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....
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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.
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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:
Or for comparative quotes try;
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Home Contents Insurance
Contents insurance is designed to provide you with peace of mind and financial protection against damage to, or the loss of, contents in your home. If you move out of home and start renting, sharing a house, or living on campus, then contents insurance is something you may want to consider.
The first question to ask is: ‘Do I own anything valuable?’ There might only be one valuable item in your cramped bedroom, but it still is important to you. A sound system, laptop or computer, musical instrument, technical equipment, camera, television, collector’s item, white goods, lounge suite, jewellery, and so on. These are all items you might consider getting insured, so that in the event that they are stolen or damaged by water, fire or accident you will be reimbursed and able to replace them.
The price of contents insurance varies greatly depending on what you want insured, the size of your house, the suburb you live in, and many other determining factors. If you would like to get a quote on contents insurance, check out the main players listed above in car insurance. Careernav reckons you are likely to own stuff worth roughly $10,000 when you add everything up. But unlike the precise career advice we give, we can’t give you an estimate for your contents insurance.
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Health Insurance
Private health insurance gives you control over your health care. Instead of waiting for months for an important operation, or being admitted to a hospital you don’t like or being treated by a doctor you don’t know, private health insurance allows you to select the hospital and doctor of your choice and avoid waiting lists. As a private patient, you have access to a range of private hospitals and physicians and can feel confident that you’re in safe hands.
There are two options when it comes to private health insurance: hospital cover and extras cover.
- Hospital insurance covers you for most or all of the costs associated with hospital accommodation. Depending on your selected policy this covers you as a private patient, in either a private or public hospital.
- Doctor’s charges are not covered under health insurance policies. Doctor’s fees are covered under Medicare and you receive back 85% of the scheduled fee set by the government irrespective if the doctor’s fees are above that fee or not.
- Extras Cover insurance helps to cover the costs of services like dental, optical, remedial massage, physiotherapy and many other health services
However, it is likely that you will not need to worry about health insurance at this stage. Students are considered dependants and qualify to be linked to your family’s private health insurance if you are under 21 years of age, not working full-time, and living at home, or if you are a full-time student, until the age of 25. You are not required to live at home to be considered dependant in this case.
But everyone is different with different circumstances. Some students live at home, some don’t, some parents have health insurance others take the view they are fit and healthy and the cumulative premiums are more expensive than treatment costs. But this is your decision. Just like Careernav gives you responsible career advice, we give responsible life options for you to consider.
Check out the following health insurance websites. Most have tailored packages for healthy students that cover the basics – you know like new glasses, braces and wisdom teeth removal. Only kidding!
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Renter’s Insurance
This is a low cost insurance, suited to people who rent or are in share accommodation. Renter’s insurance generally covers you for the two most common events for which you may need contents insurance protection: fire and theft. This insurance is designed to make sure that you are not paying for features you may not need as a renter or in share accommodation. It’s no frills but covers the basics.
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Home Insurance
If you need to read this section, then well done on owning a property. So now you have one, and unless you’re seriously rich, it is highly likely to be your most valuable financial asset.
Home insurance is a type of property insurance that covers private homes. It is a policy which provides protection against things like:
- Storm and flooding
- Burst pipe, leaks and overflows
- Fire and lightning
- Theft and damaged caused by thieves
- Vandalism and malicious damage
- Earthquake and tsunami
- Animal damage
With home insurance, many people can find themselves under insured. This means that in the event of a fire, or burglary, you will not be fully compensated for your losses. If you are a young home owner, then it’s recommended that you have complete replacement cover, so you won’t have to worry about whether your insured sum is enough. Home insurance can cover the cost of repairing or rebuilding your home, often not at an estimated value but it depends on your level of cover or insurance company of choice.
However, unless you are a young home owner, it’s likely that you won’t have to worry about home insurance for at least another few years.
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Conclusion
Insurance is necessary when you have something of value to protect. That can be you, your laptop that carries all your lecture notes or your pride and joy first car. Accept it as a part of life and just like getting career advice to make an informed career choice, make sure you gather and chase down all the information to make an informed insurance choice.
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