provide you with a discount of up to 15% for taking out your policy online.
- Pay a higher excess. An excess is the amount you pay when you want to make a claim. If you increase this amount, your insurance company perceives you as less likely to make a claim. This helps bring down the cost of your overall premium.
- Restrict certain drivers. Most policies will give you a cheaper premium if you restrict certain drivers from taking your wheels for a spin. Consider restricting drivers like under 25s, seniors, learners, or P-Platers.
- Know how your vehicle make and model will affect your premiums. If you haven't purchased a car yet, compare insurance prices for a variety of car models. You might be surprised about how much the car you drive can affect how much car insurance costs you.
- Bundle your policies together. If you've already got home insurance, consider sticking with the same provider for your auto insurance. When you group multiple policies together you can benefit from a multi-policy discount which can take a significant chunk out of your car insurance premium.
- Keep a clean driving record. Obviously no one goes out of their way to get a fine. But if your driving record and the history of the claims you've lodged are used to determine how much of a risk you pose to the insurance company. The higher the risk level, the more you'll have to pay. Conversely, if you have a good driving record and haven't lodged many claims or none at all, there's a good chance you'll get a better deal on your premiums.
- Compare, compare, compare. It pays to do your research. Get multiple quotes from different insurers to compare prices. Don't be fooled by policies that are ridiculously cheap - this can sometimes compromise your cover. Don't be afraid to switch providers in order to get the best deal.
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How to claim if you have an accident
Slow down. Take a breath. If you've been involved in an accident, you might decide to make a claim. To increase the likelihood of the process going smoothly, keep the following tips in mind:
- Stay at the scene of the accident but don't admit that you were to blame. You should also take down the names, contact information and registration numbers of the other people involved in the accident. You should also get hold of and record the number of the police report, if it applies.
- Before you make the claim consider all the consequences that might arise as a result. You should also make sure that you're fully aware of any excess obligations you might have. Also check if your insurance company offers a no-claims bonus.
- When deciding to make a claim, you must give the insurance company all the information pertaining to your accident as clearly and as quickly as possible.
- Fill out a formal claim form if necessary. If available, provide as many supporting documents as possible and make sure that the insurance company acknowledges that your claim was received. Next, you'll have to answer any questions that are relevant for the assessment of your claim and, to ensure everything goes smoothly and you get an answer as quickly as possible, make sure you stay up to date with how your claim is progressing.
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Still not sure? Your questions about car insurance answered
Finding the right cover
Does customer service even matter?
- Response times: How can you contact the insurer, no matter where or when? This includes how long it takes the customer service team to pick up the phone when you call, how quickly you can expect a response to online or email enquiries and how long it usually takes the insurer to assess and pay claims. It can be a good idea to avoid insurers that aren’t available 24 hours a day and 7 days a week all year around.
- Claims options: If you needed to make a claim right now, what would you do? If you have a preference for online claims or want to be able to use an app, it can be a good idea to look for insurers that offer these options. If you think you’ll do it over the phone or in person, consider what exactly is involved.
- Communication: Does the insurer stay in touch throughout the claims process? This can be an important difference when you’re making a claim, as you don’t want to be chasing them down for updates. Let them keep you in the loop instead.
- Policy flexibility: How can you adjust your policy? Flexibility encompasses not only the options available to you, but also the ease with which you can take advantage of them and the responsiveness of your insurer.
- Partnered service quality: What’s the quality of the insurer’s service partners? Free roadside assistance might not be much use if it’s not available in your area, while towing, vehicle storage, glass and windscreen replacement and other repairs will all typically involve the use of partnered service providers. It can be a good idea to compare the quality of these, and look for relevant reviews.
How do I compare different car insurance policies?
The best* car insurance policy for you is one with an affordable price tag and the right amount of cover for your needs. If you have too much protection, you’ll be overinsured and spending more than you need to. If you have too little, you’ll be underinsured and not effectively protected.
The trick is to find the right balance of cost and cover for your needs. Try running through this car insurance buying checklist to find your next policy.
Car insurance buying guide
Here's a quick walk through of how to find the right car insurance. The three steps are deciding, comparing and buying.
- Decide on your cover type. What type of cover do I need? Comprehensive, third party property, and third party fire and theft car insurance policies all offer different types of protection. You should know what type of insurance you’re looking for before comparing policies.
