Car insurance is still a much more complicated business than it should be. For example, a typical Product Disclosure Statement (PDS) for car insurance in Australia runs to over 25 pages, with dozens of individual clauses. Glossing over these documents is tempting – but it’s a bad idea. Perhaps the most important clauses in these documents are the ones that tell you what you’re not covered for.
For example, one car insurance policy document includes important exclusions that tell you the insurer won’t pay for things like:
- Repairs or car inspections carried out without their consent;
- Or some personal items that might be stolen from your car;
- Or loss or damage caused by failure to take reasonable steps to secure your car after it has broken down, been damaged in an accident or you have been notified of its recovery after it was stolen.
If you don’t read the policy document thoroughly, and don’t notice these clauses, you may be in for a nasty surprise if you need to claim at a later date. The problem today is that getting a financial adviser involved in helping you understand car insurance is likely to be very expensive indeed.
The Australian Securities and Investments Commission (ASIC), which regulates car insurance in Australia, announced a pilot scheme to simplify financial advice for car insurance products. The pilot plan would involve financial advisers being able to offer a ‘scaled’ product, where they can provide advice on less complicated products at much lower cost. This is very welcome, but drivers shouldn’t ‘wait for the cavalry’ to help them understand car insurance policies.
The good news is that comparing car insurance quotes online continues to get easier. Despite the attitude of the big two insurance companies – Suncorp and IAG – there are now several websites which allow you to compare live quotes from multiple insurance brands.
Obviously, the first thing most drivers will look at is the premium, but this is only one part of the story. Make sure you compare all the features of the policies, because there are many things besides price that go into determining the best value car insurance for you.
Once you’ve compared car insurance policies from several different brands online, you will then need to look at the policy document for the brand you intend to purchase. If there are words or phrases you don’t understand in this document, make sure you ask the insurer for a plain English explanation before you sign on the dotted line.