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Car insurance for beginners

27 July 2016

Cheap car insurance is tempting but, like most important purchases, price should be only one factor worth considering before handing over your hard earned cash.

So here’s a checklist of what to think about when choosing car insurance, that could end up saving you both time and money:

1. The extent of cover – what you’re really insured for

2. Choose the right policy for your circumstances

3. Find out about policy benefits like whether you get towing or a rental car

4. Know how your claim will be settled, so you get what you expected

5. Get quality repairs

1. Extent of cover

The extent of cover refers to what you are actually covered for, such as theft, damage to your car or damage to someone else's car or property, towing following an accident, glass, keys and locks, a rental car while your own car is off the road and temporary accommodation. In New Zealand there are generally two types of cover to choose from – comprehensive and third party. Your choice will determine how much you pay towards your premium and in return how much your insurer will pay out, should you make a claim.

2. Choosing the right policy

At AA Insurance we offer the following polices that allow you to choose the cover that best suits your situation:

Comprehensive
Provides full insurance (including fire and theft, and at an Agreed Value) and offers cover for any accidental damage done to your car as well as any damage done to other people’s car(s) or property. At AA Insurance there are optional, additional benefits like Excess-Free Glass Cover and Rental Cover.

Third Party, Fire & Theft
We'll take care of the costs if you accidentally damage other people’s car(s) or property. Plus, if your vehicle is stolen or damaged by fire we'll pay up to the Agreed Value to repair or replace it. At AA Insurance, this policy also has an optional, additional Excess-Free Glass Cover benefit.

Third Party
This covers the damage you cause to someone else’s car or property in an accident, although it won’t cover the damage you cause to your car. If price is an issue or your car isn’t worth much, then third party insurance which, at around $5 a week is less than a cup of coffee, can be a great option.

3. Your insurance benefits

The benefits of your policy largely depend on the cover you choose. For example, our Comprehensive policy covers the cost for towing, storage for your car and transport for you and your passengers if you’re in an accident, whereas our third party policies don’t. There are also optional benefits that may save you money in the long run, like Excess-Free Glass Cover, because we know things like windows are often damaged.

It’s also worth checking for any discounts. Sometimes, the more insurance policies you have with one insurer, the more discounts you may be able to accumulate, such as AA Insurance’s multi-policy discount for customers with two or more polices. Having all your policies (such as carhomecontents or landlord) with the one insurer can also make claim time less stressful, and if it’s for the one event you may only need to pay one excess.

4. How your claim will be settled – Market Value vs Agreed Value

If your car is written off as a total loss, meaning it’s not economical to repair, it’s important to know how your insurer will settle your claim. There are two options insurers mainly use – Market Value and Agreed Value – and these will be highlighted when you get a quote for your policy.

Market Value looks at the current value of your car at the time of loss, so you could be surprised at how much you will be paid out. You may also discover you’ve been paying too much for your premium compared to the value of your car.

With Agreed Value, like we offer at AA Insurance, your insurer agrees to pay out the amount your car is insured for on your most recent policy schedule, which often means your claim will progress quicker too because the value has already been agreed on.

5. Quality repairs

Our claims data shows that most car accidents involve repairs rather than full replacement, so it’s worth checking with your insurer the quality and process of the repair work that’s undertaken should you need to make a claim.

You want to be sure your car will undergo a quality repair and that the work and parts are guaranteed. Will you need to get quotes for the work yourself? Do the repairs come with a guarantee? Can you get a rental car while you’re waiting for your car to be repaired? These are all important considerations when choosing an insurer, so ask before you take out a policy to avoid any nasty surprises or hassles come claim time.

In Auckland and Hamilton we provide a Customer Service Centre that’s a one-stop-shop for all assessment, quotes, repairs and quality checks. Regardless of location though, our customers' cars are repaired by specialists from our Quality Repairer Network, with all work receiving our Lifetime Repair Guarantee, so that you can be sure your car will undergo a quality repair and that the work and parts are guaranteed.

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