- Consider the special cover types. If you don't drive a lot then you probably want to look into Pay As You Drive car insurance, and if you want less than 12 months of cover you probably want to look at short term car insurance. If the general market value of your vehicle isn't an accurate reflection of its worth, such as if it's modified, then you will probably want to narrow your search to agreed value car insurance providers.
- Work out your preferred excess. Consider how much you are willing and able to pay as an excess in the event of a claim. Think of this amount as the damage threshold which determines whether or not you’ll be making a claim if something happens. You will often have the option to choose your own excess, but you should try to stick to the amount that you’ve decided works for you.
- Consider the options. There are a range of options available. Some of the useful bonuses to think about are roadside assistance, lock and key replacements, and excess-free windscreen and glass replacements. If you have a new car, you might also want to check a policy's new for old replacement terms.
Once you've decided what you need, you can start comparing suitable options.
- Compare prices and discounts. Get quotes from different insurers to compare prices. As you do, make sure you're looking at equivalent quotes, with a similar excess in all cases, and whether your quote has automatically added the various available car insurance discounts. Sometimes a quote that initially seems higher will actually be cheaper after adding a discount. Multiple excesses will often apply, so you also want to look at these in detail and make sure you understand all the potential excesses which may apply in the event of a claim.
- Compare the cover. You'll naturally want to make sure you're comparing the same type of car insurance in all cases, as well as considering the extras and other benefits, like roadside assistance or lock and key replacement.
- Compare the fine print. The product disclosure statement (car insurance PDS) has the fine print of your car insurance policy. You'll want to look at the benefits and cover in detail but don't want to overlook some of the less clear differences, such as the exact claims process, what evidence you'll need to provide. The PDS is a contract that explains exactly what you're getting with your car insurance, so it can pay to examine it in detail. If any learner drivers will be getting behind the wheel, or if multiple people will be driving your car, it's also worth looking at any conditions that may apply here.
After that, you might be ready to start buying.
- Nominate or restrict drivers. If no one under 25 will ever be driving your car, it can be worth restricting drivers on your policy to get lower premiums. If you know exactly who's going to be driving your car, you may also be able to nominate specific drivers.
- Opt in or out of extras. Are you able to opt out of unwanted extras to save money, or opt into desirable ones?
- Remember that you can switch later. There's a cool-off period after taking out a policy where you can cancel for a refund (provided you haven't made any claims), and will also be able to switch policies later. A car insurance "lazy tax" might apply if you get complacent, so it can pay to get more car insurance quotes regularly, before renewal time.
How to apply for car insurance
Applying for car insurance involves first getting a quote, and then the application process itself.
Getting a quote
The quote process will differ depending on the insurance brand, though most will follow similar steps to those listed below:
- Specify what policy you want and when you want it to start: comprehensive; third party property damage, fire and theft or third party property damage.
- Input your vehicle type, including non-standard modifications and accessories, if the vehicle is for business or personal use, and if you want to insure it for an agreed or market value.
- Enter your personal details and the details of any drivers.
- Choose any policy extras and decide if you want to increase your excess to reduce your premiums.
Once you're happy with how much you'll be spending each year or month, you'll have to go through an application which go through the same steps above but in further detail.
When this is completed, you'll make your payment, and the policy will start on the date specified.
Information you must disclose when applying
While it may be tempting to avoid disclosing some details about your vehicle or driving history from your insurance brand, in doing so you only risk your claim being rejected in the event you actually have an accident. Insurance companies go to great lengths to verify the information you have provided in the event of a claim.
- Driving convictions. While many motoring convictions can be removed from your licence before you can be considered rehabilitated, from a legal standpoint, you still have to inform the insurance company of any convictions you haven't been rehabilitated for.
- Other criminal convictions - If you have any other criminal convictions, you must let the insurer know as they can determine the level of premium you have to pay or the terms you are offered. If you don't let them know, you can find yourself with a policy that is not valid.
- Vehicle incidents - Most insurance companies will require you to reveal your entire vehicular incident history, which not only refers to claims you have lodged yourself or have been lodged against you but also those pertaining to any other person driving on your policy. Such incidents could be accidents, joy riding, vandalism, damage to the windscreen, fire or theft.
