There are four basic levels of car insurance that you can get in Australia. The bottom level is the one that the law requires you have, which is the CTP or green slip policy. The top addition to this legal requirement is comprehensive insurance.
It has many benefits when you opt to get this type of coverage. Even though it may be the best you can get, it does not mean it will be the most expensive option.
Let’s first take a look at everything that a comprehensive car insurance plan will cover and then go from there.
- Civil Disobedience (Riots)
- Natural disasters
- Falling objects
- Hitting an animal
- Damage by rodents
- Damage to vehicles (yours and theirs)
You can see here that a comprehensive car insurance policy will cover anything that could happen in an accident, except for injuries and death. This does not matter if you are at fault because it covers everything in every circumstance.
Now let’s take a close look at some other things this type of auto insurance covers so you can see why it is so important to have this type of coverage.
- Emergency towing
- Emergency lodging
- Emergency food and drink
- Rental car coverage
- Roadside assistance
These are just some of the additions you can get with your comprehensive car insurance policy. It is not to say that you have to have them because they do cost you more in premiums, but when you think about the trade-off of paying a little every month compared to spending a lot if you need the coverage but choose to not include it when you signed the contract with your insurance carrier.
When Do You Need To Have Comprehensive Car Insurance
When you check around for car insurance quotes, you will notice that comprehensive car insurance can be a little pricey. The premiums will be judged by your driving history, credit history, and type of car, so it may vary from you to your friend down the street.
What is essential to remember here is that there will be times when this type of coverage would be considered mandatory to ensure you are covered, as well as anyone else that has a stake in the condition of the car you drive.
Let’s dig into some of the most common reasons why you would need comprehensive coverage so you can make an informed decision when it comes time to sign on the dotted line (or in the little box if you prefer online.)
- If you have a vehicle worth a substantial amount of money and would be too expensive to replace or repair, you would need comprehensive coverage. An example of this would be a new sports car.
- If you had to get a loan to purchase the car, the lender would demand that you show them proof of comprehensive coverage to ensure that they get paid back even if you end up totaling the car.
- If you drive a substantial amount of time and rely on it to make your living, it would be great to have complete coverage.
These are just a few examples of when you would need comprehensive, but the final decision is up to you. There is a mathematical formula that you can use if it makes things easier for you.
- Value of car – deductible – (premiums X 6 months) = overall value
If you complete this equation and come up with a negative number, having a comprehensive car insurance policy would not be financially worth it. If it comes out with a positive number, you should add comprehensive to your CTP coverage.
The final choice will come down to what you want or need. You need to take the time to analyze the entire situation, including your financial position, and go from there. In some instances, it may seem like it would be a good idea to just go with the lowest coverage allowed by the law. In the end, it may come back to haunt you if you ever need to file a claim. If you are ever in doubt about needing it or not, lean towards the safe side of things and get the best coverage that you can get for your vehicle.