Month: March 2020

There is a lot of car insurance options out there. What is short-term and temporary car insurance, and what’s best for you?

What insurance is best for you?

Before driving a car, you have to make sure you’re insured by some type of policy. Whether it’s your policy or you’re a temporary driver on someone else’s policy, you must legally be insured if you want to drive. Car insurance essentially protects you if you get in an accident where damage is caused. Car insurance policies usually last between six months to one year. However, you can also get short-term and temporary car insurance.

Read more about car insurance renewal with Tippla!

Car insurance when you’re a temporary driver

Because it’s illegal to drive without insurance all around Australia, even short-term driving may result in large fines if you’re driving an uninsured car. Additionally, you may also be liable to pay for any out-of-pocket costs related to injuries or damage. Those costs are usually very high for the average person. That’s why it’s important to consider short-term and temporary car insurance.

However, you may sometimes need to drive a car that’s not yours, like:

– If you’re taking turns on a road trip 

– Emergencies where you might need to drive another car.

– Renting a car

– Your car is being repaired 

– You volunteer to drive someone’s car

Temporary drivers using your car

If you live with family members who plan on driving your car for a temporary period, you will need to contact your provider and add them to your policy. You will incur a small fee, however, that ensures all the drivers in your household.

If you’re unsure if a family member is covered, you can contact your provider and get more information on your policy. Additionally, note that adding young or inexperienced drivers to your policy may be more costly. Tippla can help you understand car insurance with new drivers. 

Borrowing a car

If you borrow someone’s car, you will most likely be covered by third party insurance. Make sure you confirm that with the owner of the car before you drive it. Getting in an accident in someone else’s car may raise the car owner’s premium. If you’re not covered under their third party insurance, you could look into short-term and temporary car insurance.

Renting a car

Depending on your provider, your policy may extend the coverage onto a rental car. You may purchase additional coverage for rental cars through your existing provider. The rental car company may also offer you coverage for an extra cost, however, that could be for a temporary period.

Public liability car insurance

This policy covers you when you drive a car that’s not yours. If the owner doesn’t have an existing policy on the car, you’ll need to purchase coverage before driving the car.

Public liability car insurance offers you liability insurance if you get in an accident driving someone else’s car. However, this policy won’t reimburse you if the car is stolen or badly damaged. They also have a policy length of six months to one year, just like a traditional policy.

Car-usage policy

If you don’t plan on driving your car as much, you could look into usage-based insurance*. This is a type of policy that allows you to pay for the amount you have driven, and how well you drive. If you drive less than the average driver and believe to be a good driver, your premium will be much lower with usage-based insurance.

Cancelling your car insurance before the policy period ends

With most car insurance companies, you can easily cancel your policy by contacting them and speaking with a representative. If this policy is new, most companies will have a cooling-off period that allows you to cancel the policy if you change your mind. However, cancelling your policy may incur you with a small early cancellation fee. 

What happens when your car is written off?

Having a car written off is every driver’s nightmare. Regardless of how your car got written-off, when it seems damaged beyond repair, it could stress any driver out. 

Deciding whether or not your car is written-off is completely out of your control. When filing a claim after an accident, your insurer will send an assessor to evaluate the vehicle and compare the repair estimates to its market value. This process could also determine if the damage could have long term effects and whether or not the car is a total loss. Depending on your policy and coverage, your car insurance may cover a total loss. However, here’s what you should know if your car gets written-off.

What does it mean when a car is written off?

A car is assumed to be a total loss based on two things: It’s damaged beyond repair, or it would cost more to fix the car than what it’s worth. As mentioned before, you will be assigned a claims assessor after you file a claim with your insurer. The claims assessor would be your point of contact as you go through the claims process. They will also help establish whether or not your car is a write-off. 

What will insurance pay for a written-off car?

With comprehensive insurance, a written-off car will be covered. You will have to go through your policy to ensure you’re being covered for certain components, as all providers differ from one another.  Most policies might require a deductible, which is essentially the amount you will have to pay out-of-pocket before your insurer covers the rest of the costs. 

It could get a bit tricky with leased cars. You would’ve most likely been required to add comprehensive insurance on the car (the priciest coverage) to cover any write-offs. After determining your car is a write-off, your insurer will then calculate its actual cash value to pay to you, minus the deductible.

The actual cash value of a car is its market value before it got written off. This amount is always less than what you paid to buy the car, as it accounts for depreciation. 

How is the ACV of a car calculated?

Almost all insurance companies use an industry formula to calculate your car’s value. Multiple factors that are taken into account include your car’s make and model, how much is on the odometer, and of course how much it depreciated since you bought it. 

What is a new car replacement?