- Alterations - Most insurance companies will require that you reveal any alterations you may have made to your car. Even if these alterations do not affect the performance of the vehicle, they could make it more valuable or increase the chances of it getting stolen. Things like installing specialty exhausts or tinting windows, which otherwise do not affect the performance of the vehicle, are considered alterations you must inform your insurer of. While this might seem strange, the fact is that insurance companies have found that people who make alterations to their vehicles tend to statistically have a higher likelihood of being involved in a claim.
If any of the requirements of what must be disclosed to your insurer is unclear, it's always worth giving them a call to verify the details to ensure you are adequately covered. Keep these details with the rest of your insurance documentation in the event you have to provide proof in the future that you did as you were required.
When am I required to pay an excess?
The excess is the charge you are required to pay on every claim you lodge. So, for example, if the rear and front of your car have been damaged in two separate situations, you are required to make two claims, which means you will need to pay an excess for each claim you lodged. The total amount you have to pay depends on the conditions under which you made the claim.
If the insurance company agrees that you or your vehicle were not to blame for the accident and you are able to offer the contact information of the other driver or the registration number of the other vehicle, some companies will waive the excess.
Are there different types of excess to pay?
Generally, there are five types of excess you might be required to pay, depending on the circumstances:
- Basic excess
- Voluntary excess, which is ans additional excess you can nominate to pay to make your premiums cheaper
- Age excess for those under the age of 25
- Inexperienced driver excess for those who have held a licence for a short number of years
- Undeclared young driver excess, which applies when someone under 25 drives the car but isn't listed on the policy
What does amount covered represent?
The amount covered represents the maximum sum an insurance company will pay for the damage or loss of your vehicle, minus any applicable deductions, unless otherwise stated in the policy. This amount includes the entire value of the vehicle, including alterations and accessories and also includes GST.
Does car insurance include GST?
Yes. Car insurance in Australia includes GST. This is included in the cost of premiums.
This means that the GST paid on car insurance may also be claimed as a business expense, and may also entitle one to GST credits, or input tax credit.
For a vehicle that is used for both business and personal use, the GST paid on car insurance is divided according to the ratio of personal to business use, just like the rest of the car insurance premiums. Learn more about insuring a car for business use here, or insuring vehicles for commercial use only here.
Purchasing, renewing or cancelling your policy
How can I pay for a policy?
You have the option of paying your premiums either every month or on an annual basis. In some cases paying monthly will raise the total amount you pay each year.
Is policy renewal automatic?
If the insurance company is willing to renew your policy, in most cases you'll receive notice a minimum of 14 days before the expiration date of your policy. The notice generally includes how much you have to pay as well as when you have to pay by. If you pay your premiums every month, you won't have to do anything as the company will simply continue to draw payment for your account on the same date every month. However, if you pay your premium as an annual lump sum, you should talk to your insurance company to see how you can make the payment.
Do I have to do anything if the renewal contains wrong information?
If your renewal doesn't contain the correct information, you have to get in touch with your insurer. You have to make sure that all your information is updated and accurate and if you don't take action to inform your insurer about any changes to your circumstances that you are fully aware are relevant to your policy, you might end up with a reduced payout on a claim or no payout at all. Furthermore, your policy might be cancelled and if fraud is suspected, the insurance company may simply act as if the policy had never existed.
What is the cancellation procedure?
In most cases, a car insurance policy can be cancelled by calling the insurance company or by sending in a written cancellation. Generally, if you cancel your policy outside the cooling off period, you will receive a refund consisting of any portion of your premium that has not yet expired after the cancellation fee has been deducted. There might also be other non-refundable government charges which will also be deducted if the refund exceeds $5.
How can I repair my car?
Generally, your insurance company will be able to help with getting your vehicle repaired. Depending on the insurer, you will be sent to one of their assessment centres or recommended repairers, or the repairer of your own choice. In either case, an assessment will be performed and repairs will be organised.
What do I have to do if another person lodges a claim against me?
You should contact your insurance company immediately if you receive any letters making demands from any other person involved in the event, even if it's from their insurer or legal representative.
If contact is initiated verbally, then inform the other party who your insurance company is and let them know that the insurer will be handling the claim. At no point should you admit that you were to blame for the damage or accident and you should certainly not make any promises regarding covering their expenses.
