Insurance is when you pay an amount of money each year that gives you financial protection against loss or damage. The insurer agrees to compensate you for a loss rather than you having to pay for that loss yourself.
Common types of insurance are health (see Chapter 9, Health and Wellbeing), home building insurance, home contents insurance, travel, life and car insurance. It is important to understand the insurance policy and how much it will cost before you agree to enter into the agreement.
There are different types of car insurance available. If you own a car it is compulsory to have third party insurance (“CTP”). This will cover you if you injure another person in an accident. You may also like to purchase comprehensive car insurance, which provides wider insurance cover, such as covering some of the costs of any damage to your car (or other person’s car) if you are in an accident, or if your car is stolen.
For more information on insurance, go to www.moneysmart.gov.au/insurance