Buying Motor Vehicle Insurance
Like buying a car, there is no single best solution when it comes to buying motor vehicle insurance. Make sure that price is not the only factor you think about when you choose your motor vehicle insurance. You have a wide choice of policies, and you should shop around to make sure that you choose a product that suits your needs and circumstances.
As with all insurance, before signing the insurance contract you should carefully read the policy document and product disclosure statement and make sure you ask your insurer about any aspects of the policy that you don’t understand.
To download a car insurance factsheet, click here.
Types of car insurance
If you own and operate a private motor vehicle in Australia, there are four main types of general motor vehicle insurance you need to be aware of:
- Compulsory Third Party (CTP)/mandatory motor vehicle accident personal injuries insurance – required by each state and territory. It protects any person that you might injure while you are driving. It is not an alternative to taking out a motor policy to cover your financial liabilities, such as damage to another vehicle or property, or your own vehicle
- Comprehensive – covers damage to your own vehicle and other people’s property, as well as theft and some other risks, plus legal costs
- Third Party Property – covers damage to other people’s property and legal costs, but not damage to your own vehicle
- Third Party Fire and Theft – Third Party Property with some add-on features that cover your vehicle
When you buy motor vehicle insurance, the following factors are considered:
| Factors affecting insurance | Specific example of risk factors |
| Age and gender of the driver | Young (18-25) male drivers are a higher risk than other age and gender categories because statistically they have more accidents
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| Driving record including history of accidents | Many insurance companies reward ‘no-claim’ drivers with lower costs because they have a proven track record of driving without accidents.
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| Whether the motor vehicle will be used for private or business use | Private use is considered less of a risk as the vehicle is not used as much or driven as hard.
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| Whether the motor vehicle was purchased for cash or is under finance | Insurance companies need to know if there are other parties, such as banks, that have an interest in the vehicle as there is a link between credit rating and accidents. People who own their vehicle outright tend to have less accidents.
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| Whether the motor vehicle is to be parked or stored in the city, suburbs or the regional areas | Cars in the city are more likely to be stolen or in accidents than those in the country.
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| Make and model of the motor vehicle | Some cars are more expensive to repair and later model cars often have more safety features. |
