CAR INSURANCE

Do not get caught with the wrong car insurance

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The worst possible time to find out that your car insurance is inadequate is when you’ve just had an accident, and you need to make a claim.

Car insurance isn’t like a home loan; most of the time, when you try to buy car insurance, you’re not at risk of being ‘rejected’. But the rubber hits the road when you try to claim after an accident. At that point, if there’s something you should have told a car insurer that you haven’t, then you are at risk of having your claim denied. The result is that you’ll end up out of pocket for the accident – and run a serious risk then of not being able to get affordable insurance next time around.

The good news is that it seems that relatively few claims for car insurance in Australia are actually rejected. The Australian Securities and Investments Commission (ASIC), which regulates car insurance, conducted a review of over 1.2 million motor vehicle claims that were lodged in 2009, and found that just over 3,000 (or 0.3 percent) of these claims had been formally denied. But if you are one of those 3,000, that’s small comfort.

For example, one driver hit a car at traffic lights, and was left $9,000 out of pocket because she ‘unintentionally’ failed to disclose two out of four claims over the past five years. Another driver failed to disclose two minor accidents, and had her claim refused even though she disclosed three other minor accidents.

ASIC notes that some “consumers do not properly understand their disclosure obligations, the importance of complete and accurate disclosure, or the ramifications of failing to properly disclose relevant matters.”

The guideline here is simple – correctly disclose your historical driving record over the past five years, or run the risk of your claim being denied, or payout being reduced. And make sure you do the same for any other driver who is listed on your policy.

There’s a new service from Veda Advantage that can help you find this information – called My Insurance Passport. The service, which costs just $9.95, includes the key information you’ll need to understand what an insurer knows about you, and what you should disclose.

For instance:

-          Details of applications you’ve made for insurance

-          Enquiries about you made by insurance companies

-          Claims you’ve made

-          And claims where you’re involved (when you were named as the driver of an insured vehicle).

If you don’t want to shell out any money, you can get this information from insurers directly, but that’s a lot of time and hassle, so the Veda service is well worth a look.

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