Do not get caught with the wrong car insurance

Don't get caught with the wrong car insurance

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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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.