Impact of COVID-19 on Your Motor Insurance

Many of us are part of the millions of people whose daily commute to work has been reduced from hours in traffic to a few steps to your home office. Cars, which have helped make travel easier, are used far less leading to the question: do I still need to maintain my motor insurance?

Motor Insurance in Australia

The minimum legally required motor insurance in Australia is included with your vehicle registration. This is called the Compulsory Third Personal or CTP insurance which covers your liability for health, medical, and disability claims. For example, you cause damage or injury due to a vehicular accident, this would help you compensate the victim.

It does not cover your personal health or medical needs. You will have to secure your own travel or personal insurance and it is very much recommended!

Third Party Property insurance is not compulsory. This type of insurance protects you against liability for damage your car might cause to other people’s property. In the case of a collision, this may be the other car in the accident. It also covers damage to physical property.

Changes to Motor Insurance due to COVID-19

Some insurance brokers compute premiums based on the average distance travelled monthly. With stay-at-home orders in place, this figure has been reduced greatly.

Here are answers to some questions you might have about your insurance policy!

Can I Temporarily Suspend My Motor Insurance?

Depending on your insurance broker, you may temporarily “freeze” or suspend your motor insurance. You will not pay but your coverage will also be temporarily removed.

This option is usually available for those going on trips longer than a month, deployed or assigned to a distant workplace, or any situation the car will not be used at all.

There is still the risk of something happening to your car even when it’s just parked at home. Most insurance brokers would advise against removing coverage, even temporarily.

Can I Cancel My Motor Insurance?

If you plan to drive at all, even if it’s just for the weekly or biweekly grocery run, you should not cancel your motor insurance. As stated previously, your vehicle registration comes with the mandatory insurance that helps you pay others in the event you cause a car accident.

You may face legal repercussions if caught driving without insurance and even if your car will stay parked in the driveway, there are many things that could happen and cause damage.

Bottom line: You can, but it’s better if you don’t!

Should I Switch To “Pay As You Drive” Insurance?

If you are only switching because you are currently working from home, you may want to consider how much you will pay if you stay on a Pay As You Drive policy once you start driving regularly again.

It may sound like a good deal now, but you may end up paying more than the standard policy when you resume driving on a regular basis. Not driving much for the long term? Go ahead!

What If I Can’t Afford My Motor Insurance Premium?

It’s best to call your agent or insurer as soon as possible if COVID-19 affected your income and you currently cannot afford your insurance premium.

Many insurance brokers are offering discounts and paybacks for motor insurance policyholders. Some are also offering a grace period for payments so check first!

What If I Need to File a Claim During the COVID-19 Outbreak?

Many insurance brokers are limiting in-person transactions. You can file a claim online through their mobile apps or over the phone.

Don’t worry. They will continue to process claims during the pandemic.