Avoiding The Potholes Of Car Insurance

Car Insurance is an issue that we all of face in our lives. Do we insure our car or not?

For example, what type of policy should you get? What should you look out for when signing on the dotted line? Car insurance can be a minefield if you do not investigate and take time out to research and evaluate the many types of insurance on offer in today's market.

Some of the main questions you need to ask yourself include do you want car insurance in the first place or are you willing to let luck prevail? Do you want comprehensive cover? Do you want to be covered just for fire and theft or do you want third party property damage insurance?

There is a significant difference in each of these policies and they vary from company to company. Basically comprehensive cover is full cover of your car and the other person's car (or the traffic light you demolished).

Third Party Fire and theft insurance is the next step down and then you have third party cover. Third party protects you for damage to some else's car but not yours.

After working out what type of insurance you want, ask yourself do you want to insure the car at an agreed value or current market value of the car? This is very important to consider. If your car is a special model with lots of modifications, you might consider the agreed value option because it allows you to include added extras.

The majority of people go for the market value option but it is important to read the fine print. This option has a catch. The insurance company pays out the amount the car is worth at the time of the accident. Hence the amount could be different to the market value originally spelled out in the policy when you signed up because of depreciation.

Once you have worked out what type of cover you want you start getting down to the smaller, more tedious options.

Some of the main ones you need to consider include:
(i) How much is the excess?
(ii) Do you want to choose the repairer?
(iii) Do you want loan vehicles if your car is stolen?
(iv) Do you want the policy to cover the car for business use?
(v) What drivers are covered?
(vi) Is it repaired using only genuine spare parts?
(vii) Is there a limit on towing fees?
(viii) Does it cover damaged property and personal belongings inside the car?
(ix) Does it Cover taxi fares?

RAC's Assistant General Manager for Insurance Services, Sam Mola believes it is very important for people to research and investigate all options before taking out car insurance.

"People need to watch out and make sure they are signing up for cover that suits their needs. You need to review the benefits provided and then make an informed decision," he said.

"People need to make sure they are familiar with the cover provided by the policy and not just compare policies on price. They need to make sure the company can provide the appropriate claims service when a claim is made. For example the company should provide a high quality of repairs for a minimum amount of fuss. People need to consider the reputation of the organization. Cheaper does not always mean better."

The Australian Insurance Council's Group General Manager for Western Australia and the Northern Territory Daryl Cameron said in 85 per cent of cases policies are bought on price alone, which can be dangerous for people who do not read their policies extremely carefully. He also said if you are not honest with your potential insurer they may refuse to pay out if the time comes.

"It is vital that all known information regarding the vehicle or any intended driver is fully disclosed to the insurer when taking out a policy or when one is up for renewal. If anything changes that may effect your policy you must tell the insurer; It is extremely important, remember you have a duty of disclosure," Mr Cameron said.

"If you smash into the back of a Mercedes, and you forgot to tell your insurance company about your dangerous driving conviction, they may refuse to pay out despite the fact you are covered by them. So be careful otherwise you may have to foot the bill yourself," he warned.

So be careful, take your time and watch out for the traps that catch many unsuspecting motorists. It is important that you understand what you are getting into and ask as many questions as you can. Remember there is no harm in asking and it could save you a lot of money in the long run.

Here are 10 points to remember when considering car insurance

Thomas Murrell MBA CSP is an international business speaker, consultant and award-winning broadcaster. Media Motivators is his regular electronic magazine read by 7,000 professionals in 15 different countries.

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