If your car is written-off within 2 years of its purchase, your insurer may reimburse you to buy a new one of its value. This ‘new car replacement’ coverage is usually included in most comprehensive policies. It’s best to add on this coverage when purchasing a new car, as it may deem worth it if you lose your car. Almost all insurance providers in Australia have this option, however, you will need to have comprehensive coverage. 

What happens when your leased car gets written off?

If you took out a loan to buy a car, that vehicle is under a financial stake of your lienholder, until the loan is paid back in full. You could, however, get in an accident and have the car written off. What could then happen is you’d have to make car loan repayments on a car you don’t drive anymore. That’s when Gap Insurance may be helpful. 

Gap insurance is an additional coverage option for cars that are being leased. Gap insurance covers the difference between the value of the car and what’s left of your loan repayments. 

Car insurance companies provide you with multiple coverage options that provide different types of protection.

The concept of car insurance is your protection from financial risks. Those risks are taken into account when injuring someone or damaging your car. Other factors that are also covered by certain policies include at-fault accidents, natural disasters, or even theft and vandalism.  With certain coverages, you would be covered from situations where you’d be liable to pay large bills and expenses. Additionally, insurance may also cover third party damage or other passengers in your car. 

In Australia, you have the option between choosing comprehensive, third party property damage, compulsory third party insurance, or third party fire and theft coverage. However, you will need some sort of car insurance covering your car so you could drive it legally in all states. 

Read more on how much car insurance may cost you. 

The best way to describe car insurance is the coverage of your liability. As mentioned before, depending on your policy, you’ll receive a certain amount of cover. For example, comprehensive insurance covers the costs of theft, vandalism, collision, and certain expenses. 

Types of car insurance explained

As mentioned before, car insurance policies are made up of different coverage factors. Several coverage components provide different types of liability protection. When you first purchase insurance, you’ll be required to choose what coverage you want on your car. The higher the coverage is, the more costly your premium will be. 

Here are some different coverage types and what they do:

– Compulsory third party (CTP) insurance. Covers you if another person was injured in an accident. 

– Third-party property damage. Covers you if the damage is done to someone else’s property 

– Third-party fire and theft. Covers your car if stolen or damaged by fire or thieves.

– Comprehensive car insurance. Covers the most, and is usually the most expensive type. 

Does car insurance cover damage or injury you cause to other drivers?

Due to every state in Australia requires you to have some sort of car insurance cover, the extent of your coverage depends on your policy. Damage or injury caused to other drivers is covered by compulsory third party insurance, third party property damage and comprehensive car insurance. Medical bills can be costly, which is why most people tend to have comprehensive coverage. You might not realise how much damage your car can do to someone else’s property, which is why it’s the safest option to be covered by a comprehensive policy. 

Does car insurance cover injuries to yourself and other passengers?

Most insurance policies protect you and passengers in your car when injured. Costs covered could include medical bills and other repair costs. However, it’s difficult to list specific coverages as different providers would have different policies and offers. 

If your car insurance covers medical expenses, that would most likely include surgeries, X-rays and other bills. Some medication may also be covered by your insurance, however, it’s best to go over your policy to be sure. 

Moneysmart can help you get the right car insurance. 

Does car insurance cover theft or damage to your car?

Almost all types of car insurance protect your car from theft and damage. That includes the repair costs if damaged, and rebating your car’s market value if stolen. However, note that some coverage types may differ from another depending on whether you’re in the car at the time. Some providers may not cover the car if you’re not physically driving the car when damage is done. It’s best to go over your policy in detail to understand what’s covered. Comprehensive insurance will cover damage done to your car, whether it was being driven or not. That also includes out of control events such as extreme weather conditions, vandalism or falling objects. 

Does car insurance coverage apply when your car is worth less than owed if it was stolen or written off?

Although your car insurance pays out your car if it’s written off after an accident, your provider will most likely deduct the amount the car depreciated. This means your car insurance provider will pay you the actual cash value of the car rather than its market value. 

If you loan a car, you could owe more money than the car’s worth. Therefore, the actual cash value may not be enough to make the payments owed. That’s when gap insurance pays out what’s left from the amount owed on the loan and the car’s actual cash value. 

Does car insurance cover you if hit by an uninsured driver?

You do have the option to purchase additional coverage that protects you from the risk of other parties not having enough insurance or coverage. If you get in an accident with the other party being at fault, they must cover all the costs. That’s why insurance can play a major role. You also don’t need to be driving the car at the time of the incident for insurance to protect you. 

What does car insurance not cover?

When purchasing your car insurance, your coverage will be thoroughly detailed on your policy. The policy will provide what’s covered and what isn’t. The following is not covered by car insurance:

– Regular services/ maintenance. Repairs for regular wear and tear or your car’s yearly service.

