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Car Insurance

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cleaning-791542_1280Purchasing car insurance not only secures against costs caused caused by natural disasters, man-made calamities or unforeseen circumstances but also gives you peace of mind. We normally choose an insurance policy by the recommendations of car dealers, friends or family. But it is always advisable to compare quotes from different insurance providers, going through the fine print before signing the deal can save you money and potential stress. To get you started we’ve compiled the following list and ideas.

Types of car insurance: Some common types of car insurance policies are:

Comprehensive cover: It comprises of the coverage of repairs/replacement to your own vehicle and property irrespective of anyone’s fault. It also protects you with the cost of emergency repairs, damages and transportation costs caused by anyone.

Third party property cover: This type of insurance covers damage you have made to another persons vehicle rather than damage to your own car. It usually encompasses legal costs, cover for substitute vehicle, limited damage by uninsured drivers and the claim service.

Third party fire and theft cover: The name itself suggesting coverage for loss or damage in case of theft or fire. But it can also cover your liability for damage caused by your car to another persons property.

Compulsory third party insurance:  CTP is mandatory for every registered driver in Australia. It provides compensation to drivers who are legally liable for personal injury to another person in the case of a car accident. The process of CTP and registration differ from state to state.

Additional coverage options: Besides from all these insurance covers, some insurers offer additional benefits and features comprising of new car replacement, protected no claim bonus and choice of repairer. You should carefully examine each and every policy and analyse the features and benefits of each and if they suit you and your requirements.

You may get confused with the different insurance covers available, these basic tips may help:

  • Have a detailed study and compare coverage quotes
  • Find out what coverage you need
  • Understand the benefits offered
  • Get a hand on the lingo – if you don’t understand something, get it clarified
  • Know your vehicle
  • Be sure of how much you can afford comfortably
  • Read about the insurance company and its history, reviews
  • Review the fine print of the policy – this can be enlightening! You might be surprised what negates your policy in an accident. Eg: not in roadworthy condition, any modifications not declared etc.
  • Identify how to lower your premium – Eg: a higher excess, better security etc.

Difference between agreed and market value: insurers will normally provide you with these two options in the event that your car is written off.

  • Market value implies the market value of a car at the time of the claim keeping in consideration the age, make and model of the car.
  • Agreed value is the value of the car agreed by you and the insurer.

Meaning and types of excess:

Excess is the cost you have to bear in the event of a claim. For Eg. Your claim is worth $1000 and your excess amount is $300 then your insurer will pay $700 and the remaining amount will be paid by you i.e $300. Generally this is paid directly to the car repair workshop or the mechanic. There are basically three types of excess:

  1. Basic excess: This is the minimum amount which you are responsible to pay in the event of the claim. Your Certificate of Insurance will have a specific mention of the excess amount.
  1. Voluntary Excess: As the name itself suggests, this is an additional amount apart from the fixed excess which you voluntary pay in the event of claim. This type of excess allows you to pay a lower premium and reduces the financial risk of your insurer.
  1. Age Excess: This type of excess is generally adopted by the inexperienced driver or drivers under the age of 25 years. They pay a higher excess.

Considerations before going for excess:

  • When you pay a higher excess, your premium tends to be on the lower side. Ultimately you save money.
  • Before considering to increase the excess, keep in mind which car you have and the consequences in the event of claim. For Eg. If you drive an old and obsolete car then it’s of no use increasing the excess and paying more than your car is worth.

Things to keep in mind while making a claim: These are some simple tips to remember at the time of accident when making claim:

At the scene of an accident:

  • Make sure you stay on the scene of an accident
  • Keep a record of all the particulars such as names, contact details, registration numbers of other drivers involved.
  • Note down the police report number, if applicable.

Prior to make a claim:

  • Consider any ramifications of making a claim. Eg: losing your rating, paying higher premiums in the future.
  • Have a clear idea on your excess obligations.

At the time of making a claim:

  • Inform the complete details of the accident to the insurer as soon as possible.
  • You may be asked to fill in a formal claim form later.
  • Supporting documents always help. Try to provide them if possible.
  • Answer every question related to your claim.
  • Getting an Insurer Acknowledgement Receipt to the claim is a must.
  • Be informed about the progress of your claim.