What is comprehensive car insurance and what does it cover?
Comprehensive car insurance provides the highest level of protection for your vehicle. It’s designed to cover any and all damage to your car. If you damage someone else’s car or property in an accident, it covers that too.
Is CTP included in comprehensive insurance?
No. compulsory third party insurance is always separate. Comprehensive car insurance does not cover any injuries, only vehicle and property damage, while CTP only covers injuries and death, but no property damage. Between comprehensive car insurance and at-fault compulsory third party car insurance, you have the highest level of protection available.
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What am I covered for exactly?
You may be asking yourself, 'What is comprehensive car insurance and what does it cover?' Comprehensive car insurance covers loss or damage to your own vehicle and your legal liability to a third party for loss or damage to their vehicle or property. A typical comprehensive car insurance policy covers your vehicle against the following:
- flood, hail or storm damage
- malicious acts
- fire and theft
- accident or collision
- damage to third party property.
On top of this, most comprehensive policies also include a range of extras, or have them as options:
- cover for belongings inside the car
- towing and storage costs
- use of hire car
- windscreen replacement
- legal liability cover
- emergency travel, accommodation and repairs.
So, how much is it actually going to cost me?
How much your insurance will cost depends on a variety of factors and finding the cheapest comprehensive car insurance takes time. Insurers determine your level of risk and the premium you pay by looking at various indicators. So, how much does comprehensive car insurance cost? It depends on you and your car. Below are some questions and answers about what impacts car insurance premiums.
- Does my driving history affect my premiums? If you have a driving record full of parking and speeding infringements, it will have a negative impact on your insurance.
- How does my claims history affect my premiums? Insurers rate drivers on a scale of one to six, with one being the highest rating. This is referred to as the no claims discount, the longer you go without making a claim, the cheaper your premiums.
- Does the type of car I drive affect my premiums? The type of vehicle you drive does impact your premiums. For example a sports car costs more to insure than a station-wagon.
- How does age factor influence premiums? Practice makes perfect, which is why younger drivers pay higher premiums.
- What if I park in a secure location? If your car is kept in a secure location (e.g. a garage) you can expect to pay less than someone who parks their car on the street.
- What if it's a commercial vehicle? What the vehicle is used for will impact the premiums. Vehicles such as taxis that are on the road all the time attract higher insurance premiums.
An excess is the amount you must pay towards a claim. Most comprehensive car insurance policies let you choose the amount of excess. The more you choose, the less your premium will be. However, it is important to ensure when opting for a higher excess that you will have sufficient funds on hand to pay it if required.
As the cost of repairs resulting from minor accidents is often less than $1,000, many people opt for an excess around this level, so they do not have to claim on their insurance and jeopardise their rating.
The three main types of excesses are the standard, or basic, excess, which is an amount agreed to when you take out the policy and which you have to pay when making a claim, an age excess which usually applies to less experienced drivers under the age of 25, and a special excess which may be applied to some drivers in relation to a specific past incident. You may be able to choose your standard excess level which makes a big difference to premiums.
For example, this is how RACV Insurance lets excess impact premiums.
|Basic excess level||How it changes the premium|
Comprehensive car insurance is designed to cover any and all vehicle and property damage, even if it was found to be your fault. In other words, it combines standard car insurance with third party property insurance.The main types of car insurance are as follows:
- Compulsory third party (CTP) insurance is a compulsory form of insurance covering death or injury to third parties. It is included in your vehicle registration in all states except NSW, where it must be purchased separately. This is not included in any comprehensive car insurance policy.
- Third party property (TPPD) insurance covers the damage caused by your vehicle to third party property and also your own legal costs. It can be purchased alone, but is included in comprehensive car insurance policies.
- Third party fire and theft (TPP F&T) insurance combines fire and theft coverage for your own vehicle with the benefits of third party property insurance as above. It too can be purchased by itself, but is also covered by comprehensive car insurance policies.
- Comprehensive car insurance covers damage to your own vehicle from fire, theft and any other hazards named in the policy and also includes the benefits of third party property insurance and extras. It does not include compulsory third party insurance.
Car insurance comparison
|Agreed value cover||Yes*||No||No||No|
|At-fault damage to other vehicles||Yes||No||Yes||Yes|
|At-fault damage to own vehicle||Yes||No||No||No|
|No claim bonus protection||Yes*||No||No||No|
|Not at-fault damage to own vehicle||Yes||No||Limited||Limited|
|Third party personal injury||No||Yes||No||No|
*Cover varies depending on providerBack to top
Which is the best car insurance* for me? It's a common question but a tough one to answer. Everyone’s needs and ideas about the best car insurance* are different. For example, one driver may be after the best car insurance* for under 25 drivers, while another is after the best comprehensive car insurance* for seniors. One driver may want cheap cover against common risks, while another wants to pay more for complete peace of mind. It is these differences in needs that will determine the best policy for you.
As easier question is whether third party or comprehensive insurance better for your needs.
- Third party car insurance covers you for damage your vehicle causes to other people's vehicles or property. It generally does not cover you for theft of or damage to your own vehicle. It costs less than comprehensive car insurance, but offers little to no protection for your own vehicle. This is a good choice if you’re driving an older or less valuable car. It covers you from the most potentially expensive risks, but doesn’t extend unnecessary levels of protection to your own vehicle.
