Three things you think are 100% true about car insurance but probably aren’t.
Insurance has a whole bunch of grey areas and car insurance is no different. With that in mind, here are three pervasive myths about car insurance.
1. You won’t have any out-of-pocket costs following an accident
This is more of a half-truth than a myth. People believe that because they’re paying for car insurance, they won’t face any costs if they’re involved in an accident. However, whether you’ll face out-of-pocket expenses will depend on a couple of things.
In most cases, you’re going to have to pay an excess following an accident. An excess is the amount you agree to pay to your insurance company in the event you lodge a claim. Choosing a higher excess means you’ll pay more if you need to make a claim, but your premiums will be lower than someone who has chosen a basic or $0 excess as the insurer will cover more or all of the costs at claim time.
Some insurers may also have the following excesses:
- An age-based excess means that you’ll pay a higher excess when making a claim if the driver is under 25.
- Special excesses are at the discretion of an insurer and can take into account your claims history and even the type of car you’re driving.
There’s also the idea that you won’t need to pay the excess if you’re not at fault. This one is not so cut and dry and according to the Financial Rights Legal Centre:
“The general rule is that an excess is always payable when you make a claim, whether you are at fault or not.”
If you’re able to prove that you were not at fault, some insurers will recover the excess from the at-fault party as long as you’re able to provide your insurer with the driver’s details such as their name, address and rego number.
2. Your insurance covers you and you alone
Car insurance isn’t cover for you; it’s cover for your car, and depending on your policy, it may cover more than just the nominated driver. While this is not true of all policies, many insurers allow other people to drive your car and be covered.
But, before you throw your keys to your mate to do a Macca’s run, there are a couple of things you should check. First and most obvious, you should check whether your policy covers a driver other than yourself. Second, you should check whether there is an unlisted driver excess.
3. A red car is a red flag to all insurers
It’s not. While some insurers can and will take the colour of your car into consideration when determining your premiums, there are plenty of insurers out there who don’t. If you do have a red car, you have two solid options. One, shop around and find an insurer that doesn’t factor colour into its quote. Two, look for a usage-based car insurance policy as how much you pay for insurance comes down to how safe a driver you are.
Contributed by Richard Laycock from Finder