Paul Clitheroe - car insurance getting more competitive
12 Jun 2012
ipac Paul Clitheroe
my weekly view
It’s worrying to think that almost 160 cars are stolen every day in Australia. Car theft has been on the rise over the last year, and the cost and inconvenience it brings to motorists makes comprehensive car insurance a must.
Car cover is one of those financial products that is often misunderstood, and it can be easy to think your vehicle is protected by insurance when in fact it’s not.
To set the record straight, there are three main types of car cover available to drivers. As the name suggests, compulsory third party (CTP) insurance is mandatory for all cars. Without it you won’t be able to register your vehicle. However this type of cover doesn’t protect you or your car, or someone else’s property if you have an accident. It only offers protection for anyone you may injure with your car in a collision.
Further along the spectrum is third party property insurance. This provides cover for any damage your car causes to someone else’s car or their property if you’re at fault in a collision. Again though, it doesn’t provide cover for your car.
A more complete type of protection is offered by comprehensive car insurance. With this type of policy your car is insured against theft, weather-related damage and repairs arising from a collision. It also covers the cost of repairs or replacement to someone else’s car if you’re found to be at fault in an accident.
The broader level of cover provided by comprehensive insurance means the premiums cost more than for other types of car cover. Nonetheless I reckon it’s definitely worth having, and interestingly, research group Canstar say that for many drivers the cost of car cover has fallen over the past 12 months thanks to increasing competition.
In its latest car insurance star rating report, Canstar named AAMI and Budget Direct as offering the highest overall value for car cover. But it is important to do some shopping around of your own. Premiums vary widely according to where you live, your age, the type of car and its value, and your driving history.
There are ways to save on premiums. A 10% discount is often available if you arrange and pay for cover online. Using the same insurer you have other types of cover with could also mean earning a discount.
If you only rack up a small number of kilometres annually, it may be worth looking at options like ‘pay as you drive’ cover, where premiums are linked to how many kilometres your car travels each year (visit www.payasyoudrive.com.au).
Having comprehensive car cover in place means you shouldn’t be left out of pocket if your car is damaged or stolen. But it can still be very inconvenient to be without your car even for short periods, and following some basic precautions can mean avoiding the hassle and expense of making a claim.
The spike in car theft for instance, has prompted the Insurance Council of Australia to remind drivers about the need to keep an eye on their car keys. Apparently, improvements in vehicle security means some thieves are turning to the theft of keys and transponders as a means of stealing cars.