Car insurance is a good-to-have. The right insurance could save you a lot of out-of-pocket spending as well as guarantee peace of mind. As such, it's smart to take out time to learn how to get the best deals on insurance.
Now, cheap car insurance deals aren't always the best deals. As with other products and services, a low price isn't a guarantee of great value. Usually, the reverse is the case. The goal is to get the best cover possible without spending an arm and a leg. Here's a simple guide to getting the best deals on car insurance.
Understanding the Different Types of Car Insurance
If you’ve never bought insurance before, you might be unaware of the various types of insurance and what they cover. Here are four types of car insurance you need to be aware of:
1. Compulsory Third Party (CTP)
CTP is the most basic form of insurance available in Australia, and it covers compensation for persons injured or killed when your car gets involved in an accident. "Persons" here include pedestrians, cyclists, and other road users. CTP auto insurance is mandatory for every car in all Australian states and territories. You couldn't get your vehicle registered if you do not have the policy in place.
Key Note: CTP does not cover vehicle damages or theft. It only covers damages caused to other people while you’re driving your car.
2. Third-Party Property Damage (TPPD)
TPPD covers damages done by your vehicles on other vehicles or properties but not for the vehicle. Sometimes you will find insurance companies who cover some damage to your vehicle if you figure in an accident with an uninsured driver.
Important distinction: While CTP covers injuries to persons, TPPD covers damages to properties.
3. Third-Party Fire & Theft
Third-party Fire and Theft is essentially everything TPPD is. Only it also provides cover for when your vehicle is stolen or damaged by fire.
4. Comprehensive Insurance
The most expensive and extensive of them all; comprehensive insurance covers the repair or replacement of your vehicle in events of theft, accident, collision, fire, weather-related damages. It also covers the repair and replacement of vehicles involved or damaged by your vehicle in an accident.
Comprehensive car insurance is very competitive as most companies are willing to offer varieties of inclusions and extras to lure customers.
It's popularly believed that comprehensive policies are the most expensive type of cover to buy. Even I stated something along those lines earlier. In reality, there are cases when it could work out to be the cheapest, especially if you consider the benefits, viz.:
- Cover for damages to your car, including windshield.
- If your car gets written off in an accident, you get a pay-out for a replacement car.
- Cover for injuries you sustain during accidents.
Are these benefits worth losing for a few dollars in savings?
As a general rule, if your car is a new and expensive model and could cost thousands of dollars to repair, a comprehensive policy is usually the best option. Otherwise, any savings you set aside from choosing a third-party cover will likely be lost when you have to fork out substantial cash for repairs.
High-risk drivers go for third-party policies—CTP, TPPD, or Third-Party Fire & Theft—to lower overall cost. This puts third-party in high demand. Consequently, their costs go up.
Choosing the Right Car Insurance Policy
Here are a few questions to consider when making insurance-buying decisions. If you can't come up with the answers yourself, make sure to ask the insurer.
- What type of auto insurance suits my need?
- Do I need additional benefits such as a cover for a rental vehicle?
- Should I insure for Market Value or Agreed Value? – Market value is the value determined by the insurer with consideration to the condition of the vehicle at the time, age, and other factors. Agreed Value is the value that you and the insurer agreed upon when you signed the policy.
- Am I allowed to choose my auto repairer, or the insurer determines who repairs?
- If the accident is my fault, will my no-claim bonus be affected?
- Do I have to pay excesses if I can prove that the other vehicle driver is responsible for the damage?
Getting the Best Insurance Deal Around
1. Compare Costs Online
Don’t ever settle for the first deal you find. Check around, shop around. It doesn't take that much time, but it can save you a lot of money.
2. Take a Higher Excess
Although it could cost you more if it ever comes to making a claim, it will lower your premiums.
3. Keep Your Car off the Street
Keep your car in a garage or a parking lot off the street. This could significantly affect your premium.
4. Insure More Than One Vehicle
If you own more than one vehicle in your household, bundling your policies could make it cheaper.
5. Consider Pay-As-You-Go
If you are one of those who use their cars once-in-a-party-time, consider using a pay-as-you-go or pay-as-you-drive auto insurance policy. They are the best option for people who don’t drive much.
6. Keep an Eye Out for No-Claim Bonuses
If you are a cautious driver, be on the lookout for insurers who offer no-claim bonuses. For every clean claim year, you get a discounted premium.
7. Insure Different Valuables with One Insurer
Most insurers have multi-policy discounts when you bind different insurance policies together.
How Age Affects Insurance Deals
Age significantly impacts car insurance costs. For insurers, younger drivers and youths are at more risk of vehicle damage. Therefore, for younger folks, premiums are usually costlier, and there are fewer opportunities for cheap car insurance.
Insurance deals also vary by state. Tasmania has the cheapest auto insurance deal in Australia, according to Finder's research. Here the average price of a full car insurance policy is about $1,073 per year contrary to the $1,717 per year average that Victoria drivers would have to spend.
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By Damilare Olasinde