– Other people who drive the car. This factor is tricky. If you have third party coverage, other people may drive your car, however, if you don’t have that additional coverage, you won’t be covered. 

– Ridesharing. Depending on your policy, some providers may not cover the cost of damage if the vehicle was being driven for fares. 

– Damage that exceeds your limits. This is when your insurance covers the maximum coverage, and you’re required to pay the deductible. 

When you turn 25, you’ll notice a drop in your insurance premium.

Car insurance companies calculate premiums based on how much of a risk that driver is. Therefore, new drivers, regardless of their age are perceived as high risk with a likelihood of getting in an accident, which as a result increases the premium.

How car insurance rates are set 

Car insurance companies will want to know a few basic information when you apply for a policy. That information includes:

• Your driving record
• Age 
• Credit History 
• Car make and model 
• Your location
• How often you’ll drive the car

Your insurance provider will ask you to provide this information because it’ll help them calculate how much of a risk you are to insure. As a result, your premium will be calculated based on those components. Sometimes car insurance companies get too stereotypical resulting in high premiums. Unfair, right? Have you heard of usage-based insurance? If you are a firm believer in your driving skills and lack of accidents then you should check it out!

Essentially that’s how insurance works. The way you drive determines your insurance rates. What car insurance providers do is, they collect your driving history along with your age to determine the likelihood of you getting in a crash. That’s why new drivers tend to pay higher premiums than experienced drivers. Read more on car insurance rates for new drivers. 

When your car insurance rates drop 

Generally, all insurance providers drastically decrease premiums when drivers turn 25. However, that applies to drivers who turn 25, with a good driving history. As mentioned previously, accidents tend to boost your premiums for a couple of years. Therefore, if you’ve had a clean driving record, you’ll notice a decrease in your premium even before turning 25.

You can expect your insurance premium to decrease continuously up until approximately the age of 65. However, that rule doesn’t just apply to age. Factors that may contribute to your premium include your car, how often you’ll be driving, your neighbourhood, and other factors that summarise how much of a risk you would be to insure. 

Other ways to save on car insurance 

The best way to save on car insurance and one of the most efficient ways is to compare car insurance quotes from different providers. Have a range of companies with their quotes for you to understand which one would suit you best and help you save money in the long run. 

What are deductibles and what do they mean for you?

An insurance deductible is an amount you have to pay out-of-pocket after your coverage is applied. Unlike medical insurance, deductibles, not all car coverages require a deductible. 

When adding coverage to your car insurance, you may have the option to where you want to set your deductible. 

The way it works is the higher your insurance deductible, the lower your premium will be. However, you don’t want to set your deductible so high that you wouldn’t be able to afford it. Here are a few tips on how deductibles work and how much you should set it to. 

What does car insurance deductible mean?

The amount you pay out of pocket when filing a claim is known as a deductible. For example, if you get into a car accident and your coverage has a deductible of $500 and the repairs cost $2,000, your insurance would pay $1,500. Essentially you want to try and pay out of pocket only when the damage is less than or equivalent to your deductible. 

Moneysmart can aid you tips on claiming your car insurance. 

What kind of coverage requires a deductible?

Not all insurance coverage will have a deductible. For example, third party coverage, which covers the cost of damage done to someone’s property, doesn’t require a deductible. However, with most types of car insurance coverage, you’ll be required to set a deductible. Comprehensive car insurance’s deductible usually ranges between $500 and $1,000, depending on multiple components. Comprehensive car insurance is a type of coverage that covers the most damage and costs, although is also the most costly. 

How do I decide what my deductible should be?

Essentially, the way it works is, the higher the deductible, the lower the premium. That’s because you’re setting the cost and worth of the coverage, rather than your insurer. The same applies the other way around, the lower the deductible, the higher the premium. 

Although it’s tempting to set a high deductible for the low premium, you need to keep in mind that there could be a chance that you’d have to pay the deductible. Therefore, it’s best to set an affordable deductible for a reasonably priced premium. 

Are you a new driver? Read more on Car insurance rates for new drivers. 

If you’re unsure of what is a car make and model, here’s a quick breakdown of everything you need to know.

How could your car make and model affect your insurance?

One of the first things you’ll have to fill out in your insurance application is your car make and model. This is your car’s manufacturer, and what line of cars it’s from. For example, if you drive a Toyota Yaris, the make would be Toyota (the manufacturer), and the model is Yaris.

Some models may have additional variations. For instance, some may have multiple body styles such as two or four-door versions. Additionally, models may have different engine options.
You may also personalise your car’s trim level. The trim level is the additional feature you may choose for your car.

