Your finance is approved and the car is almost yours. Then the lender tells you the loan is conditional on insurance. What kind? From who? And what should you actually be looking for in the fine print?
This guide covers what most lenders expect when you finance a car, what "full comprehensive" should include, and how to read a Product Disclosure Statement (PDS) so you know what you're buying.
Your lender's exact requirements are in your loan documents, so check those first, because they differ between lenders.
With a secured car loan, the vehicle is what protects the lender if you can't repay. If it's written off in a crash, destroyed in a storm or stolen, that security disappears. Comprehensive insurance replaces it.
That's why keeping your policy current is typically a condition of the loan. If it lapses, you can be in breach of your loan contract even if every repayment is on time. Tell your lender if you change insurers, and make sure the new policy still notes their interest.
When you insure a financed car, the policy usually shows your lender as having a financial interest in the vehicle. If the car is a total loss, the insurer pays the lender first, up to what you owe. Any remainder goes to you. If the payout is lower than the loan balance, you still owe the difference.
What you get under comprehensive varies by insurer and by policy tier, so compare these points:
In Queensland, compulsory third party (CTP) insurance is bought when you register the car. It covers injury to other people if you cause an accident. It does not cover damage to your car or anyone else's property. Comprehensive insurance is a separate policy, and that's the one your lender cares about.
A PDS is the document that sets out the terms of the policy. They're long, but you don't need to read every page. Go to these parts first:
If you're comparing insurers, Suncorp is one of the names Queenslanders often search for. Like most insurers, it publishes the PDS for its car policies on its website. A search for the insurer's name plus "motor PDS" or "car insurance PDS" should bring it up.
Whichever insurer you choose, check these three things:
We don't summarise any insurer's policy terms here, because they change and the PDS is the only reliable source.
Premiums depend on your postcode, the car, the drivers, how it's used, where it's parked and your claims history. Choosing a higher excess can lower your premium, but only if you could comfortably pay that excess on the day.
Our Insurance Products page outlines the options we can help you with, and you can compare any quote against the points in this guide.
Do I have to have comprehensive insurance on a financed car? Most lenders require it for the life of the loan. Check your loan contract for your lender's exact requirement.
Can I choose my own insurer? Usually yes, as long as the policy meets your lender's requirements and notes their interest.
What happens if my insurance lapses? It may put you in breach of the loan terms, and the lender may arrange cover and charge you for it. Tell your lender if you're switching insurers.
Will insurance pay out my whole loan if the car is written off? Not always. It pays the car's insured value, which can be lower than your balance.
Is CTP the same as comprehensive insurance? No. CTP covers injuries to other people. Comprehensive covers damage to vehicles and property.
Knowing your loan terms before you shop for insurance makes the whole process easier. Apply online and we'll compare lenders for you, then you can line up the right cover before you pick up the keys.
This article is general information only and does not take your personal circumstances into account. Insurance products are issued by third-party insurers. Read the PDS before buying any policy.
