The Different Types of Car Insurance & What You Need To Know

To help you understand car insurance a bit more, we’ve listed some topics on the finer points. Find out what coverage is available when it comes to car insurance and what will suit your needs.

Types of Car Insurance

These are the common types of car insurance policies:

Types of car insurance

• What’s the difference between Agreed and Market Value?
• What is Excess?
•  Making a Claim
•  Buying Car Insurance

• Comprehensive cover: This covers the cost of repairs to or replacement of your own vehicle and property whether you are at fault or not. It can also cover the cost of emergency repairs, transportation costs and damage caused by other drivers.

• Third Party Fire & Theft cover: Third Party, Fire and Theft covers you for loss or damage to your car if it is stolen or catches fire in addition to your liability for damage caused by your car to other people’s property.

• Third party property cover: Covers damage that you have caused to another person’s vehicle or property. It does not cover the cost of damage to your own car. It usually includes legal costs, limited damage by uninsured drivers and claims service.

• Compulsory third party insurance (CTP): Otherwise known as ‘green slip’ insurance, CTP is required of every registered driver in Australia. It indemnifies drivers who are legally liable for personal injury to another party in the event of a car accident. This can include other drivers, passengers, cyclists and pedestrians.Each State has a different process for CTP and Registration. See your State Government for details.

• Additional coverage options: Besides the standard cover provided some Insurers will have additional features and benefits available, they may include New car replacement, protected No Claim Bonus and choice of repairer. You should look at each policy and see that the features and benefits are what you are looking for in an insurance policy.

What is the difference between Agreed Value and Market Value?

Most insurers will also give you the option of market or agreed value in the event that your car is written off.

• Market value represents the market value of the car at the time of the claim, taking into account the condition of the car based on its age, make and model.

• Agreed value is the value of the car as agreed by both you and the insurer and is fixed until the policy renewal date.

What is an Excess?

An excess is the amount you’ll have to pay in the event of a claim.

For example, if your excess is $500 and your claim is worth $1,200, you will pay the first $500 and the insurer the remaining $700. In the event of a more serious accident, in which your vehicle is written off, the excess amount will typically be deducted from the final claim payment.

Generally speaking, there are three types of excess:

• Basic excess: This is the minimum payment that you are obliged to make in the event of a claim. The excess amount will be specified on your Certificate of Insurance.

• Voluntary excess: This is an additional amount, on top of your fixed excess, that you agree to pay in the event of a claim. Increasing your excess effectively reduces the financial risk carried by your insurer, which should thereby lower your premium.

• Age (inexperienced driver) excess: Where an insurance policy features an inexperienced driver, or drivers under the age of 25 years, a higher excess will normally apply. This includes nominated drivers as well as the principal driver.

Things to think about when considering your excess:

• It may be worth increasing your excess to save money on your insurance premium. But before you do, consider the car you drive and what would happen in the event of a claim. For instance, if you drive an old, low-cost vehicle it may not be worthwhile to increase your excess. After all, you don’t want to pay out more than your vehicle is worth!

• In the event of an accident, consider the difference between your claim amount and your basic excess. Always look at the impact a claim may have on your No Claim Bonus entitlement and the effect on premiums in future years.

Buying Car Insurance

At its most basic, insurance should protect you and your family against the effects of a loss to your person or property. But with the different cover options available, it can get a bit more complicated than that. Read our top tips below for buying car insurance.

Tips for buying car insurance:

1. Establish what coverage you require
2. Compare coverage quotes
3. Understand the benefits of car insurance
4. Learn the lingo – our glossary will help
5. Know your vehicle and your driving history
6. Determine how much you can afford
7. Review insurance company credentials
8. Review the fine print of your policy
9. Find out how to lower your premium

Use iSelect’s car insurance comparison tool to find a deal that’s right for you.

Top 10 Auto Insurance Companies

Every car in the country must be insured if it is going to be used on the road; that makes for a very large number of people looking for auto insurance. There are hundreds of insurance companies in every state willing to provide this service, but trying to figure out which ones are the best and deserve one’s attention can be a bit tricky.

