Comprehensive cover is the highest level of car insurance you can get on the market. It protects you if you're in an accident, a big storm thrashes your car, or someone hits your car with their shopping trolley.
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Do I need comprehensive car insurance?
In most cases, getting comprehensive car insurance is a good idea. If you care about your car or depend on it every day, it makes sense to invest in comprehensive car insurance.
It's the only type of car insurance policy that will properly cover you if your car is damaged in an accident. And if it is and you're unable to drive it, most comprehensive car insurance policies will also give you a rental car, and in some instances, a brand new car. You'll also be covered for any malicious damage or vandalism, damage from hail or storms, theft, fire, emergency accommodation, and much more.
One time that it might not be worth getting comprehensive car insurance is if you're young as the cost of comprehensive car insurance might cost more than the car itself. Another time you should reconsider taking out comprehensive car insurance is if you've got a cheap car you might not care much about, as you might not get your money's worth if the car is written off.
How much does comprehensive car insurance cost?
During our analysis of 6 Australian car insurance brands, we found that the cost of comprehensive car insurance varies from $75 to $91 a month. So if you want to save on costs, your best bet will probably be to get quotes from a bunch of brands.
To get these costs, we averaged together the cost of a male and a female Sydneysider, both born on 1/1/1983, driving a 2016 Ford Falcon.
Your cost will differ depending on your circumstances. Some things that can affect the cost of your quote include your gender, the type of car you drive, the colour of the car, how long you have been driving, the amount of cover you need, plus more. Be sure to read the PDS to find cover that suits you.
What is comprehensive car insurance?
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 policy covers your vehicle against the following:
Flood, hail or storm damage
Fire and theft
Accident or collision
Damage to third party property.
6 things you didn't know your car insurance covered
Cover is usually dependent on the vehicle being used by a nominated driver(s) for private and occasional business use only and never for commercial use or driving tuition.
What is excess and why do I need it?
An excess is the amount you must pay towards a claim. Most comprehensive 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.
Should I get third party or comprehensive car insurance?
Which is the best policy for me? It's a common question but a tough one to answer. Everyone’s needs and ideas about the best are different.
For example, one driver may be after the car insurance for under 25 drivers, while another is after comprehensive car insurance for seniors. One driver may want low priced 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.
Another 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 cover.
What's the right type of car insurance for you?
How can I save?
Despite the higher cost of comprehensive car insurance, there are ways to reduce your premiums and make it more affordable. Ensure that when you look at a policy you consider:
Shop around. Not all insurers charge the same, so look for a good deal. Compare both prices and benefits offered to find a policy option that fits your needs and budget.
Increasing your excess. Increasing your excess can ensure that your premiums stay lower.
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 my insurer really need to know? Should I tell them everything?
When applying for comprehensive 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.
Other questions you may have about comprehensive car insurance
Another way to get the comprehensive car insurance while saving 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 companies offer this choice.
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.
You are not required by law to have comprehensive car insurance, although your bank may require you to have it if they’ve given you a loan for the vehicle.
You can find policies that will pay for a rental car while your car is being repaired or replaced, but in most cases, it is optional cover that you’ll have to pay a little extra for on top of your comprehensive policy.
Most insurers will offer cover for your windshield and other windows, but it is usually an optional add-on that you’ll pay a little more for.
Yes, comprehensive policies will cover flood damage to your vehicle.
Yes, hail damage is covered, along with other forms of severe weather like cyclones, lightening and even earthquakes.
Yes. If another driver hits your car and they’re not able to pay for one reason or another (like they drive off or they’re uninsured), your comprehensive cover will kick in and pay to have your car repaired or replaced.
Ask yourself what would happen if your old car got totalled. Could you afford to buy a new one right away? If not, could you do without a car for a while? If you answered no to either of those questions, comprehensive car insurance could be a great safety net. If you could afford to replace the car yourself or go without one for a while, giving comprehensive cover a pass might not be a bad choice either and you could go with something like third-party property instead.
The price of comprehensive car insurance varies from person to person and car to car. Insurers will work out your cost based on a number of factors including your age, gender, driving history, claims history, neighbourhood and type of car you drive.
Richard Laycock is Finder's insurance editor, and has spent the last five years wrangling insurance product disclosure statements. His musings about insurance have appeared on Money Mag, Yahoo Finance, and Travel Weekly. When he’s not helping people make sense of insurance fine print, he is testing the quality of cocktails in his newfound home of New York. Richard studied Media at Macquarie University and The Missouri School of Journalism and has a Tier 1 Certification in General Advice for Life Insurance.
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