Floods to push up cost of vehicle ownership and motor insurance
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results about Floods to push up cost of vehicle ownership and motor insurance
The knock-on effect of the recent floods on Australia’s east coast will affect car insurance premiums for all Australians as well as push up the prices of used cars and parts, says Ms Kate Brown, head of research at the personal finance marketplace and advice company Compare Club.
With thousands of damaged cars needing to be repaired or replaced, Ms Browne said, “Australians should prepare for the cost of vehicle ownership to increase. We’d expect to see car insurance premiums, as well as the price of both used and new cars, and vehicle parts, to rise.”
“These devastating flood events are a reminder to all car owners to check your car insurance policy and research how much it would cost you to find an exact replacement for your vehicle.”
The current challenge in the Australian car insurance market revolves around the shift in the value of used cars.
Agreed-value policies, where insurers and drivers agree on a replacement value, have traditionally provided drivers with more protection but are now more problematic. With used car prices on the rise, owners with agreed-value policies may face significant disparities when insurers attempt to replace their vehicles.
Knowing the true worth of a car is important. Picking the wrong type of replacement could leave vehicle owners thousands of dollars out of pocket — between A$2,000 ($1,320) and A$6,000 based on Compare Club data.
The data come from a late 2022 Compare Club investigation which revealed that rising used car prices means that owners of popular vehicles such as the Hi-Lux could face a shortfall of up to A$11,400 on a written-off vehicle if they hold an agreed-value policy.
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