Write down as much information as possible on the other party, including their name, place of residence, telephone number and vehicle information. Then get in touch with the insurance company to let them know what has occurred so they can help you with the process.
Is it necessary for me to give my Input Tax Credit (ITC) entitlement to the insurer for the claim?
According to the GST Act, you are obligated to let your insurance company know what your insurance premium ITC entitlement was. More information is available from the ATO.
Why is my ITC entitlement deducted from any payments made directly to me?
Generally speaking, according to an insurance policy, the insurer is liable to cover the net cost of your claim. Thus, when they work out how much they have to pay you, they deduct any ITCs you might be entitled to because they reduce the net expense.
The best option is to contact your accountant or the ATO to learn more about the ITC and how it impacts your claim.
Do insurance companies insure all types of vehicles?
No. Some insurance companies will not provide coverage for vehicles such as:
- Beach buggies
- Classic and vintage cars
- Commuter buses that can carry more than 12 passengers
- Vehicles that are damaged
- Vehicles that were formerly ambulances or taxis<
- Horse floats
- Privately imported vehicles
- Corsa Special Vehicles
- Vans built for special purposes like fire rescue vans
- Rally cars
- Refrigerated vehicles
- Taxi trucks
- Vehicles that can carry over 2 tonnes
If you aren't sure whether your vehicle is eligible, it's best to contact the insurance company directly and see what they say. There are also some limitations in terms of what the vehicle will be used for. Many insurance companies will not provide coverage if the vehicle in question is used:
- As a courtesy car
- For the transportation of inflammable liquids, explosives, chemicals, dangerous goods
- In time trials
- In a racing competition or rally
- For taxi services
- For hire services
- For racing
- As a demo vehicle
Again, not all of these will apply to all insurers so your best option is to contact the insurance company direct and see what they say regarding your particular vehicle and its usage.
What cancellation fees are there?
As long as you give enough notice, most standard car insurance policies will let you cancel at any time. Keep in mind that a cancellation fee will generally apply, unless you're switching to another policy with the same brand, or you're within the cooling off period.
|Brand||Cancellation fee||More info|
|1300 Car Insurance||Cancellation fee of $40||More info|
|1st for Women||Cancellation fee of $40||More info|
|AAMI||Cancellation fee of $30 for each car insured on the policy, plus FSL, GST and stamp duty if applicable.||More info|
|Allianz||If you cancel the policy, you may receive a refund of the unused premiums, minus reasonable administration costs.||More info|
|Australia Post||Cancellation fee of $40||More info|
|Budget Direct||Cancellation fee of $40||More info|
|CGU||No cancellation fee. If you cancel your policy before it ends, CGU will refund a portion of the unused premiums.||More info|
|Dodo||Cancellation fee of $40||More info|
|GIO||Cancellation fee of $30, plus FSL plus GST plus stamp duty for each car insured on the policy.||More info|
|ibuyeco||Cancellation fee of $40.00||More info|
|NRMA||Cancellation fee of $30, plus GST and any other government charges that apply.||More info|
|Ozicare||Cancellation fee of $40||More info|
|QBE||If you've paid your premiums in advance, QBE will refund you the proportion of the premiums for the remaining period of insurance, less any administration fees.||More info|
|RACQ||RACQ will refund your remaining premiums if you cancel your policy prematurely. If the refunded premiums are less than $100, a fee of $10 will be deducted.If the refunded premiums are more than $100, a cancellation fee of 10% of the refunded amount will apply, up to a maximum of $80.||More info|
|Real||The cancellation fee is specified in your Certificate of Insurance.||More info|
|Virgin||Cancellation fee of $40||More info|
|Woolworths||Cancellation fee is specified in the Certificate of Insurance||More info|
|Youi||Cancellation fee of $33, inclusive of GST.||More info|
|Huddle||Cancellation fee is specified in the Certificate of Insurance||More info|
What you will/won't be covered for
What drivers are covered under my policy?
While this varies from insurer to insurer, generally a learner driver will be covered by a car insurance policy as long as there is an instructing passenger in the front seat who is a fully licensed regular driver. In most cases, you don't have to pay an additional premium but if the learner driver has an accident, you might have to pay an age or inexperience excess or both.
Most car insurance policies also cover international drivers as long as they can legally drive in Australia and have a valid licence. Of course, they must abide by the terms and conditions of the policy as well.
