4 car insurance questions all young drivers should ask
More than 30% of young Queensland drivers don’t know what their comprehensive car insurance policy covers, according to a recent study from QLD car insurer RACQ.
This can be pretty costly any way you look at it. If you’re underinsured, you could end up having to cover massive costs after an accident. Or you could be paying for additional features on a comprehensive plan which simply don’t apply to your circumstances.
This got us thinking: how much does the average person know about car insurance when they start driving? Unless you’re a total motorhead or vintage car enthusiast, you may not have a complete understanding.
So, to get you on the road to the right level of cover, here are answers to some of the biggest car insurance questions.
Is CTP the same as a Green Slip?
Indeed it is. CTP or Compulsory Third Party insurance is the same as a Green Slip, which you are required to take out in every Australian state and territory before you can register and get driving. It covers the cost of any injuries you may cause others while driving, as well as compensation if someone is killed in a motor vehicle accident.
While it is compulsory, insurance providers offer it at varying rates, although some states have a single CTP underwriter and the cost is included in your registration. In any case, be sure to do your research in conjunction with other car insurance investigations.
What is third party property damage insurance?
Don’t assume you’ve got your bases covered with CTP. You’ll probably need to take out third party property damage car insurance, too. This optional insurance provides legal liability cover up to $20 million, which is available in the event you are sued as a result of a car accident.
But what are you actually covered for if you cause a crash? That depends on each provider and the type of policy you chose. Basic third party insurance could cover as little as $5,000 in damages to another vehicle, whereas a more extensive policy may go into the tens of thousands.
The best case scenario is that your insurance covers the full cost of repairs or replacement of another person’s property or vehicle if you’re at fault in an accident. Forking out a little extra on a premium could cover you down the line. But remember, third party property damage doesn’t provide cover for your own wheels, so if you’ve funneled a fair amount of love and cash into your car, you may want to consider more extensive insurance.
Then what’s different about third party fire and theft?
This is the next Pokémon evolution of third party insurance. It offers the same liability and damage cover if other cars or property are damaged, as well as cover if your car is stolen or damaged by fire. You may want this additional coverage if you park in a street rather than a secure lock-up, especially in high-density areas where fire or theft may be more common. As you might expect, the extra cover will result in a higher premium.
Do I need comprehensive car insurance?
Many first or second cars will have a fair few kilometres under their timing belt, as well as some scratches and other issues to boot. So, if the cost of paying higher premiums or an excess on a claim exceeds the value of your car, then comprehensive insurance may not be worth it over a third party policy.
However, if your vehicle is worth the extra cover, you’ll want to dedicate time to choosing the right comprehensive car insurance policy. This is generally the most comprehensive type of cover (it’s all in the name), so will naturally cost a bit more.
You and your provider will determine your premium, excess and the amount to be paid out in various claim scenarios when you take out this kind of policy. This will often be dependent on things like the value of your car, plus the age and experience of listed drivers.
Typically, comprehensive car insurance includes cover for:
- Legal liability up to $20 million
- Bad weather like hail, earthquakes, tsunamis, floods and storms
- Accidental damage
- Vandalism and malicious damage
- Theft and attempted theft
- Collision and towing from accident to a repairer or your home
- Emergency repairs
- Car hire (not always available and cover varies – check with your insurer)
- Replacement car, with conditions
Some common exclusions you may want to pay more for as optional extras:
- Windscreen, glass and sunroof protection
- Wear and tear – get clarification on what that precisely is at each insurer
- Depreciation in your car’s value
- Additional people insured to drive your car
- Electrical, mechanical and structural faults
- Accidents as a result of your vehicle being unroadworthy
The Product Disclosure Statement (PDS)
Whatever car insurance policy you end up choosing, it’s imperative to read the PDS before signing on the dotted line. This is usually a long, complicated document where all the fine print of the policy lives.
It’s not a riveting read, but it will help you select the most appropriate policy. It will also shine a stark light on policy exclusions, or certain circumstances where you may have thought you were insured, but which actually nullify your cover. It’s all about being prepared for the worst by finding and understanding a policy which you can afford.
Become an expert in choosing the right type of car insurance with this guide. Then, peruse some of the comprehensive options below.
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