The make and model of your car give your insurer a detailed description of your car. This helps insurance companies determine your car’s worth to insure. Here’s how to find your car’s make and model.

Moneysmart can help you pick the right car insurance for you. Read more!

How to find your car’s make and model

You can easily find your car’s make just by looking at it. Almost all cars will have the manufacturer’s logo or symbol on the front and back of your car. You also have the option to look up your car’s make, model and other information with your vehicle identification number.

What’s a vehicle identification number?

A vehicle identification number (VIN) is a unique 17-digit serial number specific to every car. This number is used by the automotive industry to identify specific cars.

You can find your car’s VIN on your dashboard, and it’s visible if you’re standing outside.

How make and model affects your car insurance

The make and model of your car give your insurer a detailed description of your car. This helps insurance companies determine your car’s worth to insure. Essentially, the more expensive your car is, the more expensive it’ll be to insure.

Are you a new driver? Read more on how your insurance rates will be affected!

Here’s a step-by-step guide on reporting an accident and filing a claim.

Car accidents can be terrifying and overwhelming. Some people may get too emotional and won’t remember what steps to take after an accident. We’re here to help by giving you a step-by-step guide that’ll allow you to gather all necessary information when reporting an incident and filing a claim.

Get to safety

Accidents happen, and that’s okay. The first thing you should do after a collision is to safely evaluate the scene. Check for any injuries on yourself and any involved parties. If it’s safe to do so and you’re able to, you should move the cars somewhere to allow the flow of traffic to go on. 

It’s important to turn your hazard lights on so surrounding cars can slow down.

Take a moment to collect yourself and take a deep breath. It’s easy and natural to get overwhelmed in these situations. However, whatever you do, don’t leave the scene of the accident as you can face serious legal repercussions regardless of how small the mishap is. 

Call 000

This step is not always necessary. You should only call 000 if someone is seriously injured and in need of urgent medical assistance. Otherwise, you may call 000 if violence escalates from one of the persons involved. 

Collect all the required information

After an accident, the most important to take is swapping information. Your car insurance provider will need basic information to begin a claim and assess the situation. Here’s the information you’ll need to collect:

• – Contact information of any witnesses
  – Timestamp and exact location of the accident
  – Insurance companies and policy numbers of people involved
  – Make, model and colour of cars involved
  – License plate numbers
  – Names, addresses and contact information of people involved

Document the car accident 

The more details you provide on the situation, the easier you make the claim process. While your memory is still fresh, you should write down every detail you can think of about the accident and how it could’ve happened. Additionally, take photos of the damage done to all vehicles from multiple angles, as that could be used as evidence. Photos and a timeline of the accident make it easier for your insurer to understand the chain of events and who would be at fault. 

File a claim 

Aim to contact your insurance company to file a claim as soon as possible. Filling a claim is a simple process that can be done by calling your provider and giving them all the details. Your insurance company will ask you basic questions about the accidents and from there you will be able to assess who would be at fault. 

Your insurance company will then take care of the costs, depending on who’s at fault. If your car has been written off, the insurance will inform you. Make sure to stay on top of the process and document every step.

With usage-based car insurance, you could save a lot of money compared to the regular policy. What exactly is it?

Usage-based car insurance is personalised insurance that is solely based on how you drive. Premiums are calculated by how much of a risk you are to insure. If you’re a new driver, insurance companies consider your likelihood of getting in an accident is larger than experienced drivers. 

Nowadays, there are some companies in Australia that base your premium on how you drive. This is what usage-based insurance is. The safer you drive, the lower your premiums will be. This new form of insurance saves you money over the traditional calculation of premiums. 

How does this type of car insurance work?

Usage-based insurance is a personalised policy that is based on how you drive. Companies use telematics to track your driving style and calculate your premium based on your safety. The concept behind it is that if you’re driving safely or hardly driving, then you’re less likely to get in an accident. 

It’s an awesome and helpful product that’s still relatively new. Therefore, it will be difficult finding insurers in Australia who offer this specific policy. 

How is my driving reported?

Usage-based insurance companies have a few ways to monitor your driving style.

Mobile App

Your insurance provider will most likely have a mobile app that would track how often you drive. The app will have a history of all your trips and locations. This can help the provider recognise driving in risky times or areas, which can affect your premium. 

This also allows your insurer to check any risky actions such as mobile use, sudden braking or speeding. 

Which companies offer usage-based insurance?

Usage-based insurance companies are still rare in Australia. However, we managed to find a 100% Aussie company that’s here to help you save!

UbiCar

UbiCar is a usage-based Australian company that uses telematics to track your driving style to give you a driving score that calculates your premium. Based in Manly, NSW, UbiCar is available to all licensed drivers living in Australia. Visit UbiCar or download their app to find out more. 

