Car Insurance FAQ
What is the difference between CTP and other types of motor vehicle insurance?
Compulsory Third Party (CTP) insurance covers injuries to people such as pedestrians, cyclists and other road users when your vehicle is involved in an accident.
CTP is a legal requirement for all registered vehicles in every State and Territory. Each jurisdiction has its own scheme, with different criteria and benefits. In some states you will have a choice of insurer.
CTP does not cover you for damage to your vehicle, other vehicles or property, or theft of your vehicle or its contents, nor does it cover your legal liability.
Vehicle owners risk significant financial and personal loss, potentially in the millions of dollars, if they fail to take out other forms of motor vehicle insurance alongside their CTP cover.
You have a choice from Comprehensive, Third Party Property, and Third Party Property and Theft.
Why do young drivers usually pay higher premiums?
Substantial evidence shows young, inexperienced and newly licensed drivers have a higher risk of accidents than more experienced drivers. They are also more likely to engage in risky and reckless driving behaviour.
Drivers under 25 are significantly over-represented among those killed or injured in road traffic accidents. In NSW, the 2011 Auditor General’s report found young drivers accounted for 25 per cent of all drivers killed, despite representing only 16 per cent of motorists.
The cost of your car insurance premium depends on how risky the insurance company thinks you are to insure.
Young drivers are usually charged a higher premium because insurers have to pay more claims involving young drivers than experienced ones.
What does market value and agreed value mean?
The amount that your insurer will pay you in the event of a write-off depends on whether you have insured your car for an agreed value or a market value.
Market value is the most common method that vehicle owners choose to determine how much their car should be insured for – it’s the amount your car would be worth in the open market. This sum is determined by the insurer.
Market value is usually less than the agreed value because your car’s value goes down over time through depreciation and wear and tear. For example, if you bought your car for $30,000 and two years later the car is a total loss, the market value may only be $20,000 or less.
If your car is insured for an agreed value, it means that you and the insurer have agreed in the policy how much you will be paid if the car is a total loss. This is usually more than the market value.
An agreed value policy is usually more expensive than a market value policy. However, the value may reduce automatically each year when the policy renews, because the insurer assumes your car’s value will continue to depreciate over time.
Do I need to list all drivers on my insurance policy?
All drivers who you expect will regularly drive your car should be listed on your policy.
Listing regular drivers can affect your premium, excess, policy coverage and the decision to insure you. However, failing to list a regular driver may result in additional excesses, a reduction or refusal of a claim.
You should always check with your insurer how listed and unlisted drivers may be taken into account.
Do I need to list learners?
Speak to your individual insurer. However, learner drivers are generally covered on your car insurance policy so long as a fully licensed driver is in the car as the instructing passenger in the front seat.
Depending on your insurer, an age or inexperience excess may still apply if the learner driver has an accident.
What is an excess and when do I have to pay an excess?
An excess payment is the amount you have to pay towards a claim.
Car insurance policies have many types of excesses that can apply in different situations. In some instances you may have to pay more than one excess when you make a claim.
Some excesses, such as the basic or standard excess, will apply whenever you make a claim.
If the claim is not your fault and you can identify the at-fault driver, some insurers will waive the excess. Others may require you to pay the excess and then will refund the amount at the end of the claim and repair process.
Other types of excess that may be payable will depend on the circumstances of your claim. These include:
✓ Age excess where an additional amount is contributed, depending on the age of the driver
✓ Undeclared driver excess in cases where the driver was not stated on the Certificate of Insurance
✓ Voluntary excess that you have elected to have to reduce your premium
✓ Inexperienced driver excess where a driver is under 25 and has not held a licence for more than two years
✓ Named driver excess where one of the drivers listed on your policy has this excess showing against their name
✓ Imposed or special excess required under your policy
The amount and types of excess you would be required to pay is listed in your insurance documents.
What is a no-claim discount or bonus?
A no-claims discount is accrued by drivers following a period when no claims are made on your insurance policy.
These discounts will vary depending on your insurance provider and its criteria. When comparing policies, check about the type of discount on offer and the length of time that has to pass without making a claim before you are eligible.
Making any claim, even when you are not at fault, can affect your no-claims status.
