The Australian Car Insurance Industry is Changing. Car Insurance by yaoyufang


									             The Australian Car Insurance Industry is Changing.

       When our parents wanted to buy car insurance, they would have turned to insurance
companies such as AAMI, NRMA, RACV, RACQ or even approached their existing
insurance company which provider their house or life insurance. They then bought the
insurance that was offered by their preferred provider without much thought and, more often
than not, without any shopping around. Today, things are different. Consumers are far more
savvy and demand get far more from their car insurance budget. With the proliferation of
insurance providers and the variety of ways a consumer can purchase a policy, the chances of
making a significant saving on your car insurance costs are much better.

         Australians are becoming more reliant on the Internet when it comes to shopping for
car insurance, leading to the entry of new car insurance players through the Internet alone.
There are very few of us who have the time (or inclination) to traipse between several
insurance offices and compare the different products and policies offered. Likewise, it may
literally take hours on the phone to obtain quotes from several different companies, and then
you still have to compare the products and prices to decide on the policy that is right for you.

        Many (if not all) car insurance companies now have a presence on the internet and
provide the ability to obtain a quote and buy car insurance policy online. You simply enter
your information into the forms provided car type, driver(s) age, existing insurance rating if
you have one etc. You then choose what sort of coverage you require and then push the
calculate button and up pops your quote and a quote number. Each individual company will
let you know when the quote is calculated and how long it is valid for. Once you’ve decided
on the company and policy you wish to purchase, you just type the quote number back into
the companies website and, using your credit, purchase the insurance. (You can also take the
quote number and contact the insurance company by phone or in person if you have more
questions or don’t want to use your card online.)

       Buying insurance over the net is not only quick and convenient, several car insurance
companies offer discounts for buying online. By selling car insurance online, car insurance
companies don’t have to employ as many phone operators or counter staff in their branches
and hence pass on these savings on to the end user (YOU). The proliferation of these new
companies offering car insurance online has also led to the savings associated with increased
competition. In summary, the Australian car insurance industry is rapidly changing, with the
changes most likely to benefit the consumer!

        Car Insurance Prices: What are the Predictions For 2008?

       Market analysts suggest that car insurance prices in general should fall during 2008
due to increased industry competition -- both from new entrants and from existing players

that are increasing their presence in the market. The use of the Internet by consumers has also
led to price decreases, as the costs associated with selling online versus in-branch or over the
phone, is much lower for car insurance companies who are now passing these savings onto
the end user.

       There are several new players in the Australian car insurance industry. Many of these
companies only have a web based presence, and thus can offer cheaper prices than traditional
providers who have physical branches around Australia. While both the traditional insurance
companies and the net-based companies deal with claims processing, net based companies
operate at a lower cost by using technology to reduce the number of branches and other
overhead to pass on the savings to the consumers in the form of lower premiums.

        Another new player to enter the car insurance market is the Commonwealth Bank
which already has a presence and a customer base in other areas of the insurance market.
CBA is hoping to capitalise on customer loyalty and successfully enter the car insurance
market. Rumour has it that they will also announce several special offers and discount rates to
attract new customers to their brand. The entry of this well known and respected insurance
provider, can only increase competition and lead to more competitive car insurance policies.

        Another area in which consumers are expected to save in 2008 is in the age- specific
areas of car insurance. As we all know, young people (18-25 males in particular) pay
significantly more for car insurance than any other demographic. It is believed that insurance
companies are going to start targeting this segment of the market and offering discounts to in
order to obtain a larger share. This has already occurred in other segments with older drivers,
and women in particular, being offered favourable rates.

        Consumer’s use of the Internet to obtain quotes and compare different insurance
providers and products, has also increased their awareness of some smaller and less well
known companies and also of companies that have not traditionally sold to their area. This
has also led to the increased competition being that the big companies are now facing. And
we all know that as their slice of the pie becomes smaller, they will do anything they can
(including lowering their prices) to retain market share.

       So according to the above analysis, all Australians should be able to look forward to
cheaper car insurance premiums and better products, as the effects of the growth of
competition in the market continues to be felt in 2008 and beyond.

                  Car Insurance Costs Do They Vary By State?

The cost of car insurance premiums not only varies by state, but also by the location of
consumers within each state. The major reason for the variance, is the risk perceived by the
insurance companies. This article will explore the findings of a recent survey into car
insurance policy costs that was conducted by CANNEX which is a respected independent
specialist research company widely used by governments, financial institutions, and the

media. During their investigation, CANNEX not only found discrepancies between the costs
of like policies between states, but also found that some particular consumers within states
were paying even more for their policies than the adjusted state prices would suggest.

       New South Wales has the highest policy prices of any Australian state due to higher
population density. Dense population increases the chances of not only accidents occurring to
the vehicle, but also the likelihood of the vehicle being stolen. The study found that residents
of New South Wales pay on the average 68% more than the national average for car
insurance policies. They also found that men under the age of 25 were paying up to $1,879
more for their coverage. The cheapest quote obtained by CANNEX for this age group was
$899, while the most expensive quote they obtained was $2,777. The average quote for males
under 25 was $1,775.