You must understand all aspects of your car insurance policy.

Having an active insurance policy on your car is crucial for making sure you and your vehicle are protected if an accident occurs. Additionally, not having an insurance policy on your vehicle is illegal in Australia, and you won’t be able to drive your car. That’s why you can’t go wrong with insuring your car. 

Regardless of how long you’ve been on the road, a car insurance policy can be complicated. Let us help you break down your insurance policy and to understand to what extent you’re covered. 

Declarations page 

With any form of insurance, you’ll have a declaration page on the front of your policy. It’s where you want to look to get a summary of the basic details of your policy. A declarations page usually includes:

• Summarised policy information. This information usually includes your policy number, its life span, your agent’s contact information and the name of the person insured. 
• Information about your vehicle. That can include the make, model, and registration details. 
• Your car insurance premium. An insurance premium is an amount you have to pay every 6 months or yearly to keep your policy active. 
• Deductibles. That’s the out-of-pocket amount you could pay in some situations.
• Coverages. This is the additional coverage you purchased on top of your existing policy.

Insuring agreement

Following your declarations page, you’ll find your agreement section. This section acts as a legal contract stating the obligation you and your provider must have to each other. It breaks down your responsibilities and the types of coverages in your policy. Insuring agreement may include the situations in which you’re covered. 

Exclusions 

Your agreement section will also include exclusion. Exclusions for every coverage is essentially the situations in which your insurance won’t cover.   

Conditions 

Your car policy will include a conditions section. This section covers the conditions you must meet to be insured. Conditions could include your responsibilities during an accident. If you don’t meet the requirements of your policy, your provider can decline your application and deny a claim. 

Definitions 

You can find this section either at the start or end of your policy. The definition section highlights the terms you should familiarise with or that you would’ve come across. This section can help clarify any confusion with your coverage. 

How to get a copy of your car insurance policy 

When purchasing your car insurance, your provider will most likely send you a digital version along with a physical copy in the mail. A car insurance policy can be your helpful guide when you need to file a claim. Don’t panic if you lose your policy! You can easily get one by contacting your provider. They might ask you basic security questions and for identification. 

Need to renew your policy? Read more all about car insurance renewal.

You can still take out car insurance without having a driver’s license.

However, you won’t be covered if you drive it as that would be illegal. Sounds counterintuitive right? Insuring a car without having a driver’s license. However, there are many scenarios where you’ll wish you had insurance on your car!

Reasons to buy car insurance 

There are many reasons as to why you’d want a car insured, even without a license. Car insurance policies have coverages such as fire, theft, and vandalism! Here are some cases as to why you’d want to buy insurance for your car without a license. 

Getting car insurance for an underage driver

You won’t be driving your insured vehicle without a license. However, other licensed drivers in your family can drive the car. Adding other drivers to your policy is cheaper than purchasing separate ones, especially if they’re under 25. If you have a child in your family with a learner’s license, you’ll want to insure them through your policy, to begin with.

 Read more on Learner drivers and car insurance! 

Getting car insurance for a personal driver

If you have a chauffeur driving your car, the car will still need to be insured. Whether you’re wealthy, disabled, or simply retired from driving, you must always ensure the car you’re driven in. You can add your driver onto your policy by contacting your provider and listing them as a primary driver. It’s a simple process that can be done on the same day!

Getting car insurance for a vintage car

Some people may have a vintage or collectable cars, without driving them. Even if you don’t drive your vintage car, you need to take into account protecting the car from theft, vandalism, or natural disasters! Simply contact your insurer and list the car under third party coverage. It’s a less expensive coverage that covers from the listed perils. 

How to buy insurance without a license

When applying for insurance for your vehicle, you will be asked to include your licence number. Although insurance companies prefer you have your license, you may still apply without one! Instead, you can use the name and information of the primary driver or another driver in your family. That step insures your car as long as you don’t drive it!

New drivers or young adults pay more for their car insurance policy. Here are some tips to get cheaper car insurance rates for new drivers.

When purchasing a vehicle, you must always purchase a car insurance policy along with it. In Australia, you’re legally required to have a certain amount of coverage to drive your vehicle. Car accidents can be extremely costly depending on the damage, and that’s when car insurance can be helpful and important for your financial protection. 

However, for new drivers or drivers under the age of 25, premiums can be insanely costly. Car insurance companies calculate premiums based on how much of a risk that driver is. Therefore, new drivers are perceived as high risk with a likelihood of getting in an accident, which as a result increases the car insurance rates. For parents, adding another driver to your policy that’s under 25 can also increase your premium. 

That’s why it’s important to compare insurance companies and their rates before making your final decision! Read more on Learner drivers and car insurance! 

Why is insurance expensive for new drivers?

