4 questions to ask before dropping your comprehensive car insurance

Comprehensive car insurance after a crash

If you hold comprehensive car insurance, you may have felt the urge to ditch your policy for a cheap option, even if it does mean you're covered for less. You probably get this feeling about once a year when you get a reminder to pay your premium...

If that is where your head's at right now, it's probably worth a refresher on why comprehensive cover is king when it comes to car insurance. To kick us off, here are a few key factors:

  • It covers you if you damage someone else’s car or property
  • It covers damage to your own car
  • It covers you if you’re the victim of theft
  • It usually covers you in the case of a fire, flood, storm, earthquake and all manner of other unpredictable events

If you’re still not convinced about the value of your comprehensive policy, we strongly suggest you ask yourself the following questions before you drop it.

1. What is the value of my car?

Maybe your ride has finally lost that new-car smell or you’re just not feeling your former motoring style anymore. Whatever your personal feelings towards your car, it is depreciating in value each year. No matter whether you have a Toyota or a BMW. This might prompt you to ask: is my comprehensive car insurance premium still worth it?

The answer really depends on your wheels, but a good rule of thumb is: until the sum of your annual premium and excess outweigh that of your car, it is probably still in your best interests to keep your comprehensive policy. Especially if you can’t answer question number 2 with a resounding “yes!”.

2. Can I afford to replace my car or live without it?

If you could arrange other modes of transport to-and-from work or see your car as more of a luxury transportation device, then perhaps you could do without the higher premium payments that come with your comprehensive insurance policy.

However, if you don’t have a sizeable sum of cash lying around or if you absolutely need your car for family or work purposes, this probably isn’t an option. If you ditch your comprehensive car insurance and then get in an accident, you could be without your car until the necessary funds become available to fix or replace it.

3. Do I owe money on my car?

Did you have to externally finance the purchase of your new car? If this is the case, you might not be able to drop your comprehensive car insurance without voiding the conditions of your loan. So, check with your car loan provider before making any moves on your comprehensive car policy.

Even if that’s not the case, dropping comprehensive car insurance with a pricey car loan hanging over your head might not be the smartest move. If you find yourself in an at-fault car accident, then you could be left with the bill to repair or replace your car as well as the outstanding loan. So consider holding onto your comprehensive car insurance if you’ve got loan repayments to keep up with.

4. What are my alternatives?

At Mozo we’re pretty big advocates for comprehensive car insurance. But if you’ve gotten this far and are still considering making the switch to something a little more budget-friendly, then you’ll be wanting to know exactly what your options are.

If you’re not wanting to insure your car comprehensively anymore, you generally have two options: third party property and third party fire and theft

Third party property

Consider this entry-level car insurance. It will cover you for the damages you cause to other people’s property, but it could be pretty minimal cover (usually starting around $5,000). If you write-off someone else’s car, you may have to pay the difference out of pocket to replace it as well as managing your own repairs or replacement.

Third party fire and theft

Car insurance companies usually give you the option to add fire and theft cover to your third party insurance for a few extra bucks a month. This gives you added security against a range of circumstances, depending on your provider and what you select. While this level of car insurance will cover you against fire and theft it probably won’t cover you for things like vandalism or storm damage - so check the fine print.

Across all these coverage levels, there are some things generally not included. So before you make any changes to your policy, make sure you know what isn't covered by car insurance in Australia.

And don't forget you'll also need to take out compulsory third party (CTP) insurance to legally drive in Australia. This essential level of car insurance covers you for costs related to injuries and deaths caused by road accidents.

If after reading this you’re feeling a little uneasy at the thought of going without your comprehensive car insurance, it is probably best to stick with a higher level of cover. But remember to shop around using Mozo’s car insurance comparison page.

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