Some insurers will respect the no-claims bonus of another insurer if you switch insurers.
What happens if I don’t provide information about my driving record, past accidents or claims when asked?
Failing to be upfront and truthful with your insurer means that, if you need to make a claim, it could be rejected or reduced on the grounds you failed to disclose information to your insurer.
You are obliged to tell the truth when buying an insurance policy. Making a mistake in the information you give your insurer, whether it’s deliberate or not, can affect the premium you pay.
You should also make sure that you tell your insurer if your circumstances change. For example, if you modify your car, move house, have additional drivers using the vehicle or use the car for work or business.
If personal effects are stolen from my vehicle are they automatically covered?
Your motor vehicle policy may not cover anything that can easily be removed and stolen from the vehicle, including personal property such as a briefcase, laptop or mobile device.
Check with your insurer what your policy does and does not include.
Ideally, you should not leave valuable items in your car. However, if you have to, make sure items are out of sight of potential thieves. Most thefts are opportunistic and by hiding any valuables from sight you are considerably reducing the chance that your items will be stolen.
If your property is stolen or damaged, some contents policies may cover personal property even if it is not in the home at the time of loss.
What should I do if I have an accident?
If you are involved in an accident:
✓ Move yourself and any passengers to a safe place, especially if you are on a busy road or highway
✓ Call 000 if anyone has been hurt, the road is blocked, or if any other party refuses to stop or exchange details
✓ In some states you are required to notify the police if a tow truck is required
✓ Write down the following details about the other party or parties involved:
– ✓ Name
– ✓ Phone number
– ✓ Vehicle registration
– ✓ Address
– ✓ Licence number
– ✓ Insurance details
– ✓ Statement of what happened
✓ Gather the names and phone numbers of any witnesses
✓ If safe to do so, take photos of the accident scene and the damage to all vehicles involved
✓ Contact your insurer to discuss your next steps, including moving your damaged vehicle and, if your policy allows, using a hire car while yours is being repaired
What could make my claim more difficult?
Insurance companies pay out most car insurance claims. However, insurers are much less likely to accept a claim in a number of circumstances, including if:
✓ The driver was under the influence of alcohol or drugs
✓ The driver was unlicensed or with a suspended licence
✓ The vehicle was unregistered
✓ The vehicle was being driven irresponsibly or improperly
✓ The vehicle was not in good order and repair, free from rust, mechanical, hail or unrepaired damage, or any other damage that would make it unsafe
✓ Police have charged the claimant with an offence that relates to the claim
How can I save on car insurance?
As with all insurance products, it pays to shop around. The insurance market is highly competitive with more than 120 licensed insurers operating.
Though price is important, it is essential to buy motor insurance that offers the level of cover, and inclusions, that best meet your needs.
You may find a lower premium if you:
✓ Choose a market value policy instead of an agreed value policy
✓ Accept a higher standard excess
✓ Buy a policy online
✓ Pay your annual premium in full rather than in instalments
✓ Park your car off the street or in a lock-up garage
✓ Complete a defensive driving course
✓ Maintain a clean driving record
✓ Install security devices to your vehicle
✓ Have more than one form of insurance with the same insurer
Am I covered for off-road driving?
If you are planning to drive off-road, your policy may not cover you, or you may have to pay a higher premium to account for the increased risk.
Speak to your insurance provider and explain what your requirements are for off-road driving. Whether you are covered will depend on your insurer and the type of policy you buy.
Will modifications affect my insurance?
Your insurer needs to be told about modifications or non-standard accessories fitted to your car as soon as possible. Failing to notify your insurer may affect a claim or result in your policy being cancelled altogether.
When purchasing insurance, make sure you answer all questions about modifications accurately and honestly. This is part of your duty of disclosure. You also need to tell your insurer if you decide to make modifications to your car during the period of insurance cover.
Remember, different insurers have a different view on what a modification is. No matter what type of car you have, it’s best to check with your insurer before making modifications to see how it will affect your premium and your insurance cover.
If an insurer chooses to cover a modified car, it will only insure legal modifications and accessories. Your state or territory road transport authority will be able to tell you which modifications are permitted.