As mentioned previously, insurance companies calculate their premiums based on how much of a risk you are to insure. Therefore, new drivers or drivers under the age of 25 have much higher premiums because of their calculated likelihood of getting in an accident.

Other factors that contribute to your premium include: 

• Your age 
• Driving history 
• Credit Score 
• Make and model of your car 
• Your address 
• How often the car will be driven 

Moneysmart can help you with choosing the right car insurance. Read more!

How can new drivers lower their premium?

For new drivers or drivers on their learner’s license, finding a cheap car insurance rate can be difficult and a bit of a challenge. However, there are some steps to take to lower your premium if you’re a new driver. 

Add a young driver to your existing policy

One of the most affordable options to take when insuring your teenager is adding them to your existing policy! This may raise your premium slightly, however, it’s tremendously cheaper than having them on a separate policy. 

Adding new drivers to your policy is a simple process. As long as you both live in the same residential address, all you’ll have to do is call or email your provider, and it should take effect on the same day!

However, that means your teen can only drive your car as that’s the only one they’re insured on. If they move out or get a new car, they will need to have a separate policy. 

Maintain a clean driving record 

Maintaining a clean driving record is the best step to take to get low offers on multiple things, insurance rates included. If you get into an accident, your premium can increase tremendously, so it’s best to stay safe and avoid major costs!

Drive an affordable car

Having young adults driving expensive cars is essentially a recipe for high insurance premiums. Driving an affordable car with effective safety features can lower your premium, especially for a new driver. 

If your car is luxurious and you want your teen to drive it, your best and most affordable option is to add them to your policy. That would be cheaper than having a separate one as discussed previously. 

When does car insurance go down?

As discussed, young or new drivers under the age of 25 pay much higher rates. Essentially, the younger the driver is the more they’re perceived as a risk to insure. 

In saying that, your premium will decrease after you turn 25! However, make sure you have a clean driving record as accidents and claims increase your rate regardless of your age. 

Read more on how your insurance goes up after a claim.

Even though your premium will increase after filing an at-fault claim, there are some things you can do to lower the costs. 

Filing a claim is never fun, especially knowing you’ll have to pay more for your insurance. But accidents happen and that’s why insurance is there in the first place. With comprehensive insurance, the cost of damage and medical bills will be covered.

You may wonder, will my car insurance go up after an accident? Generally, filing an at-fault claim will very likely increase your insurance premium, significantly. An exact price would be hard to predict and it would depend on multiple factors such as the severity of the accident. However, here’s what you should know about the effect of claims on your car insurance rates. 

How much does your insurance go up after an accident?

Hypothetically, say you’re driving and you accidentally rear-end someone. Regardless of how it happened, you will be at fault for being the car to rear-end the other. This, unfortunately, means your car insurance will have to cover the costs and your premium will be increased. 

If you get in an accident, make sure to follow all the right steps to make sure everyone is safe. Additionally, make sure you exchange all the necessary information for the claims to be resolved smoothly and quickly. 

Here’s a summary of what your insurance coverage does:

If you get in an accident, your insurance will cover all the repair costs you or the other driver needs, depending on your coverage limits. 

Additionally, medical costs are also covered for both parties, depending on your coverage limits. In saying that, if you exceed your coverage limits, you are fully responsible for the expenses. That’s why people usually go for comprehensive insurance, as it provides the most coverage out of all the other options.  Once your policy is due for renewal after you’ve filed a claim, your provider will notify you of any increases to your rates. Your insurance rate increase depends on a few factors. 

How long does an accident stay on my record?

The severity of the accident, whether you’re at fault, as well as your driving record, contribute to your insurance rate. If this is your first accident, don’t worry! It will most likely stay on your record for 3-5 years. The way insurance calculates the cost of your premium is based on how much of a risk they see you as. That’s why drivers under the age of 25 have much higher premiums. 

If you’re on your learner’s license or are a guardian of a learner, read more on Learner drivers and car insurance.

Accidents tend to stay on your record for 5 years. So, that’s good news! Your premium rates won’t stay high forever! Your car insurance provider will only take the past three to five years when calculating your rates. 

How does car insurance work if you’re not at fault?

If you’re in an accident where you’re not at fault, your insurance can still step in. For example, if your car gets hit while it’s parked, you may want to file a claim to get your losses covered. 

There’s also the scenario where your car gets damaged by natural causes. That’s when comprehensive coverage does its job and covers the damage when you file a claim. 

Moneysmart can help you find the right car insurance for you.

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Do you have a new driver in the house? Here’s what you could do to insure them.

Teenagers are often very excited when they get their learner’s license, and probably want to start learning straight away. If you’re the parent or guardian wondering how it’ll affect insurance, let us help you out.

