New to driving? You've probably got big plans to hit the road. But before you do, make sure your car insurance is sorted. This guide can help you get it done.
How does car insurance work?
What is car insurance?
First things first, car insurance is a contract between you and your insurer. What your insurance policy covers will depend on the type of cover you choose. Usually, you will pay a monthly or yearly fee, known as a premium, and the insurer provides coverage according to the policy terms. Your premium costs less if you pay annually, rather than by instalments.
What are the different types of car insurance?
Most insurers will offer either Comprehensive or Third-Party Property Damage cover. With AAMI Comprehensive Car Insurance, your car is covered for accidental loss or damage caused by insured events like collisions, theft, and other vehicle-related incidents. It also includes any damage your car may cause to someone else’s car or property.
Third Party Property Damage will only cover damage your vehicle causes to someone else’s car or property. You can increase your cover to include Fire, Theft & Third Party Property Damage cover for an additional premium. This covers you if your car's stolen, and covers damage caused to your car by fire or attempted theft for up to the amount covered shown on your certificate of insurance.
What’s not covered by car insurance?
For AAMI policies, claims are not covered if the driver involved is under the influence of alcohol or drugs, or refuses a breathalyser test. Issues related to the car’s condition, such as rust or corrosion, and using the incorrect fuel are also excluded.
These are only some examples. You can see the full list of coverage exclusions in the relevant Product Disclosure Statement (PDS).
What is a car insurance claim?
Following an incident, you may choose to lodge a claim for loss or damage to your vehicle or someone else’s car or property. Your insurer will assess your claim and determine if you’ll be covered based on the policy terms.
What is car insurance excess?
Car insurance excess is the amount you need to contribute towards your claim as described on your certificate of insurance. Some insurers will allow you to select your excess which can change your premium. Choosing a higher excess will lower your premium however you will be required to contribute more at the time of a claim. Similarly, if you choose a lower excess your premium will be higher, but you will have less to contribute at claim time.
With AAMI Car Insurance policies, if the driver listed on the policy is under 25 years old, an age excess will also apply to your claim. This is in addition to the standard excess and any AAMI Flexi-Premiums® excess you have selected. You should also know, if a driver under the age of 25 was unlisted at the time of a claim, a higher age excess will apply.
Our article, what are the different types of car excess?, and your Additional Information Guide relevant to your policy, located in the ‘Other Important Documents’ section, may help answer any questions you have about this topic.
AAMI Compulsory Third Party (CTP) Insurance and Motor Accident Injury (MAI) Insurance
You need to get Compulsory Third Party (CTP) Insurance – known as Green Slip in NSW – before you can register your vehicle. CTP insurance covers injury-related costs for which you might be liable following a car accident, such as personal injury claims and payments for lost income. In other words, it’s insurance for injuries, not for your car or someone else’s vehicle or property.
If you’re in New South Wales, Queensland, or South Australia you must buy CTP Insurance separately before registering your car. In Victoria and Western Australia, CTP is included in the registration fee and managed by the government.
In the Australian Capital Territory, you’ll need to arrange Motor Accident Injuries (MAI) Insurance. It’s like CTP, but covers everyone injured in an accident, regardless of who’s at fault.
AAMI Comprehensive Car Insurance
As the name suggests, this offers our broadest level of coverage. This covers accidental loss or damage to your car caused by an incident and your legal liability for loss or damage the use of your car causes to other people’s car or property.
Plus, if your car is damaged in an incident that wasn’t your fault, or it was stolen, we’ll provide you with a hire car. Limits and exclusions apply. For full details on what we cover, refer to the PDS.
AAMI Third Party Property Damage Car Insurance
This policy covers your legal liability if the use of your car causes loss or damage to someone else’s vehicle or property – but not loss or damage to your own vehicle. Limits and exclusions apply. For full details on what we cover, refer to the PDS.
Should I stay on my parents’ car insurance policy?
If you are driving someone else’s car on a regular basis, you may need to be a listed driver on their policy. If you remain unlisted, and are under 25 years old, this could mean incurring a much higher age excess.
If you own your own car, you should consider taking out an insurance policy.
How to list an additional driver
- log into their AAMI My Account.
- Select the policy you’d like to add the additional driver to.
- Choose ‘Update policy’ and then ‘Listed drivers’.
- Provide the extra driver’s details.
- Pay the extra premium, if applicable.
How can I reduce my car insurance premium?
If you have AAMI Comprehensive Car Insurance, AAMI Flexi-Premiums® lets you vary your excess. Choose a higher excess to reduce your premium now or choose a lower excess and contribute less at claim time.
Choose a policy that meets your needs – whether it’s AAMI Comprehensive or Third Party Property Damage. If you choose the latter, you can include Third Party Fire & Theft optional cover for an extra premium.
Paying annually instead of in instalments can help lower your premium too. It’s all about finding the right balance between protection and price, so you stay covered and in control.
If you’re an AAMI customer, it’s a good idea to check your policy before the end of each renewal period as your circumstances may have changed over time. Use AAMI online services or the AAMI App to update or renew your policy, 24/7.
Remember to take it easy on the roads. No matter what, drive safely, watch out for other motorists, pedestrians, and cyclists, and always adhere to road rules. Because after all, driving is a gift, privilege and responsibility; Drive safe!