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What is comprehensive car insurance?

What is comprehensive car insurance?

As the name suggests, a comprehensive car insurance policy is the most complete coverage you can get, including not just coverage for your liability as an at-fault driver but also most kinds of damage to your car. You should consider buying such a policy if you feel it may cost a lot to repair your car after an accident, or if you are concerned about damage from vandalism or other incidents in your neighbourhood.

What does a fully comprehensive car insurance cover?

Every vehicle owner in Australia needs to carry compulsory third-party (CTP) insurance. This is considered the minimum insurance required to legally drive. However, depending on how much you can afford to pay for a car insurance policy and the precautions you wish to take, you can opt for additional policies offering much more than the minimum. 

A comprehensive car insurance policy will usually cover treatment for injuries to yourself and other drivers, damage to your vehicle as well as other vehicles or property. It may also cover damage to your car from theft, vandalism, or other adverse incidents.

When comparing comprehensive car insurance policies, you may want to check if the insurer offers roadside assistance and coverage for any possessions that may be damaged or stolen along with the car. Some comprehensive car insurance policies may also compensate you for getting your car towed, or the cost of travel after an accident, besides other temporary costs such as income support and accommodation costs. If you have nominated others to drive your car, they may also be covered in the event of an accident involving them. 

Is it mandatory to buy comprehensive car insurance? 

In most Australian states, only compulsory third-party insurance is mandatory. However, you may want to consider buying a policy that includes additional coverage, such as a third party property insurance policy. 

Third party property insurance =covers the cost of repairing or renovating someone else’s car or property from damage caused by you. You can also opt for the third party fire and theft insurance policy if you want this coverage for your car as well. You should remember that each additional coverage adds to the cost of your car insurance policy, with a comprehensive car insurance policy being the most expensive.

Common reasons you may seek comprehensive car insurance:

  1. You own a luxury vehicle. Owners of luxury vehicles may feel more encouraged to take out comprehensive car insurance, as the value of their car is typically much higher than the average, and therefore harder to replace out-of-pocket.
  2. Your car loan requires it. You may also need to buy a comprehensive car insurance policy if you have taken a car loan whose requirements include buying such a policy. 
  3. Your suburb requires it. If you live in an area known for frequent storms or incidents like vandalism and civil commotions, purchasing a comprehensive car insurance policy may be necessary. 

How do I compare comprehensive car insurance quotes? 

The cost of  comprehensive car insurance policy can depend  on your personal circumstances. For this reason, you should consider comparing policy quotes which are customised for your profile, by providing personal information like your age, gender, and the city you live in. While the car your drive does matter, your driving history can also make a difference in how much you pay for insurance. You may get a discount if you haven’t filed any car insurance claims in recent years and if you drive your car only for a limited distance on average. 

You should also look closely at what the policy includes, particularly the finer details like coverage for your belongings, for different incidents, and temporary support.

As the name suggests, the policy’s coverage has to be as thorough as possible, but each insurer may have a different view on what they should cover. It may be useful to read their product disclosure statement (PDS) to understand the policy more fully. Consider finding out what steps you can take to bring down your car insurance premium, such as adding security features or opting for an insurer from whom you’ve already purchased another policy. 

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This article was reviewed by Personal Finance Editor Alex Ritchie before it was published as part of RateCity's Fact Check process.



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