If you drive while pregnant, it won't affect your policy unless you've been advised to refrain from driving or that your pregnancy could negatively affect your capacity to drive. To ensure you are fully able to drive, it is a good idea to consult your doctor.
What about extras?
Some insurance companies take things a step further than simply handling your claim. Some insurers offer a valet service whereby they take care of all the details and, if your car can be driven safely, they will even deliver it to where it needs to go. Generally, such perks are only available for comprehensive policies.
Do insurers offer coverage and/or benefits for children?
Some insurance companies offer certain benefits for children if you're an existing customer. If your child wants to insure their vehicle with the same insurance company, they might receive a rating for every year they've been driving while licensed and haven't made a claim. Check with your insurance company as some offer additional perks such as free one-day skilled drivers courses, which are meant to help them with their driving skills and offer discounts after completing the course.
I need to change some information. What do I do?
To change any information pertaining to the registration of your car or the regular driver, you have to contact the insurance company. You will need to give them the number of your policy and/or the registration number of your vehicle, as well as your mailing address, which must coincide with the address on our policy, and your birth date when submitting your request.
Some details you will have to provide them with when changing the details of a regular driver include:
- The frequency with which the person will now be driving the car
- What they will be using the car for
- Their name, gender and date of birth
- How long they have held their licence for
- Accident and claims history for the past 3 years. If there are such events, you must supply details of the accident, whether or not they were to blame and when it occurred.
- Whether or not the driver has lost their licence or had it suspended or cancelled. If yes, you will need to provide details.
What if I want to make alterations to my vehicle or add accessories?
If you intend to alter your vehicle in any way that makes it different from the standard model, which includes adding non-standard accessories, you will have to contact the insurance company. You will have to provide your insurer with a list of the alterations and accessories along with their monetary value. You also have the option to remove alterations and accessories from your policy by contacting the insurance company.
How will I get around if my car is stolen?
Some insurance companies will provide their customers with a hire car for a limited period of time if their vehicle has been stolen. There is also the possibility of pre-purchasing a 'discount hire car benefit' or 'comprehensive hire car benefit', which will ensure you have access to a hire car while your vehicle is being repaired from damage caused in an accident.
What about coverage for tools of trade and trailers?
Most insurance companies will not cover tools of trade under a car insurance policy, meaning that you will have to seek the services of a specialist insurer.
In terms of trailers, some companies will offer a limited degree of coverage for accidental damage caused to your trailer while it was connected to your vehicle.
What if I am travelling overseas?
Most car insurance policies only provide coverage while your vehicle is being driven in Australia. If you're overseas, the policy doesn't cover the vehicle or the personal liability of the driver.
What happens if my car is a write off?
In some cases, the damage to a vehicle is so severe that it's not economical or safe to attempt to repair it. If the insurer feels this is the situation, your vehicle will be declared a write-off and you will receive the amount covered or the agreed value.
If you have comprehensive insurance, some policies allow for the replacement of your car with a new vehicle and coverage of on-road costs, if your original vehicle was declared a write-off after being stolen or damaged within the first two years of its first registration.
Will I be covered for driving off-road?
Some insurance policies will provide coverage for your vehicle if you are driving off-road but you do have to take some precautions to make sure your car is safe.
What's the difference between agreed and market value?
|Agreed Value||Market Value|
Should I choose agreed value or market value?
When deciding if market value is right for you, you need to consider if the reduced amount will be enough to replace your lost vehicle...is the money you save on your premium worth the additional cost you will have to pay to purchase a new vehicle.
That said, if you drive an older vehicle (say 10 - 15 years older), replacement cost may not be as great a concern so it would make sense to save the premium.
What restrictions are there?
There are certain restrictions when it comes to the type of coverage a car insurance policy offers. While these vary between insurance companies some of them include:
- You are not covered if the accident was caused by a fault with your vehicle that you were aware of and chose to ignore;
- You are not covered if your car was damaged during a race, trial, test, competition or similar arena;
- You are not covered if your car was lost or damaged with intent either by you or a person acting on your behalf;
- You are not covered for any further loss or damage caused to your vehicle if you drive it after it has been in an accident.
Car insurance is a very important way to protect your asset and stay out of debt, so be sure you know what your policy covers, and how it works in the event of an accident.
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