Friday, 28 September 2012

Demystifying Your Car Insurance

Car insurance is something that most experienced drivers are familiar with, but it can be pretty confusing to young drivers and new car owners. The type of cover you take out will affect the ongoing cost of your vehicle, so you should always shop around for car insurance and find a price and level of coverage that suits your situation. 

To get you started, we've put together a quick list of the four types of general insurance that relate to owning and operating a private motor vehicle in Australia:
  • Compulsory Third Party Insurance
  • Comprehensive Insurance
  • Fire & Theft Only
  • Third Party Property Only
Compulsory Third Party
All drivers should be aware of Compulsory Third Party Insurance as it is illegal to drive a vehicle that does not have this coverage. This insurance protects individuals who you may injure whilst driving a vehicle. In Tasmania this insurance is provided as part of your vehicle registration fee (called MAIB Premium). This insurance covers injuries sustained to others and yourself in case of an accident and this is why it is so important to ensure that your vehicle is registered at any time when taken on public roads!

Comprehensive Cover
This can cover repair or replacement of your vehicle for events  including theft, collision, malicious damage and weather related damage. It can also cover repair and replacement of other vehicles that are damaged by your vehicle. Comprehensive insurance is usually chosen to cover vehicles that are in good condition. Your insurer may choose to not provide cover to vehicles that are over a certain age, in a poor state of repair or have issues such as rust.

Fire & Theft Only
This type of cover will not help if you are involved in an accident, but it may repair or replace your vehicle in the case that it is stolen and damaged by fire.

Third Party Property Only
This can provide cover for damage caused by your vehicle to other vehicles or property, but does not provide cover for your vehicle. This type of cover is typically taken out by someone with a relatively low value vehicle, primarily to protect them from having to pay for the damage their car might do to a more valuable vehicle or other property belonging to a third party.

Here is a handy graph provided by the Australian Government's MoneySmart website that illustrates the different types of vehicle insurance you should consider.

TypeDamage to your carDamage to other people's property (e.g. other cars)Damage or loss caused by theft of your carInjuries or death to other people in an accident
Compulsory third partycrosscrosscrosstick
Third party propertycrosstickcrosscross
Third party property, fire and theftcrossticktickcross
Please note that the information above is generic and Insurance policies will vary from company to company so make sure you understand the cover before purchasing.

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