Whilst the cost of your car insurance will be based on a range of factors, four of the main ones that insurers typically consider are:
- Your age
- Your gender
- Where you live
- Your car (such as model, age & safety features)
How could age and gender affect your car insurance?
Most students will incur higher insurance costs because they are typically younger drivers. If you are under 25 years old, you are considered by insurers to be a young driver. Statistically, young drivers have higher rates of accidents. And when it comes to gender, statistically young men have more accidents than young women. As a result, insurers tend to consider them a greater risk and typically charge them higher car insurance premiums.
The average annual cost of car insurance premiums in New South Wales for men under the age of 25 is $1,641, while the average annual cost for women under 25 is $1,524, according to Canstar’s 2018 Car Insurance Research.
When considering car insurance, another important cost to be aware of is your excess. An excess is the amount you are required to pay after having a car insurance claim approved, with your insurer paying the remainder. Also, additional excesses may apply for student drivers because of their age. An ‘age excess’ will typically be applied on top of the basic excess if the driver is under 25. This amount can vary and depends on the policy you have signed up for.
If you’re over 25, an ‘inexperienced driver excess’ may apply instead, if you have not held an Australian driver’s licence for more than two years.
How does your postcode affect you?
Which state, territory, region and street you live in can affect your car insurance premiums. This includes the cost of Compulsory Third Party insurance (CTP). CTP typically varies, based on the state or territory you live in.
Where you live within your particular state or territory could also have an impact on your premiums. For instance, cities have denser populations, more traffic and generally a higher likelihood of claims being made than less-populated rural areas, meaning that city drivers tend to attract higher premiums than their rural counterparts.
If your cover includes theft, then insurers typically factor in your neighbourhood’s crime rate when determining your insurance costs.
How does your car type and age affect you?
The cost of insuring an older car model is more affordable on average than insuring a new model because older cars generally cost less for insurers to repair or replace, while new cars tend to have more electronics and more expensive parts.
The type of car you have also matters. For example, it will cost you more to insure a sports car than the average sedan, because a sports car is considered relatively risky to insure. Sports cars are high-performance vehicles that can reach higher speeds with ease. As a result, they are perceived to be riskier than the average car when it comes to being involved in an accident or being stolen. This is why they generally attract higher premiums. The same can be said of modified cars that have enhanced performance or appearance features.
Tips on how to help reduce your costs
Here are some ways that may help reduce your car insurance costs:
- Insurers will often charge you less for car insurance if you park your vehicle in a garage or carport instead of on the street. On-street parking is considered to increase the chances of your car being stolen, vandalised or damaged.
- You can often reduce your premium by raising the amount of excess you pay when a claim is made.
- Before buying your car, it could be a good idea to shop around for car insurance and get premium quotes based on the make, model and age of the vehicle you plan to buy.
- Before proceeding with any performance or appearance enhancements, it could be worth contacting your insurer to check whether they will still cover you, and if so, whether any additional costs may apply.
- Some insurers may offer you a discount on your premiums if you purchase more than one type of insurance at once from them. This is commonly known as ‘bundling.’ However, while bundling can be convenient for many people, it won’t necessarily save you money overall, so it could be a good idea to do your own research on which policies are right for you before committing one way or the other.
- Drive responsibly and safely. Motorists with a safe driving history can generally negotiate down their insurance costs.
- If you don’t drive frequently, let your insurer know as this may help reduce your premium.
- Having a car alarm or immobiliser can sometimes lower your car insurance costs.
- Many insurers let you choose to pay your premiums by the month rather than as an upfront annual fee. While paying by the month won’t necessarily save you money, and in some cases may be slightly more expensive than paying annually, it can help spread your insurance costs out to make them more manageable for some drivers.
How to choose the right policy
There are four main levels of car insurance cover: Compulsory Third Party, Third Party Property, Third Party, Fire and Theft and Comprehensive Car Insurance.
- Compulsory Third Party (CTP) insurance is mandatory for any registered vehicle in Australia. It covers you for claims made against you if a motor vehicle accident results in the injury or death of another person or people.
- Third Party Property (TPP) car insurance isn’t compulsory. It operates alongside CTP, covering you for damage caused by you to someone else’s vehicle. However, it doesn’t cover the cost of any repairs or replacements your vehicle may need.
- Third Party, Fire and Theft insurance fills the gap of TPP and provides cover for repairs or replacements needed to fix damage to your car. It also covers your car if it is damaged or lost due to fire or theft.
- Comprehensive Car Insurance is the most expensive and advanced type of automobile insurance, because it provides all the above levels of cover plus accidental damage to your car, regardless of who’s at fault. However, it does not cover you if someone else was driving your car, unless they were specifically listed as an additional driver under your policy. It also does not cover you if you were under the influence at the time of the accident.
Choosing a policy that’s right for you as a student will depend on what level of cover you think you’ll need, and what you can afford. Understanding what affects car insurance premiums, being aware of the different types of car insurance and comparing policies will help you make an informed decision. Check out Canstar 2018 Car Insurance Star Ratings to help narrow your search when it comes to finding outstanding value comprehensive insurance for your vehicle.
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