Car insurance covers owners for vehicle damage and is available through many insurers with variations in policy inclusions and premiums. Insurance is peace of mind as the insurer pays the repair costs for incidents and damage that are covered by the policy, while the owner only pays the excess. Most owners consider it astute to insure their vehicle. For owners with vehicles under finance with the vehicle used as the loan collateral, insuring the vehicle is required by the lender.
Vehicle owners with policies coming up to renewal time may have recently noticed that their premiums have increased significantly from last year. Isn’t everything going up with inflation? Yes and no. Policy holders are not the only ones that have taken note of the steep increase in motor vehicle insurance premiums. The authorities have also noticed and are on to it! We explain what you should take note of and how you may source a lower premium.
Recent News on Car Insurance
Recent media reports of an ASIC review of vehicle insurers revealed that many are not providing sufficient information to customers on premium increases. The ASIC Commissioner said that some insurers were providing only generic information on increases and others no details.
The Commission has said it will take legal action against insurers that provide misleading or inaccurate information to customers. Customers are encouraged to speak with their insurer if they have had a sharp increase or to get details on why their premiums have increased.
Who Needs Car Insurance? Why?
As noted above, vehicle insurance is required by lenders when a vehicle is financed with a secured loan. These loans - Secured Car Loans for private vehicles and Chattel Mortgage, Lease and CHP for business operators - use the vehicle as the collateral for the loan. The lender requires the vehicle to be covered with comprehensive insurance so they have the assurance that should the vehicle be written off and repossessed, they will recoup the outstanding debt.
Owners of vehicles that are not under finance are not required to have a comprehensive policy, only the Compulsory Third Party policy. But most owners will continue insuring their vehicle after they have finalised their loan.
If you don’t have car insurance and your vehicle is damaged and your responsibility, you will have to cover all the repair costs yourself. If the car is insured and is damaged and the repairs are approved by the insurer, the owner pays the excess and the insurer covers the balance of the costs to the repairer.
Owners of very old vehicles with low value that are not under finance may choose not to insure. If an uninsured vehicle is written off, the owner simply gets no payout and is left with no vehicle.
Types of Car Insurance Policies
Motor vehicle insurance policies differ in many aspects. Primarily there are two types - Agreed Value and Market Value. When taking on a new policy, car owners should look at the detail and the value as noted by the insurer to determine which is most suitable for them and their lender.
Policies vary with the details as to what is covered. These variations may include whether the damage is caused by the owner or another party, who was driving, where the vehicle was, and the type of damage sustained.
The market is very competitive as can be seen by the many ads for car insurance appearing on our screens. It can be worth shopping around as a better premium or a more suitable policy may be available to you.
Tips to Get Better Car Insurance Policy
Most people simply renew their policy each year without giving much thought to the detail. For those that pay monthly with direct debit, insurers advise policy holders that from the renewal date they will have a new monthly premium. Many just accept it, note it, and move on.
For those that pay annually, the paperwork arrives by email or mail with the new premium, and it is up to the vehicle owner to note the details. Let’s face it, we’re busy and there is just so much detail in these policies – who has the time or patience to go through it all? Well, it could be worth taking that time.
If the premium is stressing your budget or has risen considerably, speak with the insurer about why and consider changing the excess. This may result in a better premium.
Shop around; there are many insurers in the market BUT – don’t make decisions purely on price. Look closely at what is and isn’t included in the policy. For example, some policies only cover one windscreen replacement per year while others cover unlimited replacements. For car owners in country areas or who do a lot of road trips where the risk of windscreen damage is higher, this may be important.
Using an insurance broker may assist vehicle owners to find their best policy. Just like finance brokers source vehicle loans for customers, insurance brokers source policies for their customers. For those that are not big on covering the detail or who don’t have the time to shop around, using a broker may be a good idea.
Can Car Insurance Policies be Financed?
For private car owners, an Unsecured Personal Loan may be a possible finance option for a large insurance premium. The amount required for the loan would need to be below the minimum that a lender would approve and a 1-year term would be required.
Businesses that have a policy covering multiple vehicles may speak with us about Insurance Premium Funding, a specialist commercial credit facility.
For insurer contacts and more information on car insurance connect with a Jade car finance broker online or by phone on 1300 000 003.
DISCLAIMER: IN REGARD TO MISREPRESENTATIONS AND ERRORS CONTAINED IN THE MATERIAL AS PRESENTED, LIABILITY IS NOT ACCEPTED. THE DETAILS AND CONTENT IS PROVIDED FOR CAR BUYERS AND INDIVIDUALS AND BUSINESS SEEKING FINANCE PURELY AS GENERAL INFORMATION. THIS IS NOT PROVIDED AS THE ONLY SOURCE OF FINANCIAL INFORMATION. ANYONE THAT CONSIDERS THAT NEED FINANCIAL ADVICE ABOUT THEIR SPECIFIC REQUIREMENTS SHOULD SEEK THEIR OWN FINANCIAL ADVISOR.
