FAQs
Please note that these are a general explanation of the meaning of terms used in relation to this topic. Your provider may use different wording and you should read the terms and conditions of your policy carefully to understand what you are and are not covered for. Refer to the product disclosure statement (PDS) from your provider. You may wish to obtain advice from a suitably qualified adviser.
What is ‘agreed value’ cover?
In car insurance, agreed value cover is where the amount a vehicle is insured for is fixed by agreement between the insurer and the policyholder. The other main option is to insure your vehicle for its market value (see ‘market value’ below).
What is ‘comprehensive car insurance’?
Comprehensive cover is the highest level of policy coverage in Australia, which covers you for other people’s cars and property in an accident, damage to your own vehicle caused by fire or theft, and accidental damage to your own vehicle, regardless of who caused the damage. It may also provide additional types of cover, depending on the insurer and policy you choose.
However, comprehensive car insurance does not cover you for injury or death caused to other people in an accident – that’s where compulsory third party (CTP) insurance comes in.
What is ‘compulsory third party (CTP) insurance’?
CTP is a compulsory policy that covers you if you injure or kill someone in a motor vehicle accident. The specific conditions on this type of cover are different from state to state, but no matter where in Australia you are, it is compulsory to hold CTP in order to register your vehicle.
What is an ‘excess’?
An excess is an amount of money you pay your insurer towards the cost of your claim. Different excesses might apply to different types of claim, so you should check your policy for details. You may be able to pay a lower premium if you have a higher excess, but you need to be sure that you could afford to pay the excess unexpectedly in an emergency.
What are ‘exclusions’?
An exclusion is anything that is not covered by your policy. Exclusions may vary between providers, so it is a wise idea to read policy documents carefully when obtaining any quotes.
What are ‘inclusions’?
Inclusions are anything that is covered by your policy. When a particular event is listed as being included in your policy, the insurer will cover the whole expense (minus your excess) or a listed percentage of the cost involved.
What is ‘market value’?
Market value is what your vehicle would be worth on the market, or what it would cost to replace your vehicle with one of the same make, model, age, and condition that your vehicle was in before the loss or damage. This is one option for your sum insured; the other option is to insure your vehicle for an agreed amount (see ‘agreed value’ above).
What is a ‘no-claim bonus’?
A no-claim bonus is a discount on premiums that some insurers may offer drivers who haven’t made any claims so far on their policy. Some providers may have a ‘protected no-claim bonus option’, where they will let you keep your no-claim bonus after you make your first claim in any one period of cover, under certain conditions.
What is a ‘nominated driver’?
When you sign up for a policy, you must advise the insurer who will be listed on your policy as being allowed to drive your vehicle (usually yourself and one or more family members). These people are the nominated drivers. Other people who drive your car but are not nominated drivers would be required to pay an additional excess if they were in an accident while driving your vehicle and you needed to make a claim as a result.
What is a ‘premium’?
A car insurance premium is a regular amount of money you pay for the cover your policy provides. Depending on your insurer, it may be paid once annually or more frequently (e.g. monthly or fortnightly). Your premium must be paid on time for your car to remain covered.
What is a ‘third party property’ policy?
This is a policy that covers the cost to repair damage caused by your vehicle to other people’s property, such as their car. It will also cover your legal costs if they sue you over that damage. It does not cover damage to your own car, however.
What is a ‘third party, fire and theft’ policy?
This is a policy that covers damage to the property of others, and some limited cover for your own vehicle if it is damaged or lost because of fire or theft. It generally does not cover damage to your own car caused by a car accident.