Many dealers will offer to arrange insurance for you, but it is wiser to shop around for yourself. Leaving finance and insurance arrangements to the dealer may result in interest payments on your insurance premium as well as your loan.
Get quotes from a number of insurance companies, this way you can choose which policy is best suited to your needs and gives you the best value for money.
Compulsory Third Party (CTP)
- This is the only form of insurance that is compulsory
- It is paid each year at the same time as vehicle registration.
- CTP covers you against a claim arising from the death or injury of another person due to your negligence.
- It does not cover damage to vehicles or property.
Third Party Property Damage
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This is the cheapest form of voluntary insurance you can buy.
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It protects you from financial loss arising from damage you may cause to another's property, eg. a car, fence or traffic light.
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Third Party, Property Damage - Fire and Theft
- This is an extension to the Third Party Property Damage policy.
- It covers you for loss or damage caused by fire or theft as well as loss arising from any damage you may cause to another's property.
- RAC Fire & Theft Insurance.
Motor Vehicle Full Cover
Formerly called comprehensive insurance, this form or insurance provides the greatest protection against financial loss in the event of damage to or destruction of your car, as well as damage to the vehicles and property of others.
- This is the most expensive form of car insurance, but its widespread cover makes it the best for most car owners.
- It covers the following risks:
- Loss or damage to your own car, up to its market value or agreed value. Less any policy excess.
- Towing or salvage costs, if your car cannot be driven because of accident damage.
- Damage to another person's vehicle or property resulting from an accident involving your car.
- Legal liability for accidental damage to property caused by or connected with the use of the vehicle.
- Automatic cover for a limited period when a change of vehicle occurs.
- RAC Full Cover Insurance.
There are some circumstances under which the insurance company will not pay a claim. Common exclusions are:
- The car being driven by an unlicensed driver.
- The driver is under the influence of alcohol or drugs.
- The car being unroadworthy at the time of the accident.
Excesses
- The excess is the amount you have to pay yourself towards the repairs.
- If your excess is $300 and you make a claim for $500, the insurance company will only pay out $200.
- Younger drivers (between 17 and 26) can expect to pay higher excess in the event of a claim.
- Excesses that apply to younger drivers cannot generally be removed, but standard or basic excesses, which apply to older drivers, can usually be removed by paying a higher premium.
Premiums
- Premiums are based on many factors.
- Some of the most common factors are the age of the driver, type of vehicle, age of vehicle, and the vehicle sum insured.
- Cars used as security against loans may attract a higher premium than cars purchased with cash.
- For insurance purposes, a car is still considered a cash purchase it bought by way of a personal loan from RAC Finance, a bank or credit union.
No Claims Bonus
- No claim bonuses are offered by insurance companies to reward a claim-free period.
- The discount depends on the number of claim free years.
Extra Cover
- If you plan to fit additional accessories to your car, check with your insurance company so that extra insurance cover can be arranged.
- Note: it is recommended that you arrange adequate insurance cover for your new car before you drive it away from the car yard or private home.