7 Facts to Help You Select the Best Car Insurance Policy
Buying a new car and savoring that new car smell can be a dream come true. However, buying car insurance can be a confusing and expensive nightmare. But the reality is this: If you own a car, you’ve got to have car insurance. So don’t let choosing a car insurance policy drive you crazy. A little knowledge, research, and patience can help you get the best deal for your new set of wheels.
1. There are Four Basic Types of Coverage: Choose Carefully
Car insurance is compulsory. But there’s more than one type of car insurance to choose from. Be knowledgeable about the different types of insurance available, and choose the one that best fits your circumstances and budget.
Compulsory Third Party Insurance (CTP)
- Compulsory. You can’t legally drive your car without it.
- Protects you from the financial implications of hurting or killing others while driving
- May also cover some of the cost of the injuries you receive
- Exclusions: In some cases, coverage of your injuries is not provided
Third Party Property Insurance
- Covers damage your car causes to other people’s property.
- Covers your own legal costs.
- Exclusions: Does not cover costs of repairs to your car.
Third Party, Fire & Theft Insurance
- Covers damages your car causes to property of others.
- Provides limited coverage in case of theft or fire
- Exclusions: Does not cover repair costs of your car caused by accident.
Comprehensive Insurance
- Provides most extensive coverage
- Most expensive form of car insurance
- Covers cost of damage to your car and other people’s property in an accident.
- Covers theft.
- Optional coverage may include providing you with a replacement vehicle while yours is being repaired.
2. Pay Attention to What A Policy Excludes
When reviewing a car insurance policy, always pay attention to what situations and circumstances are not covered. For example, most policies will not cover damages caused by normal wear and tear or mechanical failures. In addition, most policies will not provide coverage if the driver was under the influence of drugs or alcohol. Reading the fine print can save you money and headaches down the road.
3. It Pays to Shop Around
Once you’ve decided on which type of policy you want, remember, it pays to shop around. Before you make your final decision, compare the prices between at least three different companies. This is usually easy and can be done by calling to request a quote, or looking for specific information on the internet. Take your time and do your research. Do not ever feel pressured into signing a policy.
4. Being A Good Driver Can Save You Money
Several factors may affect your auto insurance costs. For example, a person with a good driving record will pay a lower premium than a person with a bad driving record. In addition, male drivers under 25 years of age will usually pay higher insurance premiums than other individuals.
5. The Type of Car You Buy Makes a Difference
Remember that the type of car you drive affects the overall cost of your insurance. The more the car is worth, the more you’ll pay to insure it. In addition, the more power your car has, the more it will cost you in insurance premiums.
6. Car Dealers Don’t Always Offer the Best Car Insurance Deals
Sometimes, your car dealer may offer to assist you by putting together an insurance policy for you. In some cases, these offers may include additional products and services such as consumer credit insurance, which helps you pay your loan obligations in certain circumstances.
Before you agree to purchasing insurance through your car dealer, be sure they’re either an authorised representative of a licensed insurer or an insurance agent that has an Australian financial services licence or they have been appointed as a distributor. You can ask the car dealer for a copy of their financial services authorisation – legally they have to provide you with a free copy if requested. Otherwise you can check if someone is an authorised rep by searching online in the Australian Securities & Investments Commission (ASIC) register of Authorised Representatives.
And before you sign the dotted line, remember to compare their insurance prices with at least two other insurance companies, to ensure you’re really getting the best deal.
7. Tell the Truth When Applying for a policy
Once you’ve done your homework and selected your policy, you need to apply for coverage. Tell the truth on your policy application. Or it could come back to haunt you later. A policy application is full of questions about who will be driving your car, your insurance claim history, and your driving record. You may think that it’s smart to withhold information in order to get a lower premium. However, lying on an insurance application is considered fraudulent and the insurer may have rights to deny your claim.
Another way to research different polices and companies is by word of mouth. Find out which companies your friends and families use, and what type of experiences they’ve had. Whatever you decide, the bottom line is this: Before you sign on the dotted line, be sure you’ve done your homework. Read your policy cover to cover first. And always remember to read the fine print.
This article contains general advice about car insurance. The author has not taken into account your financial situation or needs and you should consider whether the advice provided is appropriate for your own circumstances before relying on it.
Filed Under: Insurance Comparison
