Things You Need to Know About Car Insurance

Educational

Mar 30th, 2020

Things You Need to Know About Car Insurance

Your car needs to be covered by insurance, that's a no-brainer. It comes in handy when accidents, theft, and other unforeseeable circumstances happen. It buys you peace of mind if there's such a thing. Having your car insured is also a statutory requirement.

How do you go about finding the right insurance provider for your car?

1. Decide on the car insurance options or covers that you'd like to have.

Compulsory

In Australia, a Compulsory Third Party (CTP) insurance or Green Slip Insurance is a mandatory car insurance cover. CTP insurance covers claims of compensation made against the policyholder when he or she figures in a car accident that injures or kills another person. CTP insurance does not cover the costs of repairing any vehicles or property, thus leaving you at a financial risk. It is the cheapest car insurance policy available. 

Voluntary

There are voluntary insurance covers, too.

Third-party - This car insurance policy covers liability for damage accidentally caused by the car to a third party's property rather than the person. Such property may include another person's vehicle. The policy does not apply to the costs of repairing or replacing the policyholder's car except under exceptional circumstances, which may include a no-fault accident with an uninsured driver. This policy also covers the legal costs of proceedings that may arise as a result of the loss or the damaged caused.

Third-party, fire and theft - This policy covers damage or loss caused to the property of a third party as well as damage to the policyholder's car whether by fire or theft and natural causes such as earthquakes. This policy does not cover the cost of repairs to the policyholder's car if it is involved in a traffic accident. So which insurance will cover will help you repair your vehicle? Because we all know that some automotive parts can be excessively expensive.

Comprehensive car insurance cover - This car insurance covers damage caused to the policyholder's car if an accident occurs as well as other occurrences such as theft, severe weather or even fire. It covers accidental damage or loss to your vehicle regardless of whoever may be at fault. It can also ensure one against damage caused to other people's cars or property caused by the policyholder while driving.

Note that it does not cover anyone not mentioned in the policy document, and that said person is the one who happens to cause the accident. Intoxication can also bar anyone from claiming under a comprehensive car insurance policy. The policyholder must, at the time, hold a valid driving license and the car must be roadworthy. This is the most expensive car insurance policy.

2. Get a quote.

The insurer’s quote will depend on several factors, including:

  • Current market value and performance of the car
  • The driver’s age
  • Driving history and claims history
  • The policy holder’s residence
  • Where the vehicle is usually parked at night 

The policyholder must disclose all of this information; failure to disclose any of the above may cause the forfeiture of any future benefits or cancellation of the insurance cover.

3. Purchase your policy and receive policy documents.

The insurance company’s coverage takes effect from the date the policy starts or a subsequent starting date if one is chosen. The policy documents consist of the certificate of insurance showing the selected cover, the policy schedule detailing the disclosed information supplied by the policyholder, and the product disclosure statement which outlines the terms, conditions, limits and exclusions that apply and how one may make a claim. 

How do you lodge a claim?

1. Prepare the necessary documents.

The policy number, the details of how the accident occurred including the place and time as well as the date it happened, the third-party information, the police report number (if available) and any witnesses' details.

2. Lodge your claim form with the insurance company.

Submit the claim form as well as the required supporting documents to the insurer and wait for their notice or response. If the company accepts the claim, then it shall repair, replace or pay the market or agreed value of the vehicle, as the case may be. 

What happens in case of a dispute between the policyholder and the insurance company?

Most disputes arise when the insurance company turns down the claim made because the policyholder did not supply supplied enough information or it believes the policy does not cover the damage or loss which is the substance of the claim. 

Dispute may also arise if the insurer decides to pay only a portion of the claim. In Australia, one must exhaust the internal dispute resolution mechanisms offered by the insurance company. If the policyholder is still aggrieved after the decision, he/she may forward the complaint to the Australian Financial Complaints Authority (AFCA).

External dispute mechanism

The AFCA is the organization tasked to resolve insurance disputes between insurance companies and policyholders, free of charge. AFCA decisions are legally binding on the insurance provider, but the policyholder is not bound by its decisions. 

One may file a complaint through their website www.afca.org.au, email them at info@afca.org.au, call them on 1800 931 678 or send them a letter to Australian Financial Complaints Authority GPO Box 3 Melbourne VIC 3001.

Are there fees and discounts that a policyholder needs to know?

No-claims discount or no-claim bonus

It is a discount on the Comprehensive Car Insurance premium. The amount of the discount increases each year that the policy does not make an at-fault claim. It is also known as a no-claim bonus.

Car insurance cancellation fees

If a policyholder cancels the policy within 21 days of the renewal or issuance of the policy or declines to renew it, then he/she has no cancellation fees to pay.

We at Carpart.com.au go above and beyond to bring you useful information about things that you as a car owner or buyer need to know. If you need car parts, you may visit our buy-and-sell platform, fill out a form and request a part. You may also browse our featured ads or search sellers and automotive professionals through our directory. 

By Eric Anyega