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Insurance - Do I really need it ?

Insurance is one of those things you generally don’t need to worry about during your school years. But once you start thinking about moving out of home, getting a car, and claiming your independence, just like career advice, it’s certainly something you will need to consider.

Insurance is the promise of compensation in the case of loss. If you are concerned about hazards that put you or your valued possessions at risk through loss or injury then get insurance so you don’t lose out. There are dozens of types of insurance available with the most common being car insurance, contents insurance, health insurance, home insurance, and business insurance.

Don’t stress. You won’t need all of this insurance. In fact, you probably won’t need much at all. So which insurance should you consider and what is the minimum cover you need? At this stage of your illustrious career, you should consider car insurance, contents insurance, health insurance, and possibly renters insurance and if you have been clever enough to already own a home, then home insurance.

So stretching our advice on careers into life skills, this is how we see it....

Car Insurance

If you’ve got your own car, it’s likely to be one of the most valuable things you own. You’re not going to want to risk losing it in an accident or through theft. It may not be a Porsche Carrera GT – it may not be worth much at all – but it’s still your mode of transportation, and you’d be lost without it.

There are two types of motor vehicle insurance to consider: comprehensive and third party and two types of situations: accident or theft/total write off.

Comprehensive Insurance

In the event of an accident, comprehensive vehicle insurance will cover you for damage done to your own vehicle, as well as any damage you may cause to the property of others. Most policies are NO blame policy, meaning they do not identify the party who caused the accident
This is full cover for your vehicle. When you claim your contribution is an amount (excess) which varies by policy.
In the event the vehicle is written off (can’t be repaired) from fire, accident, theft, hail damage, or vandalism you receive as a lump sum payment the ‘agreed value’ or the ‘market value’ in the policy you have taken out. Again you pay only the excess amount and your policy covers the rest.

Third party Insurance

If you are involved in an accident, third party insurance will cover you for the damage caused by your car to property owned by a third party. It does not cover the damage to your own car, but will fully cover you for any damage you may accidentally cause to someone else’s property.
If your vehicle is written off for any reason, bad luck, you receive nothing and take one on the chin.

Which insurance to get and from whom?

Consider your car:

If it cost you a decent sum of money, or would cost you a lot to replace, then think about comprehensive insurance. This way, if you are in an accident and your car is written off, you will receive compensation in order to buy a new one.
If you have a bomb to get you from A to B, then maybe third party insurance is more for you. The cost of insurance might not be worth the pay out in the event of an accident. But you don’t want to avoid insurance altogether. If you’re in a bingle, your hunk of metal might only come off with a minor dent, but the scraped paint job and dislodged bumper on the third party’s BMW is not something you want to pay for yourself. Third party insurance might just be the go.

In Australia, car insurance for people under 25 can be quite expensive. Car insurance is also more expensive for young males than it is for females, due to statistics showing that males in this age group are more likely to damage their cars. There are large variations in car insurance premiums depending on the specific details of your car, your personal details and your driving history.

For a comprehensive comparison of Australian car insurance companies relevant to you and your car, visit Rate City and enter your details. To give you a rough estimate, here are some approximate figures regarding car insurance for those under 25 in Australia wanting to insure a $25,000 vehicle.

Young male premiums – $648 to $1590
Young female premiums – $610 to $1495

You might not think you’ll ever be in an accident, but remember that you can’t always predict the behaviour of other drivers. Car insurance might cost a bit of extra cash to pay for now, but it could save you a lot of money in the event of an accident later.

Oh and one last thing.... your car registration covers you against third party injury, so if you accidently hit a person, then you are covered under the registration and they cannot seek damages from you personally. However, let your registration lapse and you leave yourself open to being sued for everything you own. So if there is one bill you should pay before the due date it’s your vehicle registration.

Go to the following websites of the major motor vehicle insurers for further information: