Your car is a valuable asset. Car insurance can help cover the financial costs if you’re in a car crash or if your car is stolen or damaged. With car insurance, you take out a policy, and we agree to cover your car (depending on your policy) and the other driver’s car. Otherwise, if you’re involved in a car accident, you could be considerably out of pocket.

There are different types of car insurance. Before you take out a policy, we recommend you read the Product Disclosure Statement, and Target Market Determination, as they outline exactly what's included and provide a guide for you to understand the general suitability of the product.

When choosing car insurance, think about how much your car is worth, what you'd like to be covered for and what might happen if you don’t have the right cover.

At RAC, we offer three types of car insurance:

• Comprehensive – the highest level of protection that gives the most benefits; covers your car for accidental damage, malicious damage, theft, storm, fire and flood.
• Third Part Fire and Theft – covers fire and theft for your car plus accidental damage to someone else’s car or property.
• Third Party – covers accidental damage to another car if you hit it.

There’s also Motor Injury Insurance (often referred to as compulsory third party) that covers the cost of personal injury to others if you've caused a crash. It’s mandatory in Western Australia. You pay for this as part of your car registration with the Department of Transport. It doesn’t cover damage to vehicles or other things you may hit in a collision.

The excess is the amount you need to pay towards settlement of any claim. Sometimes there are additional excesses, for example, for young drivers.

When you get a quote, you can choose a lower or higher basic excess. Choose a basic excess amount between $400 and $2000 that's appropriate for you, taking into consideration any limits of any additional or optional benefits.

When you get a car insurance quote, you’ll be given a range of amounts you can insure your car for, based on the current market value. You can choose an ‘agreed value’ within this range, depending on what works best for you.

There are ways to pay less but it’s important you get the cover that’s right for you.

Firstly, select the right level of cover. Think about whether you need comprehensive car insurance or whether third party will do.

Then choose insurance that best suits your needs and fits within your budget.