Buying car insurance set to be simpler

Buying car insurance set to be simpler

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.

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Learn more about car insurance

Does insurance cover a stolen car if keys were in the car?

A car insurance policy that covers the theft of your car, such as third party fire and theft insurance, usually covers a stolen car, even if the keys were in the car’s ignition.

However, your insurer may deny the claim if you live in an area where there have been several car robberies reported recently. They will see you leaving the keys in the car as a case of negligence. In such cases, your insurance provider may even expect you to have installed anti-theft security measures in your car. 

You may need to confirm whether or not you left your keys in your car, and if they had been stolen or misplaced, before filing your car insurance claim. The loss or theft of your car keys may be covered by a comprehensive car insurance policy, but usually as an optional item.

If you can confirm that your car keys were stolen, mention this in your claim as this will help establish that your car was not stolen as a result of your negligence.

Can you insure your car for 6 months?

Most Australian insurers won’t offer you a 6-month car insurance policy, so you may need to buy a policy that covers your car for damages and cancel it after six months. You will need to purchase comprehensive car insurance to protect your car from accidental damage, theft, vandalism, or natural disasters.. 

Consider checking whether your 6-month comprehensive car insurance will cost more if you pay monthly or six-monthly premiums instead of a one-time annual premium. Another question to ask the insurer is whether you’ll need to pay administration or cancellation fees when you cancel the policy.

Alternatively, you can look for a suitable ‘pay as you drive’ car insurance policy, which usually offers you the coverage of a comprehensive car insurance policy but only requires you to pay for the distance driven. Such a policy may not be the ideal 6-month car insurance plan as it is based on how much you drive rather than for how long. If you need to drive a lot, you may end up paying more than you’d pay for regular car insurance. 

Can I drive a new car without insurance?

It is illegal to drive a car in Australia without insurance. Most states require that you get your insurance in place before you drive the car off the dealership’s plot. So, the answer to whether driving a new car without insurance is no, it is not allowed.

The only time you can possibly legally drive an uninsured car is when you have to get the vehicle registered. You should drive straight to an inspection station or your state's vehicle registry. You must also make sure that you take the most direct or convenient route possible.

It is important to note that your compulsory third party insurance (CTP or green slip) isn’t valid until your car is registered.

Driving an unregistered or uninsured vehicle can have severe legal repercussions. If you are involved in an accident, and are driving an unregistered and uninsured vehicle, you will be personally liable to pay compensation to anyone hurt, as well as for damages. If you are caught driving a vehicle without insurance, you may be fined or even have your vehicle seized.