Car insurance can be a tricky business, particularly when you're trying to work out which insurer is best for you. Here's our top ten list of things to consider when selecting an insurer.
1. Level of cover
One of the first things you need to do is check how much cover your insurer will provide if you are in an accident. It can be the difference between being fully covered, and walking away with a hefty bill.
2. Shop around
The saying 'it pays to shop around' never grows old because its true. Competition in car insurance is strong, with a number of relatively new players now in the field such as Woolworths and Coles, who are competiting for business based on price. Whoever you decide to go with – whether its the cheapest or the most expensive – go through the fine print to make sure it includes everything you need.
3. Choose your own adventure
These days, there's an increasing number of added extras and options to pick from when selecting car insurance. It's worth considering options such paying month-by-month, if you need it, but be prepared to pay a little bit more for the convience. Conversly you can save money by limiting the flexibility in your cover, such as nominated-driver-only cover or increasing your excess to reduce the premium.
You never know when you might need to contact your insurer, so try and pick one who is contactable by phone (preferably 24/7), and has plenty of information online about your policy and what to do after an accident.
5. Repairs guarantee
Ask if the insurer offers a lifetime guarantees for workmanship on collision damage. Check the fine print though, and don’t forget to ask for new parts if it’s a new car. A lot of insurers offer "new for old" replacement of your car if its under a certain age.
6. Agreed or market value choice
The value of your car can become a point of contention when you go to make a claim, and often it comes down to whether you selected an agreed value when taking out the insurance, or whether you chose to accept the 'market value' of the car, as determined by the insurer. At the end of the day, the higher in value your car is, the more in insurance you'll pay. Also, there are some interesting hybrids around the insurance market which merge these terms, so be sure that your "agreed value" is not actually market value, up to that agreed amount.
7. Lifetime rating 1
The days of Ratings 1 to 6 seem to be ever diminishing, to the ultimate point where all policies will be underwritten as "Rating 1", but again, as there are several variations on the lifetime rating theme, it’s important to check the details.
8. Hire car
Complimentary use of a hire car has been around a long time for cars stolen but unrecovered, (where the claim has been admitted). The offering of hire cars has been widened quite significantly however, so don’t forget to ask if one is available.
9. Low Risks
Insurers are free to adopt certain "Underwriting Guidelines" to basically target any segment they wish. Age, driving history, car use, postcode and whether your car is garaged or not can affect your premium, so if you are considered "low risk" – use it to your advantage and shop around.
10. High Risks
Some drivers and cars will be "hard to place risks" so far as insurance underwriters are concerned, but there are some insurers out there that specialise in high risk candidates.
This article originally written in 2008 by Ross Lee, principal of Lee Lawyers, specialising in insurance law and injury claims.