My Credit Union

Tuesday, 26 October 2021 08:10

Print

When buying car insurance, take time to compare the cost and understand what is (and is not) covered by different policies.

Types of car insurance

When deciding which type of insurance will suit you, think about whether you can live without your car if it's written off or stolen. Also consider if you can afford to pay for the damage to someone else's car if you have an accident.

Third party versus comprehensive insurance

How your car is valued

With comprehensive insurance, you can choose how your car is valued. The value is the amount you'll get if your car is written off or stolen:

If you use the market value, you don't know how much you'll get if you claim, and you can't change the amount. If you use an agreed value, you'll pay a higher premium.

Cost of car insurance

The amount you pay each year for insurance is called a premium. The insurer works out your premium by estimating how likely it is that you'll make a claim.

You may also have to pay an excess when you make a claim. The excess is the amount you agree to contribute towards the cost of a claim.

The premium and excess you pay will depend on your policy and on other factors, such as your age. For example, a driver under 25 may have to pay a higher excess. This is because people under 25 are involved in more accidents.

No claim bonus

Some policies include a no claim bonus. This means you pay a lower premium if you don't make a claim for a certain period of time.

Read the policy to understand what claims affect your bonus and if there are any limits.

Paying for add-on insurance

Some car dealers offer add-on insurance when you buy a new or used car. These products are often not good value for money, for example the insurance extras sold by car dealers.

Getting the best deal on car insurance

To help you get the best deal on car insurance:

Compare car insurance policies

Get quotes from more than one insurer to find the best value for money, and a policy that suits your needs.

Comparison websites can be useful, but they are businesses and may make money through promoted links. They may not cover all your options. See what to keep in mind when using comparison websites.

Compare these features:

Renewing you car insurance

Get quotes from a few other insurers to check you're getting the best deal. You may end up paying more by staying with your current insurer.

This article was originally published by Moneysmart at https://moneysmart.gov.au/car-insurance/choosing-car-insurance. This information is general in nature. does not take into account your personal situation and does not constitute financial advice. Please refer to any relevant terms and conditions associated with any financial product offering.