There are numerous factors that go towards contributing to the quality of an insurer. Financial strength of a company is frequently over-looked by most insurance shoppers, yet it is a very significant factor. After all, signing up with a financially unstable company may mean that by the time one is involved in an accident and files a claim, the company may be facing bankruptcy and unable to pay. The cost of the policy and customer service is also significant issues. After continuous payment of premiums, one would expect quick and efficient service when it is needed. If one is involved in an accident, being put on hold for ten minutes or told by a machine that “an agent will get back to you as soon as possible” only to find they never take the call can be frustrating! Also, whether the company even has a valid license to operate in the state and sell insurance is another important variable.

According to most consumer guides put out by the government and industry professionals, the following ten auto insurance companies provide the required cover with very competitive prices, are financially sound and have a reputation for being available when required.

Top 10 Auto Insurance Companies

1. Allstate: Allstate is one of the most frequently top rated car insurance companies in the nation. They provide a wide range of policy options that suit the needs of a wide variety of customers. Allstate is known for the competitive rates they offer, along with safe driving incentives and accident forgiveness. They have been ranked as one of the top insurance companies for 70 years. They provide four different packages so one is sure to find one that suits their individual needs. In fact, some even claim that this company is ideal for teenagers and the elderly.
2. State Farm Insurance:Discounts are one of the favorite things about an insurance provider and this company makes sure its customers get plenty of variety. Consumers can save a significant amount, up to 40 percent, with State Farm.
3. Geico: Government Employees Insurance Company is owned by Berkshire Hathaway and provides private auto insurance in all fifty states of the nation. They are easily recognizable from their commercials on the air. They pledge outstanding customer service and promise to help in obtaining the least expensive auto insurance policy. Additionally, they offer their customers several payment options which makes them a favorite with potential clients.
   
4. Progressive: this is a multi-dimensional company offering not only auto insurance, but bike, watercraft, Segway, RV and snowmobile loans. It was established in 1937 and has the honor of selling the maximum number of commercial auto policies through independent agents operating via brokers. It has earned a credit rating of A+, which is excellent. They even have an innovative offer for their clients known as “name you price” in which potential clients can counteroffer the quote they give.
5. Nationwide: This Company was founded in 1925 under the name of The Ohio Farm Bureau Federation and is now one of the largest financial organizations in the world. In 1955, it officially became known as Nationwide and is today one of the most financially strong auto insurers in the USA. They keep their customers happy by providing them with many low cost insurance options.
6. AA Auto Insurance: The American Automobile Associations is a federation of associated auto clubs. The organization is a non-profit lobby that along with auto insurance, also offers a large number of services like first aid, towing, and emergency road service to members. It was founded in 1902 in Chicago.
7. Liberty Mutual: Established in 1912, they are a financially sound company with a credit rating of “A”. In addition to auto cover, they also offer home and life insurance. This is a full service company providing comprehensive auto policies at very competitive rates. Liberty Manual has not only been rated as one of the top auto insurance companies in USA, but has a wide network of financial services in 20 countries throughout the world.
8. 21st Century Insurance: This company works in collaboration with some of the best auto insurance companies. They are able to provide their customers a large variety of insurance products in addition to auto insurance.
9. GMAC: This insurance provider was established in 1939 and has grown steadily ever since. They make the individual needs of their customers the top priority and help them to design a policy that fits their budgets and requirements. In addition to being one of the best insurance companies in the U.S., they make a large range of insurance products available in Latin America, Asia and Europe.
10. AIG: American International Group promises to provide major savings compared to other insurance providers. Their main focus is to provide savings through low-cost insurance products and bundling. AIG is a world leader in insurance and financial services, with operations in more than 130 countries. In addition to auto insurance, they provide retirement services and asset management.
    

There are numerous listings of “top 10” insurance companies if one searches online. While this may seem overwhelming, it actually is not. This is because there are some basic companies that stand out on everyone’s’ list. Also, it should be kept in mind that some regional and smaller companies have been around for a very long time and have been providing excellent service and rates that are comparable to the national companies; however, they do not show up on many lists due to the fact that they are not national.

Compare Reviews for Auto Insurance Companies Top 5 Company

Different auto insurance companies cater to different demographics, which is what makes shopping for auto insurance such a personalized experience. Consumers should buy more than just the state minimum coverage to ensure they are fully covered in the event of a major collision.

Some things to consider when shopping for auto insurance are relevant discounts, exclusions, coverage limits, optional coverage and the claims process.

