Your car insurance

Compulsory third party (injury) cover is compulsory if you own a car. However, broader cover can prove indispensable - as anyone who has ever had an accident will know.

Because there are so many companies and policies available, it is important you have a good understanding of the basics and the right insurance advice before you make a decision. Prices vary, and detail may vary from one to another, so your broker can provide a lot of help here.

There are four basic cover options:

  • Compulsory Third Party (injury) - insures against claims made against you for personal injuries and covers legal costs arising out of the use of your car. Commonly referred to CTP, you must obtain this insurance to register your car.
  • Third Party Property Damage - insures your liability for damage to another vehicle or to the property of others (a fence, for example). It covers both the damage and your legal defence. It does not include repairs to your own car if you cause an accident. If you decide you don't want or can't afford comprehensive insurance (see below), third party property is undoubtedly vital insurance to have, because a big claim could easily bankrupt you.
  • Third Party Fire and Theft - insures against the events in the former category as well as fire and theft. It also insures against damage caused while the car is stolen.
  • Comprehensive - insures against all of the above plus damage caused by your own car by you in an accident. If you're buying a car on an installment basis, this cover will usually be insisted upon by the finance company.

Some things you need to know

Before buying car insurance, here is some useful insurance advice.

  • Excess or Deductible: These terms mean the same thing - that you accept part of the risk yourself. Practically speaking, this means that in event of a claim, you pay a certain amount. However if the accident was not your fault, the insurer may waive your contribution or return it to you. Some insurers make the excess compulsory, while others allow policyholders to use it to reduce their annual premiums.
  • No Claim Bonus: A feature of comprehensive policies, this means you are rewarded on an ascending scale for each successive year without a claim. If you do claim, your bonus is reduced, although if the accident is not your fault, certain insurers will leave your bonus intact. Once you've reached the highest scale, some insurers allow you to "protect" your bonus by paying an extra premium, so you're not penalised for just one claim.
  • Extended Third Party Property Damage: This covers you in the event of an accident that's not your fault where the person who caused the accident has no insurance. It's not offered by all insurers and it usually has a limit of a few thousand dollars.
  • Market Value or Agreed Market Value: Most policies provide settlement for a total loss claim (if the car is stolen or irredeemably damaged) on a "market value" basis. This means you are entitled to an amount representing the cost of a vehicle of similar make, model, age and condition. Or, if the vehicle is less than one year old, many insurers will replace it with a new vehicle of the same make and model you lost. An Agreed Market Value cover is especially useful for classic or vintage cars - where the insurer agrees to pay a specified amount in the event of a total loss.
  • Premium Rating: The premium, or cost of the insurance, is based on such factors as type of vehicle, age of the driver, driving experience, occupation, location and intended use of the vehicle. Modifications to a vehicle must be disclosed, otherwise future claims may be refused.
  • Making a claim: In an accident you should do two things. Firstly, ensure you comply with all legal requirements (e.g. notify the police, exchange details with the other driver, etc). Secondly, notify your insurance broker as soon as possible, preferably within 24 hours. He or she will then advise you on the steps you need to take to make a claim.

Car insurance advice provided on this webpage is only a guide. Professional insurance advice should be sought before making insurance decisions.