When is the best time to think about insurance?

There are a range of different types of insurance and while it is best to have these set up before you need them, in some cases there are additional reasons to organise cover early.

Here is a rundown on the best times to set up your car, house and medical insurances.


In Australia third party car insurance must be set up in order to drive a car or ride a motorcycle, as this is a legal requirement in all states and territories.

Compulsory third party (CTP) is the bare minimum in terms of cover available and provides compensation for injuries sustained during a car accident, but not damage to property.

Each state or territory has its own scheme and most of the time CTP is paid for when you register your car.

However, depending on where you live you might be able to choose the insurer you go with, so it is best to shop around to ensure you are getting the best possible deal.

Essentially, CTP covers basic injuries caused to others on the road but will not cover the cost of repairs to cars or property. So, if you crash into a late model luxury car, you could be forced to pay the cost to fix it.

This means it may be best to organise additional car insurance when you first purchase a car, as it could provide you with savings in the long run.

There are different levels of cover, and it is up to you and your own individual circumstances to determine which is appropriate for you, from third party insurance to comprehensive policies.

Additional third party insurance can pay for the cost of damage to someone else's car or property. If you add the fire and theft option can also provide cover for natural disasters and help you replace your possessions if they are stolen.

Comprehensive insurance policies offer more coverage but also come with higher premiums, so it is worth comparing policies to see what suits you best.

Home and contents

One aspect of building or purchasing a new home you should consider is your insurance, as this can protect you from incurring the expenses associated with incidents that are out of your control, such as damage from natural disasters.

If you can't afford the replacement costs associated with rebuilding or purchasing a new home if disaster strikes, it is well worth having insurance set up.

It is best to organise this when you first buy the house to ensure you're prepared should any problems arise.

You can choose to have either 'total replacement' cover or 'sum-insured' cover set up, which is the difference between receiving the entire costs of rebuilding your home to having a set amount given to you

One thing to remember is that home insurance will cover you for the supplementary costs associated with a rebuild, such as organising alternative accommodation, architectural plans and lodging plans.

Contents insurance will cover all your possessions and could help to pay for the cost of replacing or repairing household items.

Even if you are renting, it is worth having this insurance set up otherwise you could be left in financial trouble in an emergency.

It can be pricey to replace all your possessions and you may be surprised to find how much your household items would cost to replace.


Having medical insurance set up will cover some or all of the cost of private healthcare, such as doctors' fees, hospital accommodation, dental and optical treatment.

For many Australians, this means the difference between marking time on lengthy public waiting lists and being able to undergo expensive treatment options more quickly.

You can either choose to have hospital cover as a standalone option or general treatment cover, which will cover services like dental, optical treatment as well as physiotherapy.

Some insurers will allow you to have a prepackaged products that include both types of cover.

The government has set up the lifetime health cover initiative to encourage Aussies to get their hospital cover organised early and to maintain it over their lives, and there are certain ramifications if you leave it too long to set this up.

It is best to get lifetime health cover before your 31st birthday if possible. Every year after this date you delay getting your cover organised means you pay an extra 2 per cent loading fee.

This means you will pay an extra 20 per cent if you wait until you are 40, so it is best to organise it as soon as possible.

This loading fee only applies for ten years, providing you maintain your hospital cover after this period.

The reason behind this policy is to prevent those under 30 from subsidising the healthcare costs of older members of society.

If you are under 31 it would pay to get this organised as soon as you can.You have until July 1 the year after your 31st birthday before you are required to pay a loading fee.

If you set up medical insurance when you are under this age bracket you will only need to pay the lowest premium rate for life.

Posted by Richard West