Get the best deal on car insurance and save

20 Dec 09 / Posted by: Jessica

The debate about whether New Zealand should have compulsory third party car insurance has been going nowhere fast for a while now –in the meantime, it’s vital that you make sure you’re covered, if only to protect yourself from all those uninsured drivers on the road beside you.

Here are some tips for negotiating the best deal possible:

Know your cover

There are three types of car insurance policy and you’ll pay progressively more for each type. Always read the small print to check exactly what your policy covers but in general you can expect Third Party Insurance to cover the cost of damage you do to someone else’s vehicle or property.

This is usually the least expensive option and you shouldn’t let anyone you love on the road without it. Third Party, Fire and Theft Insurance should give you everything that’s included in third party cover with the addition of cover in the event of your vehicle catching on fire or being stolen.

Finally, Comprehensive Insurance generally covers you – not only for any damage you do to another person’s vehicle (regardless of who’s at fault) – but also damage done to, or accidental loss of, your own car. It will often also cover additional costs like towing from the scene of an accident, and a temporary replacement vehicle while yours is being repaired.

Have a regular check-up

There are several variables that will affect the annual premium you pay and one of the most important is your car’s value. Market Value will cover what your vehicle is worth just before the damage occurs – this is determined by the insurance company at the time and may differ from your own expectation. With this type of cover, listing a higher value than your car is actually worth on your insurance form won’t do you any favours – you’ll just pay a higher premium, which then won’t make a difference when the insurance company actually pays out.

By comparison, Agreed Value covers you for an amount agreed by you and your insurance company annually or when your policy comes up for renewal.

Which ever type of approach you choose, make sure you revise the figure regularly – as your car depreciates the cost of your insurance should come down (remember new cars lose about 20% of their value the minute you drive them off the car seller’s lot). If you’re unsure about your vehicle’s worth check out the price of equivalent models in your local paper, on www.trademe.co.nz or get an estimate from a car dealer.

Choose the right excess

This is a careful balancing act – the higher the excess, the lower the premium you’ll pay, but if it’s too high, it may defeat the purpose of having insurance. As a general rule, pick an amount that is right on the edge of what you could comfortably cover without dipping into your savings if an accident occurs.

Be older than 25

There are a few upsides to having wrinkles – and one of them is paying less in car insurance. That’s because young drivers are higher risk and therefore attract higher premiums. If you do allow young drivers to drive your car make sure they stick to the conditions of their restricted license or you won’t be covered if they have an accident.

Nominate drivers

Many insurers will reduce your premium if you restrict cover to just one or two nominated drivers – especially if they’re over 25. Just make sure you remember this when a friend offers to drive you home – if they crash you won’t be covered at all!

Don’t drink and drive

Even comprehensive insurance won’t cover you if you have an accident and are found to be over the legal limit. In some cases your insurer can also refuse to cover you if you are under the legal limit but your consumption of alcohol is found to have contributed to the crash.

Don’t drive while disqualified

No surprises here – if you or anyone driving your vehicle is a disqualified driver and they crash, your insurance company won’t pay.

Fix faults and keep your warrant of fitness current

If your car crashes and an obvious fault – like poor steering, soft brakes, worn tyres or a broken headlight – is to blame, you may not be covered.

Read the small print if you use your car for business

Some insurers will provide automatic cover under comprehensive insurance if you use your family car for occasional business purposes, but it pays to check.

Bundle

Combining all your insurances with one company will usually give you the best deal.

Pay your premiums annually

If you can manage it, save up and pay your annual premium off in one lump sum – it’s usually cheaper in the long run. And whatever you do, make sure you pay on time. Miss one payment and your cover stops, no matter how long your history with your insurer is.

Shop around

Ask for quotes from a range of insurance companies but make sure you’re comparing apples with apples and the excess and exclusions are similar. It’s also worth considering going through an insurance broker or adviser – a good one will not only get you great coverage at a good rate, they’ll also make sure any claims you make go through immediately and in times of stress that can be pure gold!

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