Kids on Their L Plates? Make Sure Your Car is Covered

Are your kids learning how to drive? There’s so much to teach them. How do you change a flat tire? How do you put petrol in the vehicle? What’s the right way to park a car? Why shouldn’t you text and drive? How close can you get without hitting something? All of this knowledge is necessary; for them and the car. However, accidents happen, and it won’t alwaysbe your teen’s fault. Let’s look at your options with car insurance so you can make sure your (or their) car is covered.

The Legal Minimum

Compulsory third party or CTP insurance is the minimum legal requirement to drive a car in Australia. You need it to get your learner’s permit, renew your driver’s license or register your vehicle. This type of insurance isn’t really for your benefit but for the sake of everyone else on the road. It protects people on the road by paying for their medical bills and other damages should you hit them.

Third-party property coverage takes it one step further. It’ll cover the damage to their property such as their car and related legal costs. However, it doesn’t cover damage to your vehicle or pay for your medical bills. And it definitely won’t pay to replace a totaled car.

Collision Insurance

Collision insurance is the next level in auto coverage. It’ll pay for damage to your vehicle if you hit someone or are hit by someone else. Collision insurance may or may not pay out if you’re hit by an uninsured driver. That’ll depend on the insurance carrier and the policy you sign up for. You’ll probably pay more to be allowed to select your own repairer. Note that a car warranty doesn’t cover collision damage, so don’t expect the shop to pay for your child’s fender bender.

Comprehensive Coverage

Comprehensive car insurance is the best car insurance to have for new drivers and new cars. It’ll provide the same coverage as collision insurance plus more. For example, it’s the only insurance policy for cars that covers malicious damage, weather-related damage, fire and theft. It’ll pay for any property damage caused by the vehicle, such as when your child backs into your garage or hits a tree. It’ll also pay for the replacement or repair of other vehicles, such as when your teen hits another car in the driveway. The only exception to this rule is if you gave your teenager a car so beat up that you won’t notice extra dents and scrapes. For example, there are insurers who may not offer comprehensive insurance if the car has rust or un-repaired damage.

There’s still some variability between the policies offered by insurers. For example, you could insure the car for the market value or its agreed value. Market value is what the car is worth at that time, and if the car is on payments, you risk being reimbursed less than the outstanding balance on the car note. Agreed value may be a higher value, and in some cases, it is the cost of a replacement car that is equivalent to the one you just junked. Note that you will pay higher premiums for this level of coverage.