Owning a car is an expensive proposition, and one of the most important aspects of car ownership is insurance. Maintaining continuous car insurance is not only a legal requirement in most states, but it’s also necessary if you want to keep your car loan in good standing. What’s more is that auto insurance can offer peace of mind.
If you’re considering financing a car, it’s important to understand the basics of car insurance and how a car loan fits into all this. Read on to learn more.
What is Car Insurance?
Car insurance is a type of insurance that helps to protect you, your car, and others on the road in the event of a car accident. Car insurance can help to pay for repairs, medical bills, and other costs associated with an accident. It can also provide coverage if your car is damaged or stolen.
There are many different types of car insurance coverage, and it’s important to understand the coverage that you need. You may be required to have certain types of insurance by your state or lender, and you may want to purchase additional coverage to protect yourself and your car.
Different Types of Car Insurance
Having the right type of car insurance for your vehicle is important in reducing financial impact if you’re ever involved in an accident. In Australia, there are four main types of car insurance on offer to consumers: compulsory third party (CTP) insurance, third party property damage, third party fire and theft cover, and comprehensive car insurance.
Across all Australian states, cars and motorbikes must have compulsory third party (CTP) insurance in order to meet the law. In Queensland, this compulsory liability insurance is included in registration, meaning it is automatically purchased when you register your vehicle.
After CTP insurance, comprehensive insurance is the most popular form of car insurance cover. As the name suggests, comprehensive insurance provides protection against a wide range of potential risks, including damage to your own vehicle, damage to other people’s property, and injuries to yourself or other people.
While third party fire and theft cover and third party property damage insurance both provide limited protection, they may not cover all the costs associated with an accident – like those from natural disasters. For example, if you cause an accident and damage someone else’s car, you may be liable for the cost of repairing or replacing their vehicle, as well as any other damages they suffer (such as loss of earnings).
In Queensland, this type of insurance is not required by law, but it may be required by your lender if you have a car loan.
Car Insurance and Car Loans
When you take out a car loan, the bank or lender will almost always require that you have some form of car insurance in place. This is to protect their investment in case something happens to your vehicle and you are unable to repay the loan.
Without insurance, you would be responsible for the entire cost of repairing or replacing your vehicle. This could end up costing you thousands of dollars – money which you may not have available, especially if you’re making regular repayments towards a car loan.
In some cases, the lender may even require that you add their name to your insurance policy as an ‘additional insured’. This means that they will be covered by your insurance in the event of a claim.
It’s important to understand the requirements of your loan agreement before signing up for car insurance. This way, you can make sure that you’re getting the right level of cover to protect both your car and your finances.
Car Loans with Buddii Finance
Understanding your rights and regulations as a car owner can be difficult at times. This is especially true if you have a car loan. Fortunately, Buddii Finance is here to help. Our team of experts can explain the ins and outs of car insurance to you so that you can make the best decision for your needs.
We work with a range of qualified and trustworthy lenders who are passionate about offering competitive car loan options, and our team of experienced loan specialists take the time to understand your individual circumstances, to ensure you receive the best possible assistance on your loan journey.
So, if you’re looking for a competitive car loan with great features, look no further than Buddii Finance. Contact our team today to learn more about our car loan options and how Buddii can get you on the road sooner.