Risking cheaper car insurance for peace of mind?

Risking cheaper car insurance for peace of mind?

Andrea Sophocleous investigates if cheaper comprehensive car insurance is worth the risk.

February 8, 2010

The excitement of buying a new car can often be dampened by the harsh reality of drudging through myriad car insurance options to find the best one for you. As well as not being an enjoyable task, researching insurance schemes can be daunting.

Approaching the search for car insurance with a clear idea of what you need, can help minimise the stress. All car owners are required to pay for compulsory third party insurance when they register their car. This covers injury and death to people in car accidents. Third party property insurance covers any damage you cause to other people’s property, but not repairs to your car. It also doesn’t cover car theft.

Third party, fire and theft insurance offers limited cover for theft of your car or damage from fire, but it does not cover the cost of repairs if your car is damaged in an accident. The safest option, comprehensive insurance costs the most but gives you the most cover. It covers you against accidents, theft and fire damage, and extras can include a replacement car while yours is being repaired.

When shopping around for any type of insurance, it’s tempting to opt for the cheapest policy. However, this isn’t necessarily the wisest move. The low cost of the premium may be attractive, but what about the excess you will have to pay if you make a claim?

Generally, the lower the premium the higher the excess. If you are willing to pay a high excess, this may not be an issue for you – but it’s a decision you will have to make before signing up to a policy.

The cost of the premium is simply one consideration when choosing a car insurance policy. You should also consider the valuation of your car by the insurance company – is it a fair value? Is your car worth more than the insurer is willing to agree?

You must also look at the policy’s terms and conditions (what is covered), as well as any exclusions (what is not covered by the policy). Different insurance policies carry different exclusions, so it’s important to read the fine print. Discounts for loyalty or having multiple policies with the insurer should also be considered.

The best way to lower the price of your premium is by being a responsible driver. Some insurance companies offer a “no claim bonus” on car insurance. If you don’t make a claim by the time you have to renew your policy, the insurer may reduce the premium you have to pay because you are a good “risk”.

A cheaper insurance policy can come with fewer options – is this what you want? More options may mean getting the cover you desire and the peace of mind you need.

 

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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.