Guide on How to Choose Vehicle Insurance in 2022

Think about whether your vehicle gets written off, stolen, or has an accident or whether you can afford to pay for the damage to someone else's car. It is absolutely a stressful experience, so give yourself peace of mind knowing you have already investigated the best/most appropriate vehicle insurance.

Type of vehicle insurance in Australia: Third-party VS comprehensive

There are many levels of insurance cover to consider, which include Compulsory third-party (CTP) insurance which is compulsory to drive on Australian roads and is included in your vehicle registration cost except in New South Wales. Also called green slip insurance. It covers the costs of compensation claims if you injure or kill someone in a car accident but It doesn’t protect the other parties’ car if it is damaged, nor does it protect you or your car. Then there’s Third-party property insurance that will help cover some repair costs if you cause damages to other people’s property, including cars, when an accident is your fault.

But if you’re after a policy that also insures your own vehicle, you’ll want to consider Third party property, fire, and theft, which on top of covering the third party's property damage it will also cover your vehicle if it’s stolen or damaged by fire. Then there’s the Comprehensive vehicle insurance which is the highest level of insurance that you can hold for your vehicle. On top of covering the third party's property, comprehensive vehicle insurance will also cover the repairs to your vehicle due to an accident even if it’s your fault, accidental damage, often damage that occurs due to weather such as flood or vandalism also covers your vehicle if it's stolen or damaged by fire. Because of the high level, comprehensive vehicle insurance is the most costly form of insurance.
But with so many choices out there, there won’t be one best car insurance option to suit everyone. Depending on how you slice the data, pricing, and policy inclusions, there are many ways to define which car insurance policies are the best.

Next step: Determining your Vehicle value

The next step after choosing the level of your vehicle insurance cover, you will have to choose what value you want to ensure your vehicle for in case it gets written off. There are two types of your car amount value and it is as:

Market Value

It means your vehicle is covered for what it’s currently worth ‘in the market’. In nutshell, The price of your vehicle will be assigned based upon the amount your car would have sold for, at the time of the accident, or at least, what it was worth before it was damaged. Some factors that commonly impact the amount include the age of drivers, the type of vehicle you’re driving and you may still need to pay a car insurance excess, a one-off payment to be made to your insurer before your claim can be paid out.

Advantages of Market Value:
In general, it is cheaper than the agreed value and helps save money for those who are fine to insure their vehicle for its current worth in the market.
It always adapts to match the cost of replacing your vehicle. This way, you know that you can replace that vehicle with something similar, with the cost covered.

Agreed value

is a predetermined amount both you and your provider consent to insure the vehicle for until the policy ends. The agreed value policy is not available for all vehicles and if your vehicle has pre-existing damages that might affect whether you can get the agreed value or not. It’s important to note that If you renew your policy, the agreed value will be reassessed and adjusted.

Advantages of Agreed Value:
You are able to ensure your vehicle for more than it’s worth. However, if the cost to replace the car is greater for the insurer, you may end up paying more in premiums.
The amounts for which you insure your vehicle are honoured for the duration of the policy. You probably have to renew your policy every year, and your insurer may propose a new agreed value that is lower or higher than your first agreed value.
The main difference between agreed value and market value is you claim whatever amount of money back that you agreed on with your insurer because that policy pays the same regardless of your vehicle’s depreciation.

The main difference between agreed value and market value is you claim whatever amount of money back that you agreed on with your insurer because that policy pays the same regardless of your vehicle’s depreciation.

Other Factors to consider when looking for vehicle insurance

Get quotes from more than one insurer to find the best value for money and a policy that suits your needs. Each policy is different and may use different terminology so it’s important that you read the product disclosure statement so you know what you are paying for and what you’re covered for. If you need to submit a claim for the policy, you have to make sure that your insurer is easy to deal with and the claim process is fast and efficient. Many insurers enable you to submit your claim online or over the phone, whilst some will require you to submit it in person.

It is also important to know the excess you will pay when you make a claim. Some policies will allow you to adjust the excess amount and pay higher while some policies will allow $0 excess. to weigh up whether you would rather pay a higher amount in your insurance payments and therefore a lower amount in excess should you make a claim or a lower upfront payment with a higher excess.

Some policies include a no-claim bonus. This means you pay a smaller premium if you don't make a claim for a certain period of time. Is it important to compare the No Claim Bonus Policy of each insurance policy you review, as each will have different terms and conditions.

Read the policy to understand what claims affect your bonus and if there are any limits.

Also note that some insurers may not agree to provide cover for vehicles that are Previously written off’ (WOVR), as in reality, the value of this type of car is unknown. In the case of finance, note, your finance provider will likely require proof of ‘Comprehensive Insurance’ of the vehicle noting the value and the insurer as an ‘interested party’.
Refer to your policies for clarification.