        Victorian motorists also pay above the national average for car insurance due to the
large population of the state and the associated risks involved. Victorian motorists, on
average, pay 8% more than the national average for car insurance. Young men and women
under 25 can both save over 55% on their premiums by comparing offers, while families
(parents with young drivers) in Victoria can be asked to pay up to 60% more for comparable
policies from different insurance companies.

        Queensland motorists pay on average 12% less than the national average, although the
figures show that all motorists in Queensland have the potential to save an average of 49% on
their premiums by comparing quotes, with the average saving to the consumer being $560.
Young men are again being asked to pay the biggest discrepancy in prices, with possible
savings available of $850.

        South Australians pay 18% less than the national average for their car insurance
policies, but the study showed that all drivers could still achieve savings of more than 36% if
they are prepared to compare the prices being offered. The group who stand to make the
largest savings in South Australia are the car connoisseurs who can make a potential saving
in dollar terms of $604.

       Western Australians also pay 18% less than the national average, with an average
potential saving of $456 overall. Young drivers could potentially save over $700, while
mature drivers in WA have the smallest potential of savings of any of age group in the
country at $276.

        Tasmanian Drivers pay 33% less for their insurance premiums than the national
average. However Tasmanians should shop around as potential savings of nearly 50% can be
achieved by many sectors of the market. Young Tasmanian drivers are asked to pay more for
their insurance than many young drivers throughout the rest of the country.

These findings are not surprising as most Australians have always known that people living
in metropolitan areas tend to pay more for car insurance especially in such density populated
cities such as Sydney and Melbourne. However, the report does provide concrete statistics
which could be reviewed when choosing your car insurance policy.

          3rd Party or Comprehensive: Which Should You Choose?

Third party liability insurance against injuring other people is compulsory in all Australian
states. Victoria includes compulsory third-party insurance in the costs of registering your car,
while other states like New South Wales allow you to shop around and acquire third- party
policies yourself. The third-party policies that will be discussed in this article are third party
property damage policies -- policies that cover damage done by to other cars and or property
by your vehicle. Comprehensive policies cover not only the other car / property damaged in
the accident, but also the costs of replacing or repairing your car if it is damaged.

We suggest that you purchase at least third party insurance to cover yourself in the event of
an accident involving another car or property. Do you really want to, or can you afford, to
pay to have a brand new BMW, Porsche, or Rolls Royce repaired? You also have to consider
damage to other property. For example, if your car runs out of control and damages
someone’s house or even another person. Please note that third-party property (also called
extended third party) insurance will not pay to repair/replace your car as it will only pay for
damages to other person’s property.

        Comprehensive car insurance will not only cover you for any damage caused by you
but will also cover your own car for repairs or replacement. Comprehensive insurance also
covers the policy holder in the event of theft or fire to your vehicle.

        The are a number reasons a person may choose to insure a vehicle for third party
property damage only. First, many people consider it as a good alternative for older or
inexpensive cars. Sometimes the cost of comprehensive insurance may be almost as much as
the value of an older car and people make the choice to risk paying to replace their car
themselves, while they still have the peace of mind of knowing that damages caused to other
people’s property will be covered. It’s also a good alternative if budgetary constraints make
the cost of comprehensive insurance prohibitive. Finally, some car insurance companies do
not offer comprehensive car insurance for older, inexpensive vehicles.

        Comprehensive insurance is an option typically chosen by people who have a
substantial financial investment in their cars. Most of us do not have a spare $20,000+ to buy
another car in case something happens to our existing car. Comprehensive car insurance is
also a compulsory requirement of most, if not all, car finance contracts – the lenders insist
that the car is comprehensively insured so that if it is irreparably damaged, lost or stolen, the
insurance will cover the amount remaining on the loan. If you’re ever signing a car finance
agreement, make sure you read the fine print because If the car is not fully insured, you may
breach the agreement.

        The Differences Between Major Car Insurance Companies.

        The basic policies of major car insurance companies are all remarkably similar. The
differences only become obvious when you look at the policy cost and the extra benefits you
receive from a particular insurance provider.

        If you sign up for comprehensive insurance, you may be offered the availability of a
hire car for a certain amount of time while your car is being repaired, or until your claim is
paid out, or if your car is recovered in the event of a theft. The period that this hire car is
available may vary between companies, or even depending upon the policy premium you

       The length of the time the average claim takes to be processed may also vary between
companies and it is something you should inquire about. What will you do if the company
provides you with a car for 7 days, but will not finalise your claim for a month or two?

        Another difference between insurance companies, is whether or not you get the choice
of who repairs your car, or if you are obligated to send the vehicle to a repair company
chosen by the insurance company. You may be more comfortable of the work performed by
someone you know, or you may be able to find a mechanic who can repair and return your
car to you faster than the company selected by the insurance company. Also, who pays the
costs of having your vehicle towed to your chosen repairer (if they allow you to choose) or if
there is a maximum distance they will pay to have the vehicle towed, requiring you have to
cover the cost for the extra distance?

