“My mom sent me money for a car, but the cops impounded it because I had no insurance” – Martin Henderson
Are you over- or under-insured? In other words, do you have enough insurance cover to mitigate the risk of owning a motor vehicle? How do you determine whether you are adequately insured? There is nothing worse than discovering too late that you are under-insured, or your vehicle’s manufacturer’s warranty has expired, and you have to foot a costly repair bill for more than one vehicle.
Warranties and insurance policies
Before we look at some of the answers to the above questions, let’s look at what warranties and insurance policies are as well as the main differences between these two options.
In a nutshell, a warranty is the vehicle manufacturer’s promise that the car will perform as advertised. If it does not do so, then the manufacturer has to repair or replace the vehicle at his own expense. An extended warranty is an extension of the manufacturer’s warranty. It is not necessarily backed by the manufacturer; nonetheless, it has the same aims and objectives.
An insurance policy, on the other hand, is a form of protection by an underwriter to pay for the repairs to your car should you be involved in an accident. If you are the cause of the crash, some insurance policies will pay for the vehicle repairs to the other cars involved in the accident.
Deciding what warranty and insurance cover you need
There are a couple of questions that you need to ask yourself when investigating whether you should increase your insurance cover or not.
Can you afford to cover expensive repair bills yourself?
Because a car is made up from a wide selection of moving parts, there will always be a certain amount of wear and tear as these components rub against each other while moving. The more mileage you put on your vehicle, the greater chance there is of these parts needing to be replaced.
The manufacturer’s warranty covers the replacement or repair of a stated list of the main engine components for a specified number of years. Should one of the listed parts, such as the transmission, break during this timeframe, the manufacturer will cover the replacement of, or repairs to, this part, However, if the manufacturer’s warranty has expired, and you do not have an extended warranty in place to cover these parts, then you will have to foot the bill yourself. Consequently, I believe that it is better to buy used extended warranty at Warranty and Insurance to prevent this situation from arising.
Do you have the right vehicle insurance?
There are four types of car insurance available for you to choose from; ergo, Compulsory Third Party Insurance (CTP); Comprehensive Insurance; Fire and Theft Only; and Third Party Property Only. CTP insurance is mandatory in Australia and only covers bodily injuries caused by a vehicle accident. Fire and Theft Insurance only covers the damage to your vehicle cause by fire, as well as the theft of your car. Third Party Property Only insurance only covers any damage to other vehicles caused by the owner’s vehicle.
Finally, comprehensive insurance covers general and accident damage to your vehicle, theft of your car, as well as malicious and weather damage to your vehicle. The high levels of cover offered by a comprehensive insurance policy alone should give you enough reasons to buy CGU comprehensive car insurance from Warranty and Insurance.
Apart from the fact that it is a legal requirement for all vehicle owners to have car insurance, my experience has shown that it is a good idea to take out both an extended warranty on your vehicle as well as comprehensive vehicle insurance.