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How to Find the Right Insurance For My Car

Angela has worked in the insurance industry and has found that many people still don't understand car insurance.

8 Tips on How to Find the Right Car Insurance for You

1. What you should do before you buy your car or switch insurances?

2. What is the difference between agreed value and market value?

3. Compulsory Third Party (CTP) or The Green Slip is NOT car insurance.

4 .What is the difference between Comprehensive Insurance, Third Party, Fire & Theft Insurance and Third Party Insurance?

5. What is a Product Disclosure Statement (PDS)?

6. Do you have modifications to your car?

7. What is an excess and when does it apply

8. What is a Certificate of Insurance?

Like cars, not all car insurances are the same.

Like cars, not all car insurances are the same.

1. What You Should Do Before You Buy Your Car or Switch Insurances?

So, after weeks or even months of searching, you have found the perfect car, and it is within your budget. Before you make a (non-refundable) deposit, you need to contact one or two insurance companies. Provide them with the details of the car and they will be able to give you a quote on how much your insurance will cost and what the maximum value this motor vehicle is worth. If you don't like to make phone calls, you can easily submit a quote online to most insurers.

For example, the purchase price of the car might be $17,000.00, however, your insurance company may only be able to provide a maximum insurance (agreed) value of the vehicle of $14,000.00. If the worst-case scenario happens and you have an accident that makes your car a 'write-off' (also known as a total loss), you will only get what the agreed value is, regardless of what you paid for it.

2. What is the Difference Between Agreed Value and Market Value?

In most instances - a lot of money!

Market Value:

Most of us have heard the saying that when you purchase a brand new car, it loses value as soon as you drive it out of the car yard, and this is essentially true. Over time, the value of your car will depreciate, therefore the money your insurance company will pay you will also lessen as the years roll by. This value is determined by insurance companies and industry guidelines. The benefit of insuring your car for market value is that your premiums are usually less. This option is worthwhile if your car is not worth much or you have money to purchase another car easily.

Agreed Value:

If you decide that you would like X amount of dollars if your car is a total loss then you need to ask for a policy with an agreed value. Your premiums will reflect this, however, the benefit of agreed value is that you know the exact amount of money you will be receiving. This is especially important if you have taken out a loan for your car. Regardless of how much your insurance companies will pay you, you will still be liable for the total amount owing on your loan. Many drivers chose an agreed value for peace of mind.

3. Compulsory Third Party (CTP) or The Green Slip is NOT car insurance.

Many people still get confused about Compulsory Third Party or CTP insurance and why you must have this insurance. In terms that can be easily understood, - CTP insurance (or The Green Slip) is insurance for personal injury ie. if you injure a person while driving. It does not cover any damage to either your or someone else car.

This insurance is included in your motor vehicle registration (this is why it's called compulsory). If you are not paying monthly, quarterly or yearly payments to an insurer other than what you pay in your motor vehicle registration then your car does not have an insurance policy on it.

Note: You also have the option to choose which CTP insurer you would like to use when you renew your motor vehicle registration. It is in your best interest to contact them when your motor vehicle registration does come up for renewal, as the prices can differ, especially if you want to save money.

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4. What is the Difference Between Comprehensive Insurance, Third Party Fire & Theft Insurance and Third Party Insurance?

A comprehensive motor vehicle insurance policy will (most likely) cover you in the event that you damage another car or another car damages your car in an accident. It will also cover if your car is stolen or vandalised or catches fire and if your car damages personal property (ie a fence or house). The reason that I say 'most likely is that each insurance policy is different and you should check what the policy does cover. Depending on the circumstances, an excess will apply.

A third party, fire and theft policy only covers exactly what it is stating. If your car damages another car or personal property, if it catches on fire, or if it is stolen you can have peace of mind that your insurance company will cover this. Excess payment will apply and any damage that has happened to your car will not be fixed.

A third-party policy is just that, a policy designed for damages to another vehicle or property. Excess payment will apply and any damage that has happened to your car will not be fixed.

Information on what your policy covers will be contained in the Product Disclosure Statement.

Accidents can happen at anytime and any where. Don't fool yourself into thinking 'it won't happen to me'!

Accidents can happen at anytime and any where. Don't fool yourself into thinking 'it won't happen to me'!

5. What is a Product Disclosure Statement (PDS)?

A product disclosure statement is a legal document that explains what you are covered for in case of an incident. It will also tell you what will disqualify a policy and what your responsibilities are once purchased. A number of insurance companies do have this available online and it is recommended you take a look and compare a few before you purchase a policy.

6. Do You Have Modifications to Your Car That Are Not Factory Standard?

If the answer is yes, then you must disclose this to your insurance provider. The reason for this is that if you don't, you may not get reimbursed for the cost of the modification. For example, you have purchased a $6000 sound system and had it professionally fitted to your car (which you have insured for market value). As this item is not listed on your Certificate of Insurance, it will not be covered.

It should also be worth noting that any illegal modifications to your car have a high risk of having your insurance policy revoked.

7. What is an Excess and When Does it Apply?

There are 3 different types of excess payments (and yes, sometimes they do stack).

1) Standard Excess - a standard excess where the driver of the vehicle is at fault or the insurance company is unable to recover the cost from a third party. Examples of this are acts of nature (such as hail damage) if you hit an animal or your car is stolen.

2) Inexperienced Driver or Age Excess - an excess that applies if the driver of the vehicle has not had their license for a designated amount of time.

3) Flexi Excess - a voluntary excess you have chosen to pay to have your insurance premiums lowered in the event of an incident.

8. What is a Certificate of Insurance?

Once you have purchased your motor vehicle insurance policy the insurance company will provide a Certificate of Insurance.

The Certificate of Insurance is a legal document that confirms the details of your insurance policy based on what you have provided to the insurance company. If the information on the certificate are incorrect, even if it is a minor mistake, it is your responsibility to contact the insurance company immediately to correct this. If you do not do this and have an incident, your policy may become void.

Take the Time to Keep Your Car in Pristine Condtion

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2021 Angela Lancaster

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