Beyond this, all drivers must consider what level of optional insurance they want to cover the damage bill for any vehicles or property involved.
Given the regularity of road accidents, it is definitely worth having at least some level of coverage to protect against the nightmare scenario that you collide with a Porsche. If you don’t have insurance, you’ll be responsible for paying the entire Porsche damage bill out of your own pocket. Ouch!
There are three main choices for optional car insurance coverage.
The most minimal is called a third-party property damage (TPPD) policy, which pays the damage bill of the Porche (or any other car you hit), but not any damage to your own vehicle, either by theft, fire, or an accident that you cause (remember, if you’re not at-fault, the other driver will be responsible for paying your damage bill).
One step up from this is a third-party fire and theft (TPFT) policy, which covers you for the Porche 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 exclusions apply, so you have to read the fine print). This type of insurance can also help you avoid the hassle of chasing payments if you are hit by an uninsured driver (your insurer will chase them for you).
Comprehensive is the most expensive. Indeed, I ran a quote this week and downgrading my coverage to TPFT would reduce my annual premium to $351 a year, and reducing it to TPPD would shave it to $272.
For cheaper and older cars, you may want to consider one of the lower levels of coverage, particularly if you felt confident you’d have the savings needed to repair or replace your car if it is damaged. Entirely up to you.
Agreed or market value?
If you opt for comprehensive cover, you can consider an agreed-value policy or a market-value policy.
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Agreeing to accept a pre-determined dollar amount to be paid if your car is totalled – rather than having your payout calculated at the prevailing second-hand market rate of your car – can substantially reduce your premiums.
I have my coverage set to the lowest agreed value allowable for my car, at $11,250. It wouldn’t be enough to buy my car back, but I figure it’s enough to buy a set of wheels, should the worst occur.
Up your excess
I also have my policy set to the highest allowable excess – that’s the dollar amount you agree to pay out of pocket if a claim is made. This reduces your upfront premiums. My excess is set to $2000.
Shop around
Former competition tzar Allan Fels conducted an inquiry which found insurers, despite their claims, charge a so-called “loyalty penalty” to longstanding customers.
Premiums are set low in the first year or two, and then inflate to higher rates than those offered to new customers. Sneaky.
So, shop around on websites such as Finder, Canstar, Compare The Market and RateCity. And if you do call your existing insurer and ask for a better deal, make sure they provide a quote to you as a new customer, not as a modification to your existing policy.
Calculate your kilometres
Premiums are generally lower the less you drive your car. Some insurers even charge a low annual base premium plus a per-kilometer rate throughout the year, which could work out well for infrequent drivers or second cars. Check comparison sites to find these deals.
Restrict driver ages
Some insurers also offer cheaper premium policies if you agree to only let people of a certain age, such as 40-plus, drive your car. Sorry, kids.
Beware add-ons
Consider your own individual needs, but I dropped my windscreen cover when I found out I could get it cheaper by opting for a slightly higher tier of roadside assist membership.
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