Part of your comprehensive car insurance premium is being used by insurers to cover the costs of uninsured drivers, according to a report from the Brotherhood of St Laurence.
According to The Pranged: The Real Cost of Optional Vehicle Insurance in Australia, Aussies are paying an extra $45 a year on their premiums, as insurers attempt to compensate for the unrecoverable losses that at-fault uninsured drivers represent.
Drivers with a comprehensive policy can make a claim on their own insurance for accidents that aren’t their fault, if the at-fault driver is uninsured. The report suggests that to account for this, insurers are raising comprehensive policy premiums, costing insured drivers a nationwide $1.3 billion.
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The author of the report, Tony Robinson, said that the current car insurance system employed here is “plainly unfair”, but simply switching to a mandatory scheme like the one used in the UK - where the minimum legal insurance covers drivers personal injury and property damage of others - wouldn’t work in the Aussie market.
“Mandatory schemes still record significant percentages of people who don’t pay for compulsory cover. What if they are dependent on cars for work? You can’t take cars off people,” said Robinson.
The current Aussie car insurance system involves a compulsory third party insurance policy, also known as a greenslip (CTP) which covers the cost of personal injury to others, but property damage cover is optional.
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And it turns out that a substantial chunk of Aussies aren’t taking up that option with the research estimating that approximately 12% of Aussie vehicles are uninsured for third party property damage and that uninsured drivers were at fault in approximately 114,000 accidents per year.
Robinson said that when Aussies pay for their car registration and CTP insurance, many believe they’re covered for property damage without realising that they need to seek out either a third party or comprehensive car insurance policy to get that added security.
If you’re a little confused at how our current system works, check out Mozo’s dedicated car insurance hub for a whole range of informative guides.