Having car insurance is a necessary part of owning a car when you’re driving on Australian roads. If you’re wondering how to save money on car insurance, it all comes down to finding a suitable policy for the least amount of expense.
Be it through a comprehensive car insurance policy or Third Party Property Damage cover, car insurance can provide you peace of mind. So, let’s look at some general ways to get the right policy for you and save money on car insurance.
Maintain a good driving history
The first and most obvious way to keep down the rising cost of car insurance is to be regarded as a safe driver and not get into situations that may risk an accident or cause damage or loss to your vehicle or anyone else’s.
However, being a safe driver is only half the battle as it doesn’t account for other drivers on the roads and their behaviour, which could heighten your risk of collision. In terms of saving money on your premiums, maintaining a good driving record and claims history will typically bring down the price you pay in car insurance premiums, as you would likely be considered a lower risk when compared to drivers who don’t have this.
Tip – Take a defensive driving course
If you’re a young or beginner driver, taking a defensive driving course to make yourself a better and safer driver on the road and less of a risk to your insurer could reduce your insurance costs with some insurers.
Nominate your drivers
There are several ways you can keep insurance premiums down based on who’s covered by your policy. For many insurers, nominating who will drive your car could reduce your premiums or additional excesses that may apply, as the insurer will know exactly who could be behind the wheel.
Conversely, adding someone who has a bad driving record, a history of claims or a criminal driving conviction could increase your premium.
An ‘unlisted driver excess’ may apply if someone who isn’t listed on your policy and lives at the same address as you is driving during an incident that leads to an insurance claim.
Tip – Consider an age restriction on your policy
Restricting young drivers (typically under 25 years) from getting behind the wheel could decrease insurance costs significantly, as a driver under 25 may be regarded as high-risk by insurers and premiums are therefore considerably more expensive.
Some insurers offer the choice of restricting drivers up to the age of 40 on your policy, which can also bring down your premium. Speak to your insurer for any age restrictions options that are available on your policy.
Pay more to pay less
The excess is the amount you pay to your insurance provider when you make a claim. Opting for a higher excess will usually result in lower premiums, but some insurers may only offer this on their comprehensive policies.
Paying a higher excess (or higher deductible) could be handy if you’re a safe driver. In this case, paying a higher excess could be better in the long run than paying a higher premium every year, either in monthly instalments or as an annual lump sum.
Tip – Review your excess annually
Review your current policy and (if available as an option to you) choose an excess amount that you can afford to pay should you claim. The more you increase your excess, the less your premium is likely to be.
Be on the road less
Car insurance companies will sometimes offer insurance discounts if you don’t drive much throughout the year. This is known as a ‘low kilometre’ policy, but similar policies are also called ‘pay-as-you-drive’, ‘pay-by-kilometre’ or ‘drive-less-pay-less’ insurance. For most insurers, these are similar products with comprehensive coverage.
The difference between ‘low kilometre’ and ‘pay-as-you-drive’ products can come down to driving under a set number of kilometres per year (e.g. 10,000) with a low kilometre policy; an additional excess may be charged if you go over this limit. On a pay-as-you-go policy, you may be charged based on the actual number of kilometres driven.
The idea behind these is the less you drive, the less likely you are to get into an accident, and therefore the insurer is inclined to offer a lower premium.
If you don’t drive your car to work every day, or if you work close to home, these types of policies could save you money on car insurance.
Tip – Pay less for driving less
Work out how many kilometres you usually drive in a year. If you don’t use your car every day, a low kilometre or a pay-as-you-drive policy could save you money.
Strip back unused benefits
Many policies give you the option of paying for add-on benefits to increase your coverage. If you want to save money on car insurance, consider whether these insurance extras are worth keeping on your policy.
Examples of car insurance extras include personal effects cover and the use of a hire car after an accident. While these provide more coverage, they’ll also likely increase your premiums. Have you used any of them over the last few years?
You could consider removing roadside assistance from your policy if you’re already covered through the warranty on your car or an external service.
Safe and secure parking
Where you park your car can reduce your insurance costs. If your car is tucked away at night in a locked garage, there’s less risk of it being stolen compared to if it was parked on the street. This can reduce your car insurance premiums.
Tip – Park your car in a lockable garage
If you live somewhere with an option to store your vehicle in a locked garage or basement carpark, it can be worth taking advantage of this as (depending on your policy and insurer) it could result in cheaper insurance.
Pay your premiums up front
To pay your insurance bill (your premium), you have the option of paying it up front in one, annual lump sum or through monthly instalments. Paying your premium annually can save money on car insurance.
Your insurer will typically charge added fees for the privilege of paying by instalments. There’s also a greater risk of accruing fees for missed or late payments.
Tip – Pay your premium on time
Whether you pay via a lump sum or monthly instalments, paying your premiums on time can be an easy way to save money on car insurance.
These tips on how to save money on your car insurance rates are simply a guide to help you seek out opportunities to save. For full details on anything mentioned above, it’s worth going through your policy’s Product Disclosure Statement (PDS) to check the inclusions and exclusions before you make changes to your car insurance policy.
Compare your options
One great way to keep on top of your insurance costs is to regularly sit down and review your car insurance options. A policy renewal can typically be more expensive than taking out a new one.
Changing your policy provider or your coverage options could result in significant savings on your car insurance. Before you switch providers, you’ll need to get some insurance quotes. See if you can save money by comparing different insurers using our comparison service.
Our service is an easy way to help you search for the right car insurance policy for you and save money on car insurance.