Ways you could save on car insurance

Insurance premiums have risen in recent years, and Australians are feeling the pinch. There are factors beyond our individual control that have contributed to higher prices, some of which include:

• inflation, and the rising costs of parts and repairs
• increasing car complexity with specialised, integrated technology features
• the increasing incidence of bushfires, storms and floods.

While some things are out of our hands as consumers, there are ways we can attempt to manage the cost of our premiums. Let’s explore.

A great place to start is by reviewing the type of car cover you may need. Besides Compulsory Third Party Insurance, which is mandatory for all registered vehicles, any additional cover is optional. Some cover types may be more or less suitable, depending on your car's value (which might be determined by its condition, age and mileage) and how you use your car. Here’s a summary:

This option can help cover damage you cause to other people’s cars or property in an accident (subject to the terms of your policy).

This option can help cover damage you cause to other people’s cars or property in an accident. It also can help cover your car if it’s damaged by fire, or if it’s stolen (subject to the terms of your policy).

This level of insurance can help cover your car for a variety of events and incidents, such as fire, storm damage, vandalism, theft and more, as well as damage your car causes to other people's vehicles and property (subject to any terms and exclusions of your policy).

Some insurers even have a more premium comprehensive option with higher value limits for certain types of claims.

Take time to review and compare all the different inclusions and exclusions in the relevant Product Disclosure Statement for each policy to help determine what’s right for you.

Look out for different types of discounts that could apply to you. Some discounts may include:

Some insurers may offer a discount on the price of your premium by paying for your policy online, rather than over the phone or in-store. Check whether this applies to your insurer.

Some insurers may reward you for the length of time you stay with them by offering a percentage discount to reflect your tenure, such as NRMA Insurance’s Relationship Discount¹.

Some insurers might offer a discount when you purchase 2 or more eligible products, such as NRMA Insurance’s Multi-Product discount².

Deciding on your excess is about weighing up the probability and cost of risk. Saving money upfront could mean paying more at claims time. Here’s how it works:

• If you increase your excess, your premium may decrease.
• If you decrease your excess, your premium may increase.

The good news is some insurers offer a few excess options you can choose from, so you can decide what is right for you.

Your sum insured generally represents the maximum replacement price of your car, which may take into account the value of certain legal modifications and on-road costs. When it comes to car insurance, there are typically two options to choose from:

Refers to a fixed amount you choose to cover your car for, based on a range of values offered by the insurer. The value should reflect the amount of money you believe your car is worth.

Selecting a higher value may increase your premium, and a lower value could decrease your premium.

Refers to what the car is worth on the open market at the time of making a claim. This means factors like local market prices, kilometres travelled, age, condition and modifications to the car, may all be used to help determine how much your car is worth at the time you make a claim.

Selecting a lower agreed value or switching to a market value could result in a lower premium. The simplest way to see how each of these options makes a difference to what you pay, is to get a quote.

If you’re only driving to and from the shops because you work from home, you might not use your car very much. On the other hand, if you’re taxiing kids from school, soccer, and Jessica’s 12th birthday party, you might be in a slightly different boat. In any case, it’s worth checking that the distance you drive your car each year is what’s reflected in your policy, as it may impact your premium depending on the cover and insurer.

One of the determining factors when setting your insurance premium is the age of everyone who is listed as a driver on your policy. This is because the risks associated with younger drivers are usually higher due to inexperience. If a driver is not listed on your policy and is involved in an accident while driving your car, you may need to pay an additional excess, depending on your policy terms and conditions.

If you allow a driver to regularly use your car, don’t list them on your policy, and they’re involved in an accident on the road — you could end up worse off at claim time (subject to any terms and conditions of your policy). This is because of something insurers call an ‘Undisclosed Driver Excess’. In basic terms, it’s an extra fee that may be added to your basic excess for not having a driver listed on your Certificate of Insurance. Check your policy documents for details.

The key takeaway? Be upfront about who’s driving, and if you’re concerned, carefully consider who’s allowed to drive your car and whether you’re comfortable with a younger driver behind the wheel.

Sometimes some simple lifestyle adjustments may help you save money upfront or in the long run. For example, keeping your car parked in a driveway or garage — rather than on the street — could help prevent damage to your car. Some insurers may take your parking arrangements into account when calculating your premium.

Consider taking reasonable steps to help mitigate risks to your car, so you can reduce your need to make a claim.

1. Any applicable discounts may be subject to minimum premiums. Discounts only apply until a minimum premium is reached. When we determine your premium on renewal, we may also limit any increases or decreases in your premium by considering factors such as your previous year’s premium amount. You may not save more by staying with us longer if a minimum premium is reached, or we have limited increases or decreases in your premium.
   
   
2. Any applicable discounts may be subject to minimum premiums. Discounts only apply until a minimum premium is reached. When we determine your premium on renewal, we may also limit any increases or decreases in your premium by considering factors such as your previous year’s premium amount. You may not save more with more eligible products if a minimum premium is reached, or we have limited increases or decreases in your premium. When we complete the Multi-Product Discount calculation, we will use the policy start date of your policy, not the date that you purchase your policy. As such, policies must be purchased in order of their start date so that the discount can be appropriately applied.

Any applicable discount is applied in tiers based on the number of eligible policies only. Maximum tier reached at 9 eligible policies. Existing policies will not be eligible for any new discount tier until renewal. We sometimes refer to this as the “multi-policy discount”.