Further, all drivers should consider what level of optional insurance they wish to cover the loss account for any vehicles or property involved.
Given the regularity of road accidents, it is well worth having at least some cover to protect you from the nightmare scenario of colliding with a Porsche. If you are not insured, you pay the full Porsche claim out of your own pocket. Ouch!
There are three main choices for optional auto insurance coverage.
The bare minimum is a Third Party Property Damage Policy (TPPD), which pays the de Porche’s (or any other car you hit) claims bill, but no damage to your own vehicle, whether from theft, fire, or an accident that you caused (remember that if you are not at fault, the other driver is responsible for paying your damage bill).
Taking it a step further is third-party fire and theft insurance (TPFT), which covers you for the porch you hit, plus damage or loss to your car from theft or fire.
The top-level coverage is called comprehensive insurance and covers you for the Porsche plus all damage to your car, including damage you cause (although exceptions apply, so be sure to read the fine print). This type of insurance can also help you avoid the hassle of chasing payments if you get hit by an uninsured driver (your insurer will chase them for you).
Extensive is the most expensive. Indeed, I did a quote this week and lowering my coverage to TPFT would lower my annual premium to $351 per year, and lowering it to TPPD would lower it to $272.
For cheaper and older cars, consider one of the lower levels of coverage, especially if you’re confident you’ll have the savings needed to repair or replace your car if it’s damaged. All up to you.
Agree or market value?
If you opt for extensive cover, you can think of a value policy or a market value policy.
Agreeing to a predetermined dollar amount to be paid if your car is a total loss — rather than having your payout calculated at your car’s prevailing used-market rate — can cut your premiums significantly.
I have set my coverage to the lowest allowable value for my car, which is $11,250. It wouldn’t be enough to buy my car back, but I think it’s enough to buy a set of wheels should the worst happen.
Increase your deductible
I’ve also set my policy to the highest deductible allowed – that’s the dollar amount you pay out of pocket when a claim is made. This lowers your advance premiums. My deductible is set at $2000.
Former competition czar Allan Fels conducted an investigation that found that despite their claims, insurers charge a so-called “loyalty penalty” to long-term customers.
Premiums are set low in the first or two years and then rise to higher rates than those for new customers. Secretly.
So take a look around on websites like Finder, Canstar, Compare The Market and RateCity. And if you call your existing insurer and ask for a better deal, make sure they provide a quote to you as a new customer, not as an amendment to your existing policy.
Calculate your kilometers
Premiums are generally lower the less you drive your car. Some insurers even charge a low annual base premium plus a mileage rate throughout the year, which can work out well for rare drivers or second cars. Check comparison sites to find these deals.
Limit driver ages
Some insurers also offer cheaper premium policies if you agree to only let people of a certain age, such as those over 40, drive your car. Excuse me, kids.
Beware of add-ons
Consider your own individual needs, but I dropped my windshield when I found out I could get it cheaper by opting for a slightly higher roadside assistance plan.