Having a driver with their learner’s license won’t raise your premium rates, so don’t worry there. However, you should check with your insurance provider whether additional drivers in your households are covered or not. Adding a driver to your policy isn’t as expensive as you might think!

What’s a learner’s license?

Teens can apply for their learner’s license once they turn 16 (all states except for ACT). In Australia, a learner’s license allows you to drive, as long as you’re under supervision. It can’t be any supervisor though. The supervisor must be a valid open license holder who’ve held their open license for a minimum of a year. All you need to get a learner’s license is to pass a written road rules test.

You will need to apply for a learner license at your local Department of Transport.

Different states have different laws correlated with learner drivers. The most common laws for Learners across all states include:

• Driving with a supervisor
• Carrying your license at all times when driving
• Display your L plates when driving
• Comply with the no alcohol limit

The minimum age in every state

Check with your local Department of transport for more information on applying.

Transitioning from a learner’s license to a full license

A learner’s license grants you time (100-120 hours) to practice and get used to the road rules before you get your P1 license. Once you’ve lodged your state’s required hours, you may then complete a driving test and gain your P1 license.

Information you’d need when applying for a P1 license would include your current learner’s license along with proof of your residential address.

Do you need car insurance for a learner’s license?

In short, yes definitely. Any driver with any license must be insured to legally drive. So, what are your options to get insured on a learner’s license?

There are only two options for that:

• Take out a separate policy. That option is best if the learner has their car is the driver that uses the vehicle the most. They will receive the same amount of coverage as any other driver. However, premiums for young drivers are much higher!
• Add the learner onto an existing policy. This option is probably the most popular one as many learner’s don’t have their car while practising. This option is also tremendously cheaper. However, that means that the learner won’t be able to drive another car except for the one they were added onto.

Read more about how much car insurance costs.

Car insurance policies are up for renewal every time your premium expires, which is usually yearly or every 6 months.

When purchasing car insurance, your premium either lasts for 6 months or a year from the day it’s purchased. After that date, your premium is up for renewal and you can’t legally drive your car until it’s renewed. If you don’t choose to renew your policy, your other option would be changing to another provider. Not sure where to start? Here’s a helpful article on car insurance renewal.

Renewing your insurance premium is a process that doesn’t take much effort. All you need to do is make sure you have enough funds in your bank account for the insurance provider to deduct. Don’t worry though, your insurance company will notify you when your premium is coming to an end by email or SMS.

If you try to renew your premium after it’s expired, it may complicate things. What could happen is your insurer will decline your new payment, otherwise known as non-renewal.

Want to find out the different types of car insurance? Read more with Moneysmart.

How do I renew car insurance?

Most car insurance companies have automatic renewals. That’s a helpful feature as you won’t need to worry about paperwork, and you won’t need to worry about increased rates as the company will notify you of that.

However, when initially purchasing your premium, your provider will give you an expiry date. Luckily, you won’t need to worry about missing payments because you’d be getting monthly and weekly notices close to the expiration of your premium.

Why did my premium go up?

When receiving notice of renewal, your insurance provider will inform you of any increases to your premium. There are a few reasons as to why your premium would’ve increased. Car insurance premiums are calculated based on several components.

Some factors that may weigh into an increase in your premium include:

– You have filed a claim, or you were involved in claims filed.

– You moved (interstate or across states)

– The market itself changed

You do have other options if you’re not happy with your new premium rate. The best thing to do is comparing other providers and switching your policy before your current premium expires.

How to decline your car insurance policy renewal

As mentioned before, you may cancel your policy with your current insurance provider if you’re not happy with your renewed premium rates. All you can do is contact your current insurance company and cancel your account. After that, you’ll have to purchase new insurance before you drive your car. Remember, it’s illegal to drive without insurance in every state in Australia.

Read Tippla’s article: Do I need car insurance before I buy a car?

Some insurance providers are happy to cancel your policy over the phone, while some will need a signed letter stating your cancellation.

When purchasing a car, you will most likely be covered by a warranty for a certain period.

Warranties cover costs of repair if there’s a manufacturer’s defect. You may purchase an extended car warranty to be extra safe and save repair costs in the future.

Depending on your warranty, coverage may include issues with the engine, transmission, air conditioning or other systems. However, warranties only last for a certain period or mileage. That’s when an extended warranty can come in handy. You can purchase extended warranties from car dealerships or third-party companies.

They are different from insurance in that they only cover repair costs and not collision. When we say repairs, that doesn’t include your regular services such as oil changes or brake pad replacements.

What does a car warranty cover?

As mentioned above, you’ll get a warranty on your car when you first purchase it. That warranty lasts for a certain period and therefore is transferrable from the owner to the owner because it sticks with the car.

