What to consider when choosing car insurance, tips from Youi

Family buys car insurance at car sales garage.

While having your own car can be a liberating experience, all the paperwork that comes with it can also be very confusing. Picking an insurance policy can be especially overwhelming.

We spoke to Youi’s Head of Public Relations, Belinda Zordan who gave us the lowdown on what to consider when looking for insurance.

1. How much will it cost to replace my car?

The first thing to ask yourself when thinking about buying car insurance is: how much will it cost to replace my car? Zordan says, "Replacing a new or valuable vehicle tends to be quite expensive, making the relative value of comprehensive insurance not just worthwhile, but almost essential."

She adds that the cost to replace an old car may be less than paying for an annual comprehensive car insurance premium. "While certain classic cars can be extremely valuable, for the most part, cars tend to depreciate as they get older. In that case, you may get far better value out of a less expensive third party fire and theft or third party property only car insurance policy," she says.

2. What types of car insurance are there?

Having an idea of how much it might cost to replace your car should help with deciding on a level of car insurance that works best for your situation.

CTP insurance - that’s compulsory third party insurance - is the most basic level of car insurance you must have to legally drive in Australia. It covers injury to people, not property and how it works can vary from state to state. Read our guide to CTP insurance in different states and territories, to learn more about it.

Then there’s third party car insurance and comprehensive car insurance. With third party car insurance you can choose to opt for third party property or third party fire and theft. The first option offers liability cover for damage you might cause to someone else’s vehicle, while the second provides liability, plus cover for damage to your own wheels, caused by fire or theft.

Comprehensive car insurance is the highest level of insurance you can get for your wheels. Generally it provides liability cover, plus cover for damage caused to your own vehicle as the result of an insured event. Insurance companies often offer a number of extras with comprehensive policies too, meaning you might be able to tailor cover to suit your individual needs.

3. What is agreed value and market value?

When searching for car insurance, you will probably come across the terms agreed value and market value. This is basically two different ways your car can be valued. Knowing what your car is valued at is important, as this is the amount an insurance provider is likely to pay out, should your vehicle be deemed a write off.

Zordan says, "The exact definition of these terms will vary depending upon your insurer. You should check your product disclosure statement to confirm this." Typically agreed value is an amount that you and your insurance provider agree on when taking out the policy. Market value is how much your car might fetch if it were on the market at the time of making a claim. Check out our guide to agreed value and market value, to read more about it.

4. What excess should I go for?

These days a lot of insurance providers give customers the option to choose a high or low excess. What excess you opt for will really depend on your own individual situation. If you’re trying to save money on your premium, you may choose a higher excess. Generally, the higher the excess, the lower the insurance premium and vice versa.

Come claim time, a higher excess will potentially mean a bigger bill, while a lower excess will usually mean a lower bill. So when it comes down to it, whether you choose a higher or lower excess will depend on whether you want to pay less for insurance premiums or less at claim time.

5. Do I need roadside assistance?

Roadside assistance is a service that offers assistance when your vehicle breaks down on the road and includes help for things like jump starting a battery, changing a tyre, providing emergency fuel, delivering a spare key and giving advice.

Generally, insurance companies will offer roadside assistance as an optional extra, on top of either a third party car insurance policy or a comprehensive car insurance policy. Although a few (including Youi), may offer it as standard with a comprehensive policy.

6. How will my car be used?

How often you use your vehicle is important as it may affect the cost of your insurance premium. Zordan says, “Some insurance insurance companies, including Youi, will consider how you use your car when calculating your premium.”

Most insurance providers will ask you how many kilometres you drive per year and may also ask whether you use your car for personal or business purposes. Where you live and whether or not you drive regularly on highways or on smaller suburban, city roads may also be factored in.

7. Who will be driving my car?

When working out your premium, insurance companies will look at who is driving your car. That includes their age, gender and driving history. "The age of the youngest person who drives your car is considered by your insurance company when calculating your annual premium," says Zordan.

Insurance companies may charge a higher premium to drivers under 25, as they may be seen as more likely to make a claim. Young men especially may be charged a higher premium, as they may be seen as higher risk drivers.

Start comparing policies

Asking these questions of yourself, could just help you find a car insurance policy that works for your own particular situation.

Head to Mozo’s compare comprehensive car insurance policies page to see what’s on offer right now, or check out the options below.

Compare comprehensive car insurance - rates updated daily

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    • Comprehensive Car Insurance

      Monthly premiums
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    * Terms, conditions, exclusions, limits and sub-limits may apply to any of the insurance products shown on the Mozo website. These terms, conditions, exclusions, limits and sub-limits could affect the level of benefits and cover available under any of the insurance products shown on the Mozo website. Please refer to the relevant Product Disclosure Statement and the Target Market Determination on the provider's website for further information before making any decisions about an insurance product.

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