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Understanding Car Insurance: Jacaranda Explains
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Don’t understand car insurance?
Before buying car insurance, it is important to take time to compare insurance costs and understand what is, and what is not covered by the different car insurance policies. Choosing a car insurance policy can be overwhelming. There are so many options on the market, so it can be hard to consider every available option. That’s why at Jacaranda, We’ve done our research to uncover the most important aspects of car insurance and what you should look for.
What is car insurance?
Car insurance is a type of insurance policy that covers damage to your own car. It can also cover damage to other people, their property and their car, depending on your policy.
Car insurance policies cover damage caused for certain events. This includes theft, collision, weather-related damage, fire and malicious damage. It can also cover the repair and replacement of another vehicle that is damaged by your car in an accident, as well as damage of property.
Types of car insurance
There are several types of car insurance options. These typically depend on such factors including what your needs are, what car you drive and how much money you want to spend on insurance. However, the most common types of insurance offered by the majority of car insurance providers in Australia are:
- Compulsory Third Party Insurance
- Third Party Insurance (don’t confuse it with Compulsory Third Party Insurance!)
- Comprehensive Insurance
- Third Party, Fire and Theft Insurance
These types offer different levels of cover, however, you are required by Australian law to have Compulsory Third party Insurance in order to register your vehicle.
Compulsory Third Party Insurance
This mandatory insurance provides compensation of people injured or killed when your car is involved in an accident that is your fault. It covers the liability for injuries caused to other road users, by you or anyone else that drives your car.
The reason this insurance is compulsory is the legal liability for injury or death from an accident can stretch into millions of dollars. Most people wouldn’t be able to afford this, that’s why CTP insurance is considered necessary.
Additional insurance options
Comprehensive insurance covers the repair or replacement of your vehicle for events including theft, collision, fire, malicious damage and weather-related damage. Many choose comprehensive insurance if their car is in good condition, new or relatively new.
Third Party Insurance
Third-party insurance is essentially a form of liability insurance for protection against the claims of a third party. The first party is responsible for their damages or losses, regardless of the cause of those damages. It acts as a cover on behalf of the insured person.
Third Party, Fire and Theft Insurance
This insurance covers you for any damage caused to a third party or their property if you are involved in an incident, while also covering your own vehicle if it’s stolen or damaged by fire.
Why is car insurance important?
Car insurance will help protect you and your family from big expenses. Even though car insurance is costly, an accident caused by you or another road user can make it a lot more expensive, if you are not insured properly. Additionally, you will save time and hassle. Car accidents are incredibly time-consuming. Insurance will help you avoid negotiating with other drivers and property owners involved in the accident, as well as managing the costs of repairs and replacement of your vehicle.
Accidents and other unfortunate events can happen to anyone. However, someone else’s mistake can become your problem. Having car insurance will give you peace of mind, knowing if something unfortunate were to happen – you’ll be covered. Additionally, a good car insurance can cover other expenses, such as dental work and medical treatments as a result of a vehicle accident.
What is not covered by car insurance?
Unfortunately, there are occurrences and events in which your vehicle will not be covered by insurance. These include
- Any damage to your vehicle that is a result of war, terror, invasion, foreign enemy action, mutiny, rebellion, hostilities, radiation or nuclear material and weapons
- General wear and tear
- If you have an accident and you don’t have a valid license in Australia
- If you’re breaking the law e.g. carrying more passengers than you’re legally allowed to, if your car is taken away because it was illegally parked, drink driving
- speeding fines
What is the safest type of car insurance?
Sometimes it is better to be safe than sorry. Getting full coverage including collision and comprehensive insurance even though it costs more, is highly recommended. However, there are several factors to consider before buying insurance, such as the cars’ age. Older cars can sometimes cost less to insure than a brand-new one, because new cars have a higher market value and will usually cost more to repair or replace. So, you do not need full coverage on an old car unless it is financed through a finance company or someone else is holding your title.
Car insurance is meant to pay for repairs if the car is damaged. The amount of coverage you need is the amount it takes to pay for the auto repairs or replace your automobile if it is totaled.
To find out about getting the best deal on insurance for your car, visit the Moneysmart website.
How can Jacaranda help?
Owning and maintaining a car is expensive, that also includes insurance. Jacaranda Finance does not offer car insurance, but we do offer car loans up to $35,000, if you don’t have all the funds upfront to buy a new car. We don’t stop there, we could offer you car repair loans up to $10,000 if you happen to get struck by an accident and don’t have the insurance to cover all the costs.
We also have car registration loans that cover all the costs associated with the registration of new vehicles. If you’re looking to buy a used car, we could offer you used car loans to help you finance your new, used car. All our personal loans aim to help you cover car expenses and make your life and finances a little bit easier.
Looking to apply for a car loan? Here’s how!