Buying a car is exciting. The majority of people I know spend weeks test driving different models to find a vehicle that suits their budget, lifestyle and personality.
Then they make a rushed decision to take out insurance – actually a couple of my friends have no insurance! As I watched my girlfriend at the traffic lights go a little too far and hit the car in front of her ooopss no insurance and a $3,000 bill. I pay for the coffee still!
So when it comes to car insurance there are a few things you need to think about:
TYPE - The type of car insurance - this differs depending on where in the world you are – for example in New Zealand, insurance is completely optional – it’s strongly recommended but not compulsory. NZ has a no fault system and the government department called ACC provides support if somethings happens to you due to vehicle accident.
However in Australia – if you own a vehicle you pay what is called CTP insurance = this is mandatory! This protects/indemnifies the vehicle owner and driver who are legally liable for personal injury caused to any party in the event of a vehicle accident.
You should also think hard about car insurance. The type of cover you take out will affect the overall and ongoing cost of your vehicle. Always shop around for insurance before you go to the car yard – or ask the car yard if they include insurance – not many do but in Australia Alpha Finance do as part of the weekly payment so you are covered – but you need to check what it covers and what extras are included or excluded.
From there you need to consider whether you need extra cover:
Many insurance providers offer cover for windscreen breakage, a replacement vehicle if yours is off the road. Do you need Road side assistance – very important in places like Australia where breaking down could be a very serious issue if you are in the Outback!
Now it’s just not the monthly or annual premium that you have to think about. This is easy it’s a set amount the insurer tells you that you have to pay. You can influence this and get it decreased by taking less EXTRAS or INCREASING your excess.
The excess is the amount you pay BEFORE your insurer begins to pay. This might be $250 or $500 or even $1,000.
If you generally have $500 in your bank and can cover this easily you may find your premium amount reduces. If you only have $250 then your premium may be a little higher.
But the single thing you need to do is be insured – unlike my girlfriend – because I don’t have enough money for coffee for everyone!
content written by: Donna Slater