Paul's Insights: Car cover - it's not just premiums that count

I'm a big fan of comprehensive car insurance, and while it can be pricey, there are ways to lower the cost.

But there is more to insurance than just the premiums. Most importantly, you don’t want to get involved with an insurer with a reputation for being a difficult payer.

Comprehensive car insurance is the gold standard of cover. It protects against theft as well as damage to your own car and anyone else’s property if you’re involved in a bingle.

Given the cost of comprehensive cover, which comes on top of compulsory green slip insurance, it’s important to shop around. That’s something many of us don’t do often enough. One in three Australian drivers have always been with the same insurer, which can mean missing out on valuable savings.

If you’re in the market for a car, the cost of cover is something to bear in mind. Your choice of vehicle, along with where the car is kept and the way you drive, can all have a major impact on premiums.

A good chunk of your premium is determined by the car’s ANCAP rating. The vehicle’s steal appeal matters too. It’s easy to assume that a flashy new car will hold more appeal for car thieves than an old banger. But it doesn’t always work that way. Around 60% of stolen cars have a market value below $10,000.  The Car Safe website ( features an online theft risk rating that can show how attractive your car is to thieves.

Comparing premiums is easy. Most insurers provide online quotes, often with discounts if you organise and pay for cover online.

However, it’s worth checking out an insurer’s reputation before handing over any cash.

A recent investigation by money watchdog ASIC, found some insurers have taken a heavy-handed approach to claims when they suspected fraud was involved. Whether it was or not, these claims represent a very small portion of total claims. And the vast majority were eventually paid out.

Nonetheless, ASIC found motorists who’d been subject to investigation, often faced lengthy delays – sometimes spanning several months, before the issue was sorted.

ASIC is looking at how industry standards can be improved. Until then, it’s not a bad idea to check out reviews of insurers on social media. Or ask friends, family and co-workers for their recommendations. It can help you enjoy value for money and avoid a slow or frustrating claims experience.


Paul Clitheroe is Chairman of InvestSMART, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.


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