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Comprehensive Car Insurance

published  First Published: 24/05/2011
Article written by: Nigel Brookson


Comprehensive car insurance, as the name suggests is the most comprehensive car insurance cover available from car insurance companies in Australia. The level of cover does vary from insurance company to insurance company so it is recommended you compare insurance companies by obtaining car insurance quotes from several of them and reading the insurance company's PDS (product disclosure statement) which defines the terms, conditions, inclusions and exclusions that apply to the policy.

You are not only wanting to compare the cost of the car insurance premium but also the level of cover you are getting for your money. It is important to also know that there are factors that effect the cost of the premium and although all insurance companies use a similar formulae, they will place a different bias on each factor. This is known in the insurance trade as a risk premium; which is how likely the insurance company sees you making a claim.

What is comprehensive car insurance?

If your car is accidentally damaged, stolen or burnt anywhere in Australia, the insurance company will at their option either:

  • repair your car, or
  • pay you the cost of repairing your car, or
  • pay you the 'Agreed value' or 'Market value' of your car.

With comprehensive car insurance, most insurance companies will include some extras or benefits of using them that the insurer will also pay for; such as:

  • Emergency repairs
    If your car is accidentally damaged or stolen more than a certain distance from your home and the insurance company agrees to pay your claim, the insurer may pay an amount for emergency repairs necessary to enable you to drive your car home or to the nearest place of repair.
  • Emergency expenses
    If your car is accidentally damaged, stolen or burnt more than a certain distance from your home and the insurance company agrees to pay your claim, they may reimburse you an amount for emergency accommodation, traveling expenses or rental car expenses paid by you for you and your passengers to return home or to complete your journey.
  • Faultless no claim bonus
    If your car is involved in an accident, your no claim bonus rating will not be affected if, in the insurance companies opinion, you or any other person using your car with your permission were not to blame for the accident occurring. You will have to supply the insurance company the name and current address of the person who caused the accident, and the registration numbers of any other vehicles involved in the accident.
  • New car replacement
    If your car is a Total loss and your car is,
    • is still covered by the original new car warranty, and
    • is less than 2 years old, and
    • has traveled less than 40,000 kilometres

    the insurance company may replace your car with a new Replacement car provided that one is locally available. There could be further conditions such as the car needing to be covered by the policy since first registration as new, or second registration provided it had traveled less than 5,000 kilometres and was less than 6 months old.
    If your car has been super seeded by a new model, the insurance company under comprehensive insurance may replace your car with the new model if it is locally available.

  • Personal items
    If the insurance company agrees to pay your claim after your car is accidentally damaged, stolen or burnt, the comprehensive insurance policy may cover you for an amount of money to cover the loss of personal items belonging to you or a family member. This generally does not cover mobile phones, cash or property used to generate income.
  • Trailer
    If a trailer is accidentally damaged, stolen or burnt while it is attached to your car, the insurance company may pay for the cost of repair or an amount of money.
  • Windscreen or window cover
    If a windscreen or widow is accidentally damaged, the insurer may:
    • repair the windscreen or window, or
    • replace the windscreen or window, or
    • pay you the cost of repairing or replacing the window or windscreen

    The insurance company may only do this once in a period of cover (12 months) and also will cap the limit.

  • Hire car reimbursement following your car being stolen
    The insurance company may reimburse you the cost of hiring a similar car to your car if the car is stolen. There will be limits to the period, and you will have to pay for the fuel and running costs of the hire car.
  • Keys and locks
    If there is reason to believe that your keys have been stolen, or burnt comprehensive insurance may cover the replacement of the keys and locks.
  • Towing and clean up costs
    If your car is accidentally damaged, stolen or burnt, the insurance company under a comprehensive insurance policy may pay for the cost of having your car towed to a repairer and the cost of removing debris from the accident site, or where your car was burnt.

Some insurance companies will also have some options that are not covered under the policy, but which you can select and pay an additional amount for, such as:

  • No claim bonus rating one protection
  • Restricted driver
  • Nominated driver


Agreed value

The agreed value is established at the commencement of your policy and adjusted at the beginning of each subsequent period of cover. The agreed value will be written on your insurance schedule and renewal notice and will not change during the period of cover. It is in the insurance companies interest to have this figure as low as possible; so any pay out is minimised, so always do your own research and negotiate with the insurance company to raise this 'agreed' value. Remember comprehensive car insurance is there to protect you from unexpected events, so paying a few dollars more in premium is better if you're covered for hundreds or thousands extra in the event you need to make a claim.