Types of issues covered by a car warranty include:
– Engine parts
– Transmission parts
– Seat belt or airbag default
– Entertainment system defect
– Air conditioning or electronic systems default
– Some warranties may also include roadside assistance, but that depends on your dealership.

Types of warranties

When purchasing your car, you’d get an original manufacturer warranty, otherwise known as the factory warranty. It usually lasts for a certain period or kilometres, whichever comes first. When shopping for a car, you should consider the warranty length, as that varies with different dealerships.

There are two types of warranties:
Statutory warranties: Usually added onto used cars.
New car warranties: Added onto new cars.

Should I get an extended warranty?

An extended warranty is a separate product that can be added when purchasing your vehicle. That extends your warranty to a certain time or kilometres reached, whichever comes first. Extended warranty still covers similar costs as an original warranty. Those costs may be the engine, transmission, or electrical repairs. Make sure you read your warranty fine print to understand what’s covered so you don’t get any costly surprises.

An extended warranty may work best for people with old or used cars that have an expired original warranty. You can purchase additional warranty either through a dealership or third-party companies.

Extended car warranty companies

As mentioned before, you may purchase an extended warranty from a car dealership or third-party companies. Just like insurance, it’s best to compare different warranty rates before choosing the one for you. It’s best to read fine prints before finalising your options. Sometimes cheaper warranties cover less than warranties that cost more.

Some third-party companies that sell extended warranties are:

• Car sales
• Iwarranty
• National Warranty Company
• Stratton Finance

Car warranty vs. insurance

Warranties cover manufacturer’s defects and issues while insurance covers damage caused by an accident. Car insurance is important to cover damage to yourself or others in the event of an accident. However, car insurance coverage is broken into multiple components.

Read more on how much car insurance roughly costs in Australia.

On average, Aussies are paying $1,131 for their car insurance. However, that number varies depending on multiple factors. 

We can’t give you an exact number on how much your car insurance will cost, because it depends. Insurance rates are based on factors such as your age, location, driving history, car, additional coverage and a few other components. 

If you’re wondering about the average cost of car insurance in Australia, you’re looking at $1,131 per year according to Mozo.

Average car insurance cost by state

In every Australian state, driving without insurance is illegal. Prices vary by state as some states may file more claims on average, making premiums more expensive. If your state is more populated or has a higher crime rate, you’d also be looking at higher premiums.

  Source: Canstar, 2019

The average cost of car insurance by coverage type

Specific coverage that is added to your policy contributes to your total premium. For example, having compulsory third party coverage increases your premium. However, that also means you are protected if someone is injured in an accident.

Additionally, additional coverage such as comprehensive insurance is pricier, however, you’d be fully covered. Comprehensive coverage is the most advanced form of coverage. Other types of insurance coverage include third-party property damage and third party fire and theft coverage. Third-party property damage covers you if the damage is caused to someone’s property. Third-party fire and theft cover you if damage such as a fire of theft is done to your car.  

Let’s give you some average figures on each coverage annually.

What determines the cost of my car insurance?

Multiple components contribute to your car insurance premium. That’s why it’s difficult giving an exact figure without knowing your information. Additionally, each insurance organisation has its own set of factors that help them determine your premium.

Let’s breakdown some of the most common factors that determine your premium:

Your driving history

As you can imagine, car insurance companies will look at your driving history (usually the last 5 years) to determine your rate. If you’ve previously been in an accident, your premium will be higher. That’s because your car insurance provider will see you as a higher risk of filing a claim. Therefore, if you haven’t been in a car accident, you are less of a risk, meaning you could find lower rates.

Essentially, lower risks mean lower rates while higher risks mean higher rates.

The type of coverage you purchase

As mentioned previously, additional coverage results in additional prices. Refer to the table presented above to get a rough estimate of how much each coverage costs per month.

Age

Unfortunately, drivers under the age of 25 in Australia are seen as being a higher risk by insurance companies. Your experience on the road determines the likelihood of you getting in a car accident, which is what car insurance companies look at. Therefore, if you’re still a P plater, unfortunately, your premiums will be much higher than a middle-aged driver for example.

How often you’ll drive

Car insurance companies consider more time on the road as more likelihood of getting in a crash. Inputting a bigger amount of time driving when applying for insurance will increase your premium.

Location

Some suburbs or states may be perceived as higher risks than others. Car insurance companies look at statistics to determine the possibility of your car being vandalised or stolen, and therefore either increase or decrease your premium.

Does filing a claim increase my premium?

Yes, filing a claim will increase your following premium. That’s because your insurance provider will see you as a higher risk. That’s why some people may not file claims if an accident wasn’t too bad.