The first question most people ask about car insurance is “how much is it going to cost me?”

And while it’s definitely a consideration when looking to buy car insurance, it shouldn’t be the only one.

There are so many policies and extras to choose from that it makes sense to shop around before you sign up to make sure that the policy you pick suits your needs and the condition of your car.

Here are some of the most common types of car insurance policies and their basic inclusions:

Comprehensive

When it comes to insurance, more is usually, well, more. And full, comprehensive car insurance will give you that extra peace of mind, as it covers damage to your own vehicle and other people’s property as well as theft and other risks such as accident, fire, malicious and weather-related damage, plus any legal costs you may incur. You can also elect to pay an excess in the event of an incident if you wish to lower the cost of this high-end premium. Comprehensive car insurance is the best option if your car is in good condition; some insurers might not cover cars that have unrepaired damage or excessive rust. 

There are many insurers that offer full, comprehensive car insurance — shop around to get the best deal, but carefully check the fine print.

Compulsory Third Party

You must take out this insurance when you register your car, as it’s illegal to drive a vehicle without it. It protects any person you might injure while you are driving, including pedestrians, cyclists and other road users. It doesn’t cover your financial liabilities though, such as damage to another vehicle or property or to your own car. It’s important to note that each jurisdiction in Australia has different rules, so make sure you do your research about what is covered. 

Third Party Property

Owners of low-value cars would usually elect this type of cover. It covers damage to other people’s vehicles and property, as well as some legal costs, but doesn’t include coverage for any damage to your own car. 

Third Party Fire and Theft

This is basically Third Party Property, but with some add-on features that cover your vehicle.

Other considerations

Whether your car is insured for market value or agreed value can also affect the cost of your insurance premium.

Market value is where the insurance company decides what your vehicle is worth, based on its condition, age and other factors. Agreed value is where you and the insurance company agree on the value of the car when you take out the policy.

How much will my policy be?

Most insurance companies have their own way of calculating the costs of car insurance premiums.

Basically, your premium will be dependent on the type of cover and the excess you’ve elected to pay, where the car is kept, the age of the driver and their driving record, the make, model and condition of the car being insured, any modifications, the intended use of the car and whether you’ve chosen agreed or market value.

There are so many insurers out there, so be sure to do some research before you sign up, and don’t be afraid to ask questions if you can’t find what you’re looking for, or if you are unsure of inclusions. Remember that if you bundle other insurance needs with the one insurer, you may be entitled to a multi-policy discount as well as a no-claim bonus discount as a reward for being a safe driver.