Market value

Market value is where the insurance company pays the pre accident retail value of your car, giving consideration to the age of the car, the condition and the kilometres that it has traveled. There are a number of guides also used such as 'Redbook' and 'Glasses Guide' when calculating the market value of a car.

Car insurance premium

The car insurance premium is the amount you pay to the insurance company for the car insurance and will be detailed on your policy schedule. The premium includes what the insurance trade refers to as the 'risk premium' which is what the insurance company considers is the probability of you making an insurance claim combined with other factors relating to the cost of them doing business.

There are a range of factors every insurance company will take into account that will increase the premium based on an increased risk. this risk element is calculated daily based on the number of claims an insurance company has for the different factors.

It is very important that the information you supply to an insurance company is accurate as they will take your money now, and check later if a claim is being made. The premium and indeed the decision whether they decide to insure you will be made on the basis of your answers.

The following is a list of the basic factors most insurance companies use to calculate your premium:

  • Age of the drivers who will be driving the car
    Generally the older the driver is the lower the premium is likely to be. However, for young drivers and some older drivers the premium is likely to be higher. Drivers under the age of 18 will generally be paying the most.
  • Gender of the drivers driving the car
    The premium for a female driver is likely to be lower than a male driver due to statistics that show men make more claims.
  • Type of car including make and model
    Standard performance cars usually attract a lower premium than higher performance cars. Four cylinder cars for example are cheaper to insure than v8 models.
  • Age of car
    A premium for a newer car is likely to be higher than for an older car due to the costs of repairing them.
  • Non standard accessories or modifications made to the car
    Any non standard accessories or modifications that you have fitted to your car that the insurance company have agreed to insure for an additional value, are calculated based on their type and may result in either a premium increase or discount. An alarm for example would lower the cost of the premium while spoilers would increase the premium amount.
  • Agreed value of the car
    The lower the agreed value of the car, the lower the premium is likely to be. Some insurance companies will also have the option to pay a lower premium but there will be an excess amount you will have to pay on each claim.
  • Address where the car is kept at night
    The premium is likely to be lower if the car is kept overnight at an address which has a lower claims cost and incidence rate of theft as an example than other addresses. The premium will also be lower if the car is kept overnight in a locked garage as opposed to being on the driveway.
  • What the car is to be used for
    The premium for private use is likely to be lower than for business use. Sales reps for example will pay a higher premium due to the fact they will be on the road more than say a stay at home mother.
  • Whether the car is under finance with a finance company or bank etc.
    The premium is likely to be lower if the car is not under finance. (It is a legal requirement that the car have comprehensive insurance if it is under finance; you do not have the option of choosing another type of car insurance product)
  • Your prior insurance history and insurer
    The premium may be either higher or lower depending on the pricing strategy adopted in relation to your most recent insurer, and the number of claims you have had with them.
  • Licence history
    The premium is likely to be higher if you have previously had your licence cancelled than if you have not ever had your licence cancelled or suspended. Speeding and drink driving offences for example are examples where the premium will be higher.
  • Any discounts you are eligible for
    If you are eligible for any discounts such as a no claim bonus this will attract a lower premium. You may have just started to be insured, so each year you will receive a discount if no claims are made.

Each time you renew your comprehensive car insurance your premium is likely to change, even if your personal circumstances have not changed, largely due to the number of claims the insurance company has paid out and the costs of doing business.

As a general rule however, the more likely an event of happening, the higher the premium an insurance company will charge, and the more the event costs, the higher the premium is likely to be.

Remember too that this will be different for different insurance companies at different times, so it pays to shop around.



Related Article: Compulsory Third Party Insurance, Car Insurance Tips & Advice, Car Insurance


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Tags: Comprehensive Car Insurance, Car Insurance, Car Insurance Companies, Car Insurance Company, car Insurance Quotes, Compare Car Insurance, Agreed Value, Market Value, Car Insurance Premium, Risk Premium, PDS, Product Disclosure Statement, Insurance Policy


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