The three things you need to know when you’re buying car insurance

In New Zealand, we love our cars. A Massey University study reported that in 2014, we collectively owned a whopping 3.7 million vehicles, putting our rate of ownership per 1000 people higher than Australia, Japan, the UK and the USA. According to the NZ Herald, Auckland adds 800 more cars to the road every single week.

When you’re sharing the road will all those other vehicles, it’s important to make sure that your car is properly insured. Whether you’re insuring a new car for the first time or reviewing your existing cover, here are three vital things you need to be aware of.

What kind of car insurance is right for me?

Motor vehicle insurance normally comes in three different varieties: comprehensive cover; third party; and third party, fire & theft. It’s important to know the differences.

Full cover: As the name suggests, this is the most comprehensive of the three options. It insures your car against loss or damage, as well as any other cars you damage in the event of an accident. It also covers you for financial liability if you cause injury or damage to property. This is a good option for those wanting the highest level of protection in all situations.

Third party: The cheapest kind of car insurance, third party only covers the damage you do to other people’s vehicles or property with your car. It doesn’t cover damage to your vehicle. It’s a good option if you think your car isn’t worth insuring, but you don’t want to be hit with a huge bill for writing off someone’s brand new BMW.

Third party, fire & theft: This option is similar to third party insurance, but also provides cover for your car if it’s stolen or damaged by fire.

How much cover do I get?

It’s important to note that if your car is written off, you don’t automatically receive enough money from your insurance claim to buy the replacement car of your choice. Insurance companies generally offer two cover options: market value or agreed value. If you choose market value and your car is written off, you’ll receive the amount of money that your insurer assesses your vehicle was worth at the time of the accident. With agreed value, you can insure your car for a fixed price (within a range set by your insurer), and that’s what you’ll receive, minus the excess, if your car is written off. Note that this amount may be automatically decreased each year to allow for depreciation as your car ages.

How can I make my premiums more affordable?

Because car accidents are common, vehicle insurance can seem expensive, but there are measures you can take to reduce your premiums.

·       If you have house and contents insurance with the same provider, in most cases they will offer you a package discount for insuring your car with them as well.

·       You can choose a higher than standard excess. The excess is the first amount of each claim that you are required to pay. Insurers set a standard excess, but offer you the opportunity to select a higher one in return for reduced premiums.

·       Having an alarm professionally fitted to your car can decrease the risk of it being stolen, and some insurers will recognise this by discounting your premiums.

·       You can exclude drivers under 25 from your policy. Statistically, drivers over 25 have fewer accidents, so your risk of making a claim is reduced, resulting in cheaper premiums.

·       Maintain a good driving record. If you have not had any accidents over a set number of years, you will be rewarded with a no-claims discount.

Being fully informed means being able to choose the best car insurance to suit your needs and your budget. If you need more advice about motor vehicle or any other kind of insurance, talk one of Certus’s expert advisers today.