5 factors that may affect your car insurance premium

EFFIE ZAHOS
Editor-at-Large · 15 February 2021
How much more are you likely to pay for your car insurance if you drive a black car or are younger than 25? Canstar has crunched the numbers.

There are a number of factors insurers take into account when calculating your car insurance premium. These include your age and gender, your driving record, where you live, how much you drive, as well as the type of car you drive, its colour and if any modifications have been made to it.

What might surprise you, though, is how much more some of these could end up costing you. Here’s a closer look at five of these factors and the potential costs.

1. The colour of your car

Of the 50 car insurance providers on Canstar’s database, eight take car colour into account when quoting for a premium. These are: Bingle, Youi, 1st for Women, Budget Direct, ING, Ozicare,  Virgin Money and QANTAS. It’s worth noting that the majority of these providers are underwritten by Auto & General Insurance Company.

Canstar found that the difference could be as much as $51 between colours. As the table below shows white cars had the lowest average premium while black cars had the highest. One of the reasons for this might be the relationship between vehicle colour and crash risk.

A report from the Monash University Accident Research Centre in 2007 found that compared to white vehicles, a number of colours were associated with higher crash risk. “These colours were black, blue, grey, green, red and silver. The association between vehicle colour and crash risk was strongest during daylight hours where relative crash risks were higher for the colours listed compared to white by up to around 10%,” stated the report.

Average Annual Comprehensive Car Insurance Premium by Colour (NSW, 40 year old)

White $816
Yellow $826
Red $862
Blue $862
Green $864
Black $867

Source: www.canstar.com.au – 26/01/2021. Based on a sample of comprehensive car insurance quotes across a range of customer profiles and addresses in NSW, with a target excess of $750, for a 2020 Toyota Corolla Ascent Sport 5 Door Hatch. Quotes obtained from 4 providers who have different premiums for different coloured cars.



2. Where your car is parked

Parking your car in a garage could make a pretty big difference to your premium. Canstar found that the average annual premium was $1,395 if your car is parked on the street but would be $359 cheaper if it is in a secure garage. This is likely to be because it would be harder to steal a car from a secure garage than the street and the car is also less likely to be broken into or hit by a passing car.

Average Annual Car Insurance Premiums by Parking Location

Garage (secure) $1,035
Street $1,395
Difference -$359

Source: www.canstar.com.au. Based on a subset of quotes of comprehensive car insurance policies rated in the Canstar 2020 Car Insurance Star Ratings. Premiums include quotes for both new and used cars for a range of scenarios, with a state-specific target excess ranging from $600 to $750.

 

Car on road
Image source: Travelpixs (Shutterstock.com)

3. How many kilometres you drive

Generally, the less you drive the lower your premium is likely to be. As the table below shows the average annual premium for a car that is likely to travel 20,000 kilometres a year is $136 more than one that will do 15,000 kilometres a year.

Average Annual Car Insurance Premiums by Kilometres

Annual Travel Km  
15,000 $1,148
20,000 $1,284
Difference -$136

Source: www.canstar.com.au. Based on a subset of quotes of comprehensive car insurance policies rated in the Canstar 2020 Car Insurance Star Ratings. Premiums include quotes for both new and used cars for a range of scenarios, with a state-specific target excess ranging from $600 to $750.

It can pay to make sure you don’t overestimate how much you’re likely to drive your car. Also, if you have found that you are driving less as a result of the pandemic then it can be a good idea to get in touch with your insurer as it may save you money. As AAMI pointed out “since rarely used cars aren’t as likely to be in an accident, they present a lower risk, and this is factored into your premium price.”

There are also ‘pay as you drive’ policies available from some insurers which only cover you up to a certain distance. These may be a cheaper alternative if you don’t drive a lot.

4. Your age

There are certain advantages that come with getting older  and cheaper car insurance premiums is one of them. As the table shows the average premium for someone aged 50 or older is $776 while someone younger than 25 will pay $1,818 on average. That’s a $1,072 difference. Statistics show that younger drivers are more likely to be involved in an accident which explains this price difference.

Average Annual Car Insurance Premiums by Age

Age Group  
Under 25 $1,818
25-29 $1,379
30-49 $974
50 & Over $776

Source:  www.canstar.com.au. Based on comprehensive car insurance policies rated in the Canstar 2020 Car Insurance Star Ratings. Premiums include quotes for both new and used cars for a range of scenarios, with a state-specific target excess ranging from $600 to $750. Quotes for under 25s includes 50/50 representation of quotes for males and females to capture the impact of gender on pricing for this age group.

As well as a higher premium, younger drivers may have to pay an additional excess in the event of a claim. The majority of comprehensive car insurance policies on Canstar’s database have an additional age-based excess if the driver is under 25. The cost of this excess often depends on whether the young driver is listed on the policy or not, with unlisted drivers having to pay a higher excess than if they were listed.

→ Related story: Car insurance for under 25s

Some policies don’t apply this additional excess if the driver is a learner – provided they are appropriately supervised by a fully licenced driver. Some policies also require the supervisor to be over 25 and/or listed as a driver.

5. How you pay your premiums

Most insurers give customers the option of paying by the month but many charge extra for this service. The convenience of paying your car insurance monthly rather than annually could potentially cost you an extra $124 a year. 

Average Annual Car Insurance Premiums by Payment Frequency

  Annual Cost
Annual Payment $1,397
Monthly Payments $1,521
Difference -$124

Source:  www.canstar.com.au. Based on a subset of quotes of comprehensive car insurance policies rated in the Canstar 2020 Car Insurance Star Ratings. Premiums include quotes for both new and used cars for a range of scenarios, with a state-specific target excess ranging from $600 to $750.

→ Related story: 10 tips to help you save on car insurance

 

Cover image source: Love the wind (Shutterstock.com)

This article was reviewed by Editorial Campaigns Manager Maria Bekiaris before it was published as part of our fact-checking process.

 


If you’re in the market for a car insurance policy, check out the table below which includes some of the car insurance policies on Canstar’s database for each of a 25-29, 30-39 and 40-49 year old male driver in NSW without cover for an extra driver under 25 years old, with links to providers’ websites. The results are sorted by Star Rating, then by provider name (alphabetically). Check upfront with your provider and read the PDS to confirm whether a particular policy meets your needs before deciding to commit to it.


Effie ZahosAbout Effie Zahos

Canstar’s Editor-at-Large, Effie Zahos, has more than two decades of experience helping Aussies make the most of their money. Prior to joining Canstar, Effie was the editor of Money Magazine, having helped establish it in 1999. She is an author and one of Australia’s leading personal finance commentators, appearing regularly on TV and radio.

 

 

Follow Canstar on Facebook and Twitter for regular financial updates.

 


Thanks for visiting Canstar, Australia’s biggest financial comparison site*

→ Looking to find a better deal? Compare car insurance, car loans, health insurance, credit cards, life insurance and home loans with Canstar. You can also check your credit score for free.