Learn about Car Insurance

Ever find yourself confused about car insurance and what’s involved? Then look no further. Understanding the ins and outs of car insurance can help you make the right decision to suit your needs.

What is Car Insurance?

Car insurance provides financial protection against physical damage or injury in the event of a car accident and can help pay the costs of the repairs or medical bills rather than having to cover any expenses out of your own pocket. In addition, it can offer financial protection against theft and other events including natural disasters.

Is car insurance compulsory in Australia?

Compulsory third party (CTP) insurance is a legal requirement in Australia if you own and operate a private motor vehicle. It covers pedestrians, cyclists, your passengers and passengers in other vehicles. The other three types of car insurance are the optional covers; comprehensive, third party property and third party fire and theft.

Comprehensive is the highest level of insurance someone can take out and covers a wide array of events that can damage your car, including collision, theft and natural disasters. Third party property covers you for the damage you cause to someone else’s car or property. Third party fire and theft also cover you for the damage you cause to someone else’s car or property as well as protecting your own vehicle against fire and theft.

Can I claim insurance for car scratches?

Typically the level of cover included in your car insurance policy will determine if you can claim for car scratches as a result of an accident. If you opted for comprehensive coverage then it is likely that the scratches will be covered whereas other types of cover such as third party property damage would not.

Can I insure a car financed by someone else?

It can be difficult to get insurance if someone else finances a car for you as the vehicle is in their name, making them the registered owner. Generally, you can be listed on the insurance as a driver, but you can't be the one to take it out as the car is financed by someone else.

How are car insurance premiums calculated?

There are many factors that influence your car’s premiums:

  • Your age – different ages come with different levels of experience. Drivers under 25 will pay more on their premiums.
  • The value of your car – the more expensive the car, the higher the cost of the premiums.
  • Location – some suburbs have higher crime rates and therefore means you may need to pay more on your premiums. Whether you park your car on the street or in a garage will also determine the cost of your premiums.
  • Claims record – you will pay more for your premiums if you have several at-fault crashes against your name

Which type of car insurance offers the greatest protection?

Comprehensive car insurance provides higher coverage than third-party property and third party fire and theft. Comprehensive car insurance protects your car in the event of a collision that is deemed your fault as well as theft, vandalism and natural events.

What is the difference between market value and agreed value?

Market value is the value of the car on the general market just before an incident. The market value of a car depends on factors like the make, age and condition of the car. Because the market value of any car is always changing, you cannot know the exact amount that you would be reimbursed at claims time until the time of the claim settlement.

Agreed value is a sum that is fixed by an agreement between the insurer and vehicle owner when the policy is taken out. It is a factor used to determine the premiums on your policy. It is particularly relevant for car owners who may have a high value of accessories and modifications that would not be reflected in the standard market value of the car.

For more information on market and agreed value, check out our handy guide.

Any advice is general only and does not take into consideration your personal circumstances. Before acting on any information contained in this article you should consider if the advice is appropriate for your personal objectives, financial situation and needs.