When people think of GEICO, they think of their mascot. However, it's also an insurance company that offers comprehensive insurance at relatively low prices. GEICO offers a variety of insurance in addition to auto insurance.

State Farm is the biggest auto insurer in the U.S. and is a top 50 Fortune 500 company. It was founded in 1922 by a farmer, and for nearly a century has tried to bring a sense of neighborliness into the insurance business.

Progressive has been providing consumers with auto insurance since 1937 and is known for its insurance rate comparison tool. This company offers several types of auto insurance, and focuses only on this type of insurance.

AllState became a publicly held insurance company in 1993, though it's been around since the 1930s. It is dedicated to hiring women and minorities in addition to providing appropriate insurance for people from all walks of life

USAA offers insurance to veterans and current military personnel. It has been in business since 1922 and strives to give military personnel and families coverage to meet their special needs, including auto insurance coverage.

Vehicle insurance

Vehicle insurance (also known as car insurance, motor insurance or auto insurance) is insurance for cars, trucks, motorcycles, and other road vehicles. Its primary use is to provide financial protection against physical damage and/or bodily injury resulting from traffic collisions and against liability that could also arise there from. The specific terms of vehicle insurance vary with legal regulations in each region. To a lesser degree vehicle insurance may additionally offer financial protection against theft of the vehicle and possibly damage to the vehicle, sustained from things other than traffic collisions, such as keying and damage sustained by colliding with stationary objects.

History

Widespread use of the automobile began after the First World War in urban areas. Cars were relatively fast and dangerous by that stage, yet there was still no compulsory form of car insurance anywhere in the world. This meant that injured victims would seldom get any compensation in an accident, and drivers often faced considerable costs for damage to their car and property.

A compulsory car insurance scheme was first introduced in the United Kingdom with the Road Traffic Act 1930. This ensured that all vehicle owners and drivers had to be insured for their liability for injury or death to third parties whilst their vehicle was being used on a public road.Germany enacted similar legislation in 1939.

Public policies

In many jurisdictions it is compulsory to have vehicle insurance before using or keeping a motor vehicle on public roads. Most jurisdictions relate insurance to both the car and the driver, however the degree of each varies greatly.

Several jurisdictions have experimented with a "pay-as-you-drive" insurance plan which is paid through a gasoline tax (petrol tax). This would address issues of uninsured motorists and also charge based on the miles (kilometers) driven, which could theoretically increase the efficiency of the insurance, through streamlined collection.

Compulsory Third Party Insurance

CTP insurance is linked to the registration of a vehicle. It is transferred when a vehicle already registered is sold. It covers the vehicle owner and any person who drives the vehicle against claims for liability in respect of the death or injury to people caused by the fault of the owner or driver, but not for damage. It covers the cost of all reasonable medical treatment for injuries received in the accident, loss of wages, cost of care services, and in some cases compensation for pain and suffering.

In New South Wales and the Northern Territory CTP insurance is compulsory; each vehicle must be insured when registered. A 'Greenslip another name by which CTP insurance is commonly known due to the colour of the form, must be obtained through one of the five licensed insurers in New South Wales. Suncorp and Allianz both hold two licences to issue CTP Greenslips – Suncorp under the GIO and AAMI licences and Allianz under the Allianz and CIC/Allianz licences. The remaining three licences to issue CTP Greenslips are held by QBE, Zurich and Insurance Australia Limited (NRMA). APIA and Shannons and InsureMyRide insurance also supply CTP insurance licensed by GIO. In addition to the Greenslip, an additional car insurance can be purchased through insurers in Australia. This will cover claims that the standard CTP insurance cannot provide. This is known as a comprehensive car insurance

A similar scheme applies in the Australian Capital Territory through AAMI, GIO and NRMA (IAL).

In Victoria, Third Party Personal insurance from the Transport Accident Commission is similarly included, through a levy, in the vehicle registration fee. A similar scheme exists in Tasmania through the Motor Accidents Insurance Board.

In Queensland, CTP is a mandatory part of registration for a vehicle. There is choice of insurer but price is government controlled in a tight band.

In South Australia, Third Party Personal insurance from the Motor Accident Commission is included in the licence registration fee for people over 17. A similar scheme applies in Western Australia.