- Comprehensive car insurance covers you for third party damage and for damage to your own vehicle. It also covers you for fire, theft and any other dangers named in the insurance policy. Most also offer a range of other benefits such as towing, windscreen replacement and much more. This is a good choice for people with more expensive cars, or one they’re still making payments on, who want the highest level of cover available. Some car loans may require you to take out comprehensive car insurance.
Despite the higher cost of comprehensive car insurance, there are ways to reduce your premiums and make it more affordable. To get cheap comprehensive car insurance, you should:
- Shop around. Not all insurers charge the same, so look for the best deal*. Compare both prices and benefits offered to find both the overall best value for money.
- Increasing your excess. As mentioned previously, this can reduce your premiums, but make sure you can afford to make a claim if needed.
- Looking for no-claim bonus discounts. These can save you as much as 70% on your premiums.
- Restricting usage to nominated drivers. Some insurers provide a discount if only you and your spouse drive the vehicle.
- Bundling your insurance. If you have other forms of insurance, you may be eligible for a discount if you add car insurance as well. Look for multi-policy discounts.
- Making your vehicle safer. Having a car alarm or immobiliser may earn you a discount from your insurer.
- Driving a smaller car. A car with less engine capacity costs less to insure than a bigger, more powerful model.
- Looking for an insurer who differentiates. Some comprehensive car insurers take into consideration how often you use your vehicle and reward adjust the premiums accordingly.
What does agreed or market value mean?
Another way to get the best comprehensive car insurance* and save on your premiums is to opt for market value rather than agreed value. Market value is the amount your vehicle is worth on the open market and is what you would be paid by the insurer if it was written off.
Agreed value is an amount agreed upon by you and the insurer and is normally higher than market value, meaning your premiums would be higher as well.
Not all car insurance providers offer this choice.
Is self insurance something I should consider?
Self insurance is a practice usually reserved for large organisations who negotiate with insurance companies for lower rates in return for absorbing some of the risk. However, more private individuals have now taken to self insuring as a way of keeping their insurance costs down.
A self insurance fund is basically a sum of money that you put aside to pay for a possible accident, rather than insuring against it through the normal channels. This can save on your insurance costs, but it is vital that you accurately predict the costs if such an accident were to occur, otherwise you could find yourself with insufficient funds to pay for repairs.
Self insurance could be an option for someone who owns a vehicle with little value who doesn’t want to pay for comprehensive insurance. The money would ideally be placed in a short-term investment account to help offset inflation, but it would need to be one where you could get fast access to the money if required.
Before you apply for comprehensive car insurance, you will need to have access to the following information:
- Your contact and address details
- Details of those who will be driving the vehicle
- Details of the vehicle such as year, make, model, VIN and registration number
- Whether it has any extra options fitted
- Whether it has security features such as an alarm or immobiliser
- The current market value or the amount you wish to insure it for
- Details of your driving history and whether you have made any claims in the past five years
- Whether you have a no claim bonus
- Where the vehicle is kept (i.e. on the street or in a garage)
- Whether it is used for personal or business use
- The current odometer reading and how many kilometres you would expect to travel in a year
- Whether there is any finance owing on the vehicle
Having information such as this ready when you call your insurer will speed up the application process and ensure they have everything they need to accurately calculate your premium.Back to top
James' comprehensive lesson
With the help of a loan, James purchased a new car. A condition of the loan was that he must take out comprehensive car insurance for its protection. Only two months later, he was struck at an intersection without signs or traffic lights by another driver who was checking their phone and not paying attention to the road.
Because James was found to be going slightly over the speed limit at the time, he was determined to be at fault and found responsible for the crash. Fortunately, thanks to the strict conditions of his car loan, he had comprehensive car insurance.
His own car only suffered $2500 worth of damage, all of which was covered even though it was legally his fault. The other driver’s car, however, needed $10,000 worth of repairs. But James’ comprehensive insurance had good third party coverage, so it covered that too.
After he thought it was all squared away, James got notice that the other motorist claimed to have been injured in the crash, despite seeming fine at the time, and was now suing James for medical fees, pain and suffering, and loss of quality of life. This was all quite over his head, and not knowing what else to do he turned to his comprehensive car insurance provider once more.
To his surprise, they quickly paid generously for impending legal fees and James was able to launch a stalwart defence of his innocence. The accuser folded quickly, and agreed to withdraw his injury claim. This legal tussle cost over $20,000. More than the cost of the damage to both cars, and far more than James could have afforded. His comprehensive insurance, however, paid for it all.
By the time he made the last car payment, James had higher premiums than when he started. But he saved more than he spent, wasn’t in debt, and his car was still in top condition.
When applying for comprehensive car insurance, it is very important that you tell your insurer anything that is likely to have an effect on how much they charge you for your policy. If you don’t comply with your Duty of Disclosure, and they discover you have not been totally honest with them, they may reduce your claim or even refuse to pay at all.
You should also advise your insurer when you situation changes, such as if you move house, modify your car, include additional drivers or start using your vehicle for a purpose other than that specified in the policy. All these things can affect your premium amount and the extent of your cover, so you need to be upfront at all times with your insurer.
To make a claim you will need to follow the steps required by your insurer. These will be clearly outlined in your policy and usually involve:
- Calling emergency services if necessary
- Notifying your insurer as soon as possible
- Taking your vehicle to the nearest repairer, either one approved by your insurer, or alternatively obtaining two quotes
- Lodging a claim form with the insurer, including as much detail as possible and including a police report if requested
* The offers compared on this page are chosen from a range of products finder.com.au has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your personal financial circumstances when comparing products.