Car insurance FAQs
We know that car insurance is confusing, that’s why we’ve provided you with a few frequently asked questions to help you make the right decision when it comes to buying your car insurance.
Which car insurance is right for me?
The best car insurance policy for you is one that suits your driving lifestyle and covers the features of your vehicle within your budget - but remember the cheapest policy is not always the best. You should look for a policy that has the best cover, a good price, good customer service and a fast claims process.
What is the difference between comprehensive, compulsory third party and third party car insurance?
Comprehensive car insurance
Comprehensive car insurance covers damage, loss, theft of your vehicle or property and theft and damage to other people’s property too. See more info about comprehensive car insurance.
Compulsory third party insurance (CTP)
Compulsory third party (CTP) insures you or any other driver of your vehicle against liability for death or injuries you may inflict on other road users as a result of a motor vehicle accident for which you or the driver of your vehicle are at fault.
Third party car insurance
Third party car insurance provides cover or loss against someone else’s property. While, third party property, fire and theft insurance adds cover in the event of you vehicle being stolen or catching fire.
How do I reduce the costs of my car insurance?
There are many ways to get cheap car insurance such as increasing your excess to reduce your premiums, or parking your car in a safe place when you are not using it, or by driving a standard model car. See our guide to cheap car insurance for more advice on how to save on your car insurance.
How is car insurance calculated?
Insurance costs are set by insurance underwriters. These underwriters create their pricing based on historical data which allows them to balance risk with cost. Basically this means that your car insurance premium is based on how other people with similar criteria and risk profile have performed in the past.
There are many factors that affect the cost of your premium such as your age, your driving history, how often you drive, the type of car you drive and where you park your car when you are not using it. Learn more about what factors affect your premiums and read our article on how car insurance is calculated for more information.
What is excess?
Excess is an amount you’ll have to pay if you need to make a claim on your car insurance. It is used by insurers to reduce financial risk and therefore lower your premiums. It works by you paying the first agreed amount and the insurer pays the remaining.
There are three different types of excess:
Basic excess
Basic excess is the minimum payment you make in the event of a claim. This will vary for each policy and will be detailed on your Insurance Certificate.
Voluntary excess
This is an additional amount you pay the insurer on top of your basic excess and will usually reduce your premium.
Age excess (inexperienced driver)
If you are under 25, or have not been driving on the roads for very long, insurers will consider you inexperienced and therefore you will have a higher excess. The longer you continue to drive, your premium and excess will keep going down.
Should I increase my excess?
A way to save on your car insurance is to increase your excess which in turn reduces your premium. Remember though, this means that if you do make a claim, you will have to pay more money. If you have an older car, this might not be the best option as you don’t want to end up paying a high excess when the car itself is not worth much. Generally speaking, you can save yourself money in the long run on your premiums if you decide to increase your excess.
What is a safety rating?
Ratings are a measure of your safe driving status issued by insurers to determine whether you are entitled to discounts or not based on your driving history.
What is a no claims bonus (NCB) / no claims discount (NCD)?
This is a discount applied to your premium based on the number of years you have been driving without making a claim. As you accumulate more years of driving without a claim, you receive a discount on the full-priced premium until it reaches a maximum discount (also known as 'Rating 1'). Generally, for every year that a driver has insurance on a car without making a claim, they will earn another year's NCD to a maximum of 5 years (‘Rating 1’). The value of this varies between insurers.
What is a modification?
A modification is anything that changes the car from the manufacturer’s standard specification model. Some people modify their vehicles to add desired features, improve its performance, give a distinctive appearance, or to change the type of fuel tank. Any modification should be declared to the insurer so that it can be checked against their insurance acceptance criteria. Failing to disclose modifications could result in your policy being cancelled or the insurer not paying when you make a claim.
Do I need to tell my insurer about my new car sound system?
Yes, you need to tell your insurer of all modifications you make to your car so they can add it to your insurance policy, that way you are covered if you need to make a car insurance claim.
What is an inexperienced driver?
Usually refers to young drivers under 25 or someone who hasn’t been driving for very long. Visit our tips for young drivers to find out more.
What is agreed value and market value?
Agreed value is the amount your car is insured for which has been agreed by you and the insurance company.
Market value is the amount your car is insured for, which has been valued from the current market based on car type, condition and kilometres.
Who should I list in my policy?
Make sure that anyone who drives your car is covered to do so. If you need to make a claim and an uninsured person was driving the car your insurance may not be valid.
Can I add a driver to my policy?
Yes, you can add nominated drivers. You must contact the insurance company and provide them with the following information:
1. How often will the driver use the car?
2. What do they use the car for?
3. Does the driver have his or her own car?
4. Name, gender and date of birth of driver?
5. Your relationship to the driver?
6. Has the driver had any accidents, claims or thefts in the last 3 years?
7. Has the driver had any licence suspensions, cancellations or disqualifications in the last 3 years?
8. What year did the driver obtain their licence?
Only the policyholder will be able to change the details on their policy.
Are international driving licenses recognised?
Yes international drivers are covered under the majority of car insurance policies as long as the driver has a valid licence and can legally drive in Australia.
Do I need to list learner drivers?
Not always, if you have a comprehensive car insurance policy they will be covered when driving with a fully licensed passenger in the front seat.
How do I make a claim?
You will be able to lodge a claim with the claims department over the phone or online. Follow the instructions provided by the individual insurer for their claims procedures. Have your policy details ready and any additional information such as the details for other parties who were involved, if you’ve had an accident.
You will be given a claim number and the claims department will look into your cars damage, police reports and all the provided information before a decision is made whether to pay your claim or not.
What should I do if my vehicle is stolen?
First thing to do is to tell the police and get a report for your insurance company containing the details of the police officer who took the report, the police station details, date reported and reference number. Then contact your car insurance claims department.
What do I do if I’ve had an accident?
Remain calm! Check to see if anyone is injured and call the police and appropriate emergency services if required. Exchange details including names, addresses, registration numbers and insurance company details with other vehicle owners and drivers. Do not admit fault for the accident (this is for your own protection should legal considerations be raised). Also gather details from any witnesses that may have seen the incident. Call your insurance company at your earliest convenience, they should have a 24 hour claims number and will be able to provide assistance and recommend a crash repairer if you need one.
Were these questions helpful? If you need more information on car insurance visit our handy tips and guides for more help.
We’d love to hear from you…If there is anything else we can help you with please contact us and we will get back to you asap.
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