Getting your head around insurance

A common crash in Australia and New Zealand is the rear end collision.  Particularly common in built up traffic areas, the rear end collision is often caused by a lapse in attention and the lack of a safe following gap.  Fortunately, these kinds of crashes don’t commonly result in serious injury for the occupants of the vehicles involved but they do often result in a serious hit to the back pocket.¹

The RYDA program is all about prevention of all road incidents – from serious crashes to minor dings, we arm our students with strategies to avoid them all.  However, as the Safe System recognises, we are human and humans make mistakes – particularly when we’re young and still trying to build experience, hazard perception skills and knowledge on the road.  The good thing for us is, we can insure ourselves to help ease the sometimes-enormous financial burden that can come along with those human mistakes.

Our students often ask questions regarding insurance.  In fact, we’ve even heard from a few parents who have questions about helping their young driver navigate the world of insurance.  At RYDA, we’re in the lucky position to have all sorts of road safety experts as part of our extended team.  When it comes to insurance, we’ve teamed up with one of the best in New Zealand, AMI Insurance.  They helped us out with answers to some of the more common questions.

The comments below relate to New Zealand insurance laws and may be different in Australia – regardless, it’s always recommended that you do your own research and fully understand the contract you are entering into.  We hope the points outlined below will give you a great starting point on the questions you should ask.

¹ MRJ Baldock, AD Long, VL Lindsay, AJ McLean (2005). Rear end crashes. Centre for Automotive Safety Research, iii-v, 5

Q: Don’t I get insurance as part of my registration / from the ACC?  Why would I need more?

A: In Australia, the insurance that comes along with your vehicle registration, known as Compulsory Third Party Insurance (or CTP), covers injury to people.  To make sure people injured in road crashes can get the medical support they need, this insurance is compulsory.

In New Zealand, there is no compulsory third party vehicle insurance.  Instead, the New Zealand Accident Compensation Corporation (or ACC) provides no-fault cover for anyone (including visitors to New Zealand) who is injured in a vehicle accident in New Zealand.

However, the cover provided by CTP Insurance and ACC is for personal injury.  Neither CTP nor ACC will cover any damage to property you’re responsible for or help with the costs of a damaged or stolen car, so it’s important to make sure you take out your own vehicle insurance.

Q: How do I know which kind of insurance to pick?

A: Discuss your requirements with an insurer who will be able to advise the type of product best suited to your situation. Have a close look at what each type of insurance will cover you for and make the best decision for you.  Some insurance will cover you for damage to your vehicle, other people’s property as well as fire and theft, while some may only cover for someone else’s property.  The different kinds of insurance lets people weigh up the value of their own car vs the cost of insurance while still giving them options to cover costs if they are unlucky enough to be the at-fault driver in a crash with the top of the line Tesla.

Q: What sort of information do I have to record if I have a crash?

A: Get as much information as you can about the crash.  There are some great tips on AMI’s website:

• When it happened: the date, time, location, weather conditions, traffic conditions & road markings/signs/signals. A quick sketch of the crash scene can often help here.
• The cars involved: the make, model, registration number, colour, condition, estimated speed, direction, use of lights/indicators & number of passengers.
• Who was involved: their contact details, description/distinguishing features of driver(s), contact details of passengers, pedestrians/other witnesses, details of any police officers involved?
• What was damaged: photos of the location and a description of the damage to vehicles/property – taking photos of the damage is also a good way to record what happened and share with your insurance provider at claim time. Also take note of any injuries to people involved.

After a crash, even a minor one, you can be in shock and it can be hard to remember which questions to ask.  Here’s a handy checklist you can print out and leave in your glovebox.

Q: I’ve heard that sometimes insurance companies don’t pay up.  What’s that about?

Here are a few common policy conditions and exclusions that you need to be aware of:

Crashes involving drugs or alcohol – Insurers will often have a clause excluding cover where the driver or person in charge of the vehicle is driving with an excess alcohol reading or is under the influence of drugs or other intoxicating substances.

Breaching licence/Unlicensed drivers – Drivers who breach the terms of their licence or who are not legally allowed to drive in this country are usually excluded from cover.

Unsafe vehicles – Using your vehicle while it is damaged or unsafe can compromise your insurance. It is important to keep your vehicle in a warrantable/registerable condition and take all reasonable steps to keep the vehicle in a safe condition.

Modifying your vehicle – Some modifications will make your car more likely to suffer a loss. Like increasing the chance of theft, or some engine and suspension modifications may increase the chance of loss whilst driving. Generally, insurers assume your car is stock standard – as per the manufacturer’s specifications. So, if you make any changes to your car (except replacing parts required for normal maintenance) be sure to let your insurer know straight away.

Other important things to remember:

Additional drivers – Check your insurance policy before you hand the keys over to another driver. Some policies exclude drivers who are under a certain age or restrict cover to only when the vehicle is being used by drivers who are noted on the policy.

Keeping your insurer in the loop – like any contract, you need to let the other party know if you’re making changes – you need to let your insurer know if you change the way you use the car, like taking on a job as an Uber driver or parking it out on the street instead of in the garage – all of this changes your risk profile.  Be straight with them and make sure everything’s out on the table so you know you’re covered.

Paying your premium – Set up periodical payments and reminders to make sure you don’t let your insurance lapse.

REMEMBER: Insurance is a two way contract.  If you honour your part of the contract, your insurance company will honour theirs.

Research your options and discuss with family

There are a lot of things to take into consideration when deciding on vehicle insurance.  We encourage young drivers to get involved in the process – even if it’s just changing the insurance on the family car to include them as an extra driver.  Do some research, discuss the different kinds of insurance and decide what’s right for you.

Check out AMI’s young driver page.  Even if you’re in Australia, there’s some great information here. At RYDA we know that the majority of young drivers approach their learning seriously and want to be responsible road citizens.  We partnered with AMI because they, like RYDA, care about the welfare of younger drivers.

Click on the image below to learn more about AMI’s young driver philosophy and insurance options.