For most Australians, buying a new car requires a serious financial commitment. So when such a precious asset is stolen or written off, it can be devastating for the owner - emotionally and financially.
That's why having the right protection in place, like a good value comprehensive car insurance policy, can be an important consideration.
As with any product, shopping around for car insurance is key. But when comparing policies for a new car (i.e. where you are the first owner), there are a few things in particular to consider.
1. Compare new-for-old car replacement cover
If your new car is written off within its first few years, many car insurers in Australia will replace the written off car with a new one of a similar make and model. This is known as ‘new-for-old car replacement’, or 'new car in case of write-off'.
The terms and conditions of this feature can vary between policies, so it's important to have a good read of these when comparing.
Here are some particular points to look out for:
- The car’s age
Many insurers will require the car to be less than two years old for it to be eligible for new car replacement, however, some may offer longer or shorter eligibility periods. Of the 62 comprehensive car insurance policies that include new-for-old car replacement on Canstar's database, the maximum car age ranges from 12 to 48 months. The most common maximum period of cover is 24 months.
- Previous owners
Some insurers may also specify that you need to be the first registered owner of the vehicle. This is important as some ‘new’ cars may have been previously registered to the dealer and as a result may not be eligible for replacement under this type of cover. An online car history check may help you with details of the car’s previous registered owners.
- Distance travelled
Some insurers also have a kilometre restriction for new-for-old car replacement. That is, after the car’s odometer has reached a specified number of kilometres, it will no longer be eligible for new car replacement. The upper limit typically ranges from 20,000kms to 100,000kms.
2. Compare roadside assistance
Roadside assistance is a service that provides professional on-road help in the event of a breakdown. When purchasing a car straight from the showroom, some dealerships will offer roadside assistance for a specified period of time. Many car insurance policies also offer this service as an extra option.
If you agree to take up roadside assistance from the dealership, consider whether you need roadside assistance within your car insurance policy.
When deciding which option to go with you should compare the cost and quality of the roadside assistance cover on offer from the dealership with what you could get through your car insurance policy or other providers. For example, think about things like the types of breakdowns that are covered or whether there’s a surcharge if you need assistance in a remote location.
3. Notify your insurer of any modifications or accessories added
When insuring a new car, any modifications from your car's factory specification should be included in the policy. This could be anything from the addition of a spoiler to a metallic paint job. Accessories you’ve purchased for your car should also be included.
The rules on what constitutes a modification (versus an accessory) can vary between insurers, so to be safe, make sure your insurer is aware of all modifications – even the ones you wouldn't expect your insurer to be concerned about.
Not declaring a modification could void any insurance claims, or your entire policy, so it’s best to be safe by being up front.
4. Compare how repairs are performed
Another point to consider is the insurer's policy on repairs to the car. Does the insurer allow a choice of repairer? If not, is their designated repairer conveniently located? Is there a lifetime guarantee on repairs?
Also, given the advanced design and technology of modern cars, the use of genuine parts in repairs to your new car might be important to you. An insurer should detail the types of parts they use to repair cars in the product disclosure statement (PDS).
5. Don't be spontaneous, shop around
It's important you don't choose the first policy you come across without comparing other options first. For example, the car dealership might encourage you to sign up for add-on insurance products such as tyre and rim cover or an extended warranty. In the heat of the car purchase it can be easy to say yes to these offers without checking that you’re getting the best protection for your money.
Make sure you shop around for a good value policy that provides you with the peace of mind in knowing that your new car is protected.
Some other quick car insurance tips
- Temporary hire car after an accident
This may not be covered as standard as part of your policy, so it’s worth considering as an optional extra, particularly for one-car families.
- Windscreen cover
This is also usually an optional extra. It generally doesn’t cost much to add, and windscreen repair or replacement claims typically don’t affect your no claim bonus.
- Pay by the month
Many insurers charge extra if you want to pay by the month. Because of this it’s important to compare policies based on the one-off annual cost as well as the monthly cost multiplied by 12, as these two figures may well be different.
- Your excess
Don’t forget to compare the excess (the amount you need to pay when you make a claim) when comparing policies as this can vary massively.
- Other considerations
Don’t forget that other variables like where your car is parked at night and how much you drive it will also influence your premium. For example, if your car is parked in a locked garage overnight, your premium may be cheaper than if the car is parked on the street.
Please note that this is only intended as a general guide in relation to issues you may want to consider when insuring a car. It is not intended to be an exhaustive list of all relevant issues and does not take into account your personal needs and financial circumstances. You should take into account your own particular circumstances, and obtain independent expert advice where needed, before proceeding. Examples quoted are indicative only for illustrative purposes.