5 things you may not know about insuring your car

8-minute read

What you'll learn

• Which cover is mandatory in Australia and why
• Snapshot of the different types of car insurance
• Options and extras available
• Things that affect your premium
• Why it’s important to review your car insurance regularly

Motor vehicle insurance doesn’t just cover damage, it can also offer assistance for many other things – like weather events, fire or theft. Whether you’re purchasing a car insurance policy for the first time or faced with your annual renewal notification here are five things about car insurance you may not know.

1. CTP insurance is mandatory in Australia

In Australia, you can’t register your vehicle unless you have CTP insurance (also known as compulsory third party or green slip insurance). The process and terminology vary slightly between the states and territories, but fundamentally every car owner needs to have CTP insurance for their vehicle.
 

CTP only covers liability associated with injuries or death caused to others in a motor accident you are involved in. It doesn’t cover your own injuries, nor does it cover damage to vehicles (yours or others) or property, or vehicle theft. There are other insurances available to cover those things.

2. There are different types of car insurance

We’ve talked about mandatory compulsory third party insurance above. For more extensive car insurance coverage, on top of your compulsory third party insurance, there are two main levels of insurance you can add, depending on your needs and budget.
 

Remember, as the coverage increases, so generally does the cost, which means it’s important to understand exactly what is covered by each type. Here’s a topline overview:

Quick snapshot of insurance options

A few more details

Third Party Property Damage insurance 

This insurance offers additional protection when taken out in addition to CTP insurance by providing cover for damage caused by your motor vehicle to someone else’s vehicle or property. It does NOT cover any damage to your own vehicle. 

Third Party Fire and Theft Damage insurance 

With the same (or similar) coverage as Third Party Property Damage insurance, this insurance also offers added protection for if your motor vehicle is damaged by fire or stolen. It does not cover damage to your own car in the event of an accident.

Comprehensive car insurance

This insurance covers damage to your own motor vehicle, as well as to other people’s property and vehicles, no matter who is at fault. It typically covers damage from motor accidents, vandalism, and weather events like storms, floods and hail.
 

For more details about the above types of car insurance, you should ask for a copy of the product disclosure statement from your chosen insurance provider. Of course, there are exclusions for things like unlicenced drivers or those under the influence of drugs or alcohol, so make sure you check with the insurer what’s covered and what’s not.

3. You may be able to tailor your comprehensive car insurance to suit your needs

If they aren’t included already, there may be additional features you can build into your comprehensive car insurance and tailor it to your needs and situation. Below we’ve listed some of the more popular coverage features and options – but remember, they’re not all available with every insurer and may come at additional cost. It’s a good idea to speak to your own insurer to see what they have to offer.

• New car replacement – Cover to provide a replacement car if your car is written off, often only offered for cars under two years old.
• Choice of repairer – This inclusion allows you the option to choose who looks after your car repairs, however the insurer may reserve their right to obtain a second quote from their own repairer.
• Towing – Getting your car where it needs to go for repairs (or when it’s a write-off).
• Temporary car hire – Handy for if your car is being repaired after a motor accident or if it’s stolen. 
• Window excess reduction – A lower excess (or no excess at all) if you need to claim for a replacement windscreen or window. 
• Accommodation and transport – This can be helpful if you have an accident when you’re a reasonable distance away from home and your car is undrivable. 
• Personal property – This provides cover for certain items stolen from your vehicle or damaged or lost during a car accident.
• Keys – If you need to replace or re-code keys after theft, or even to replace lost keys.
• Child seats – This covers the replacement of these after a car accident.

It’s possible that adding some of these optional features could increase your premium substantially. So, make sure you check what’s already covered in your policy, then think carefully about what extras you need and weigh up the difference in cost before deciding.
 

Of course, there are terms and conditions that apply to all car insurance inclusions, so make sure you familiarise yourself with the respective product disclosure statements. And remember, not all insurers offer all of the above extras, some charge more for them and some do not, and if they are offered they may not be available everywhere and to everyone. It’s always best to take the time to ask.

4. Several factors affect car insurance premiums

Each insurer is unique in the way they calculate their premiums. However, there are some basic factors that they are likely to consider.

• Cover type – The type of insurance cover you choose will have a big impact on what you pay. Generally, the more you’re covered for the more it costs.
• Vehicle details – The cost of your insurance is also influenced by the make, model and year (and the value) of the vehicle you’re insuring.
• Vehicle modifications – Your premium amount will reflect any additions, accessories or modifications you’ve had fitted.
• Vehicle location – If you keep your car in a locked garage, you are likely to pay a lower premium than if you park it on a busy street. Same goes for urban areas with higher traffic and crime rates as opposed to quieter rural areas.
• Vehicle usage – Premiums can reflect what the vehicle is used for and how often the vehicle is used.
• Age and experience – Younger drivers and those with less experience are statistically more likely to be involved in accidents¹. Data also shows that males under 30 years old are more likely to make claims when compared to their female counterparts.²
• Driving history – If you have a history of traffic infringements, your premium may be higher as it’s likely you’re considered a higher risk.
• Previous claims history – If you’ve made frequent claims or claims of high value, the insurer will take this into consideration, and it could affect your premium.

5. A regular review of your car insurance is important

It’s not uncommon for insurance premiums and terms to change from one year to the next due to shifts in the market and other factors. Conducting a regular review of your car insurance will give you a better understanding of where you stand, so you can make the necessary changes to your policy to cover off anything that’s happened since you last renewed.
 

Ask yourself these questions when you do your regular review:

• Has anything changed since last time? If you’ve made any modifications to your car, you will need to let your insurer know. Perhaps you’ve moved house and have a garage to park in now. Maybe there are other drivers that you should add to the policy. Or perhaps other circumstances have changed for you. All these things and more may affect your cover – and, by default, what you pay for it – so it’s important to get it right before making a decision.
• Is the cover still affordable? Reviewing your cover can sometimes reveal areas you could save money. For instance, think about the excess amount you’ve agreed to and how much you’d be out of pocket if you needed to make a claim. A review is the perfect time to tweak the details of your policy to make sure they are right for your current budget.
• How does your current policy stack up? The annual review offers a great time to compare different insurers to perhaps find a better rate or more comprehensive coverage. Remember that all insurers are different, and their insurance offerings are unique, so make sure you compare like for like with the product features and understand key differences if this isn’t possible.

Taking a proactive approach to car insurance puts you on the front foot. Conducting a review of your insurance annually is a great way to uncover any gaps in your cover or potential savings. Find out more about things to check at car insurance renewal time.

Car insurance can be a crucial safety net that helps provide protection for both you and others on the road. Whether you’re new to car insurance, or looking to renew your policy, by understanding the different types of cover, optional add-ons and factors that influence premiums you can ensure your policy is one that best fits your circumstances.
 

With regular reviews in place, you’re not only likely to get the insurance cover that’s right for your current situation, but ultimately it helps ensure you’re well-prepared for any unexpected events on the road.