4 questions to ask before dropping your comprehensive car insurance

If you’re a comprehensive car insurance policy holder, you’ve probably felt the urge to ditch your car insurance policy for something with a little less cover so you can keep hold of a little more cash. You probably get this feeling about once a year when you get that reminder in the mail that it is time to pay your premium once again.

As each claimless year goes by, you might seriously consider abandoning or downgrading your policy. If that is where your head's at right now, it is probably worth giving you a little refresher on why comprehensive cover is king when it comes to car insurance:
  • It covers you if you damage someone else’s car or property
  • It covers damages to your own car
  • It covers you if you’re the victim of theft
  • It covers you in the case of a fire, flood, storm or earthquake

Oh, and it also provides you a whole lot of peace of mind - you can drive around everyday knowing that pretty much whatever happens on the road, you’re covered.

But, if you’re not convinced over the value of your comprehensive car policy, we strongly suggest you ask yourself these questions before you drop your current policy.

1. What is the value of my car?

Maybe your ride has finally lost that new-car smell or you’re just not feeling the same level of love as when you drove it out of the lot. Whatever your personal feelings towards your car, it is depreciating each year, which means that your car is losing value which might prompt you to ask: is my comprehensive car insurance premium still worth it?

The fact is that 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?

Often a good indicator for if you should dump your comprehensive car insurance is whether you could actually afford to replace or repair the vehicle out of your own pocket in the case of an at-fault accident. If you could arrange other modes of transport to-and-from work or see your car as more of a luxury mode of transport 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 were to make a mistake on the road and had recently ditched your comprehensive car insurance, you could be without your car until the necessary funds become available to fix 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 however, dropping comprehensive car insurance with a pricey car loan hanging over your head might not be the smartest move. If the worst case scenario were to eventuate and you were involved in an at-fault accident then you could be left with the bill to repair or even worse, replace your car as well as the outstanding loan. So be smart and hold 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 in terms of policy aside from compulsory third party (CTP): third party property and third party fire and theft

Third party property

You can consider this the entry-level policy for the car insurance industry. It will cover you for the damages you cause to other people’s property but that could be pretty minimal usually around the $5,000 mark. This means that if you were to write someone else’s car off you could still be forced to pay out of pocket to replace their car and also to repair or replace your own.

Third party fire and theft

Considered the intermediate level of policy, 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 policy basically gives you the added security against a range of circumstances, depending on  your provider and what you select. You will probably want to know that, 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 when signing on for a policy like this.

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 comprehensive level of cover but remember to shop around!

By comparing all of the providers on Mozo’s comparison tables, you could save close to $1000 on your comprehensive car insurance policy.