        Some companies offer accommodation to the policy holder if the accident occurs a
certain distance from home. However, the distance from home required to qualify for this
benefit as well as the length of stay in the accommodation, varies between insurance
companies-- and some don’t offer this service at all. Another difference is the maximum
value covered for possessions that are stolen from inside your vehicle or damaged in the

        There are many add-ons and small variations not only between companies but even in
the same policy depending upon whether you pay extra for them—for example you can pay
extra to have your windscreen insured so that you file a claim for a broken windscreen,- it
does not affect your no-claim bonus, nor will you have to pay the normal excess. The excess
payable, and what does and does not affect your no-claim bonus, will also vary markedly
between insurance companies.

        The best advice is that you carefully read the fine print of the policy, know exactly
what you are covered for or not, and what additional costs you may incur, before you sign the

          What to Avoid When Searching For Cheap Car Insurance

        In the current economic climate (rising interest rates and higher fuel prices), we are all
trying to get the best value for our dollar. Car insurance is an area where there are significant
savings that can be made, but often at a cost.

        The main consideration when looking for cheap car insurance, is what do you get for
your money? Is a policy that saves you $100 a year really a saving in the long run if they
won’t pay you a reasonable value for your car? Ask any insurance company what they
consider the value of your car to be before you sign the contract. You may be unpleasantly
surprised when you learn the price range they are willing to pay if your car is written off. You
need to be sure that the bottom value they quote is as close as possible to what you believe
your car is worth. If the range offered does not meet your expectations, you may need to
inquire about obtaining an “agreed value” policy – this will cost you a little more, but at least
you will know that you have enough money to replace your car if it is written off.

        Many people try to save money when buying a policy by reducing the amount of
extras they purchase. Cutting unnecessary extras can save you money, but be careful what
you forego. A hire car for a certain period of time while your car is repaired may be
unnecessary for someone who has easy access to public transport, but if you live in a rural
area, or you are disabled or have small children to transport, it may be necessary for you to
have access to a vehicle and the cost of hiring the car yourself will far outweigh any
“savings” you achieved by not taking this option in the insurance.

         The customer service you receive from the company you buy your policy from should
also be consideration when buying cheap car insurance. Will they take your claim over the
phone or do you need to spend hours filling out paper work or worse. For example, do you
still have to lodge the claim in person at their office? Will they make you feel like a criminal
or a valued customer when you lodge your claim?

        Does the company you are considering have good or bad reviews from other
consumers? Ask your friends and family if they have ever had any dealings with the
company, or search the Internet for feedback or complaints about them. You will find many
sites on the web, including this site, where this sort of information is available.

       The basic advice when searching for cheap insurance is to decide on your minimum
requirements from the policy, and read the fine print to ensure that the policy you buy will
meet these requirements. In general, always read the fine print so you know exactly what you
are and are not covered for, and if you don’t like what you see, walk away and research
another policy and or insurance company.

                     Does Cheap Car Insurance Really Exist?

The short answer to this question is yes! The long answer is that you will have to be prepared
to do your homework and spend some time researching various companies and policies to
ensure you really are getting a bargain and getting the policy you want at a reasonable price.

        The car insurance market in this country is getting more competitive all the time and
this competition is translating into price reductions on insurance all over Australia.
Traditionally, however, Australians have been very loyal customers to their chosen insurance
companies and have not always taken advantage of offers made by other companies. Be
honest. Haven’t you been guilty of just signing the renewal and sending off the check to your
existing insurance company without shopping around to find out if you can get a better deal?
I am not ashamed to admit I have been guilty of this for years.

        A recent study by CANNEX, a well respected independent research company, has
shown that savings to the average consumer of 40% or more are possible all over the country.
CANNEX surveyed hundreds of different products provided by numerous different insurance
companies in every state of Australia (they did not survey the Northern Territory and
assumed the ACT would reflect NSW figures.) The variances between the top quotes they
received and the cheapest quotes for drivers of a particular age were huge. In some cases, the
dollar differences between the quotes for the same products for the same drivers were nearly
$1000. The CANNEX survey included all drivers from under 25 years, old men and women,
through to senior drivers and even car connoisseurs (those people with expensive luxury
vehicles.) They found that every group of consumers in every state could make savings on
comparable products by shopping around.

        A warning for people who are looking for a bargain on their insurance. Real savings
can be made, but ensure you are comparing like products and are not comparing apples with
oranges! When you get a quote, make sure of what is covered and just as important, what is
not covered! When you find a cheaper product, you need to be sure that it really is a cheaper
quote for the same product, and not an inferior product that does not offer you the same level
of protection. Likewise, you may find a product at the same price or a slightly higher price,
that offers you benefits that you are not entitled to under another policy.

        Many car insurance companies now offer quotes on the Internet where you type in the
relevant details and are then provided with a quote for the policy. A good suggestion is to
obtain quotes from as many companies as possible in order to narrow your choices down to a
short list that you can then research further as to the details and inclusions or exclusions of
the respective policies.

       One last suggestion. In order to save on your car insurance costs, approach your
current insurer and ask if they can match or even improve upon a cheaper quote you have
obtained from another company. You’ll never know unless you ask!


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