What is a low-kilometre car insurance policy?
A low-kilometre policy is a type of car insurance designed for drivers who typically travel less than 15,000 kilometres per year. While 15,000 kilometres is the common limit for these policies, some insurers offer lower limits usually at a lower premium. If you go over the maximum agreed kilometres in any given year, your cover or excess may be impacted.Â
By driving less, and staying within the policy’s agreed kilometre range, you may be able to save money on the total cost of your cover. This is generally because insurers view infrequent drivers as less likely to make a claim.
What is pay-as-you-drive cover?
A 'pay-as-you-drive' car insurance policy is calculated based on how many kilometres you actually drive. By nominating an estimated maximum kilometre limit upfront, your insurer may offer you a lower premium.
Not every insurer offers this type of cover, and it isn't right for everyone, as you'll need to stick to your nominated kilometre limit. If you make a claim and your odometer reading exceeds the distance you nominated, it could affect your payout.Â
Low-kilometre car insurance vs pay-as-you-drive: what’s the difference?
Similar to low-kilometre policies, pay as you drive car insurance is a comprehensive policy where premiums depend on how many kilometres you drive.
The main difference is that pay-as-you-drive insurance generally lets you choose the kilometre limit, whereas low-kilometre policies will usually come with a set limit determined by the insurer.
Like many insurance products, not all low-kilometre car insurance policies offer the same benefits across the board. While some insurers offer dedicated low-kilometre or pay-as-you-drive products, others may simply provide discounts for motorists who drive less.
Comparing a range of policies can help you find cover that suits both your driving habits and your budget. Here are some key factors worth considering when you’re comparing:
One of the first things to check is how many kilometres are included under the policy. If you’re considering low-kilometre car insurance, it's important to choose a policy with an allowance that realistically reflects your driving habits (as going over your limit can result in additional costs if you need to make a claim).
One of the main reasons low-kilometre insurance can be appealing to drivers is the potential to save money on premiums. However, the cheapest policy may not always offer the best value. Comparing multiple quotes and considering what’s included in the cover, rather than focusing solely on price, will give you a better understanding of which policy is right for you.
Low-kilometre policies tend to offer many of the same features as standard comprehensive car insurance, though this may vary between insurers. Depending on the policy, benefits could include cover for accidental damage, theft, fire, access to hire cars, emergency accommodation, or new-for-old vehicle replacement.
Before taking out any insurance policy, always check the Product Disclosure Statement (PDS) to understand exactly what is and isn't covered.
Some low-kilometre policies apply an additional excess if you drive over your nominated kilometre range and need to make a claim. Before taking out cover, take the time to understand how kilometre limits are monitored (as this tends to vary between insurers) and what costs you might have to pay if you exceed your allowance.
Some insurers allow you to increase your kilometre allowance during the policy period, although this may increase the cost of your premium. Checking how flexible a policy is can help you avoid any extra costs if you do exceed your kilometre limit.
If you drive infrequently, it's worth checking if an insurer offers low-kilometre discounts on its standard comprehensive policies. If it does, you may be able to access similar savings without taking out a dedicated low-kilometre product.
The comparison table above lists policies from our Online Partners that offer discounts for low kilometres. You can also change the filters on the table to better suit your requirements.
What happens if I drive more than my kilometre limit per year?
If you exceed your kilometre limit, your insurer may impose an additional excess if you make a claim, your premiums may increase, or a claim that arises during that period may be denied. There may be other consequences if you give your insurer an inaccurate odometer reading on purpose. You can contact your provider directly or check your policy’s PDS for more information.
Can I increase my kilometre limit before renewal?
You can typically increase your agreed kilometre limit during your policy period, as long as your insurer agrees to the new limit. If you think you’re going to exceed your limit, it’s often best to contact your provider and update your policy to help avoid any additional excesses if you need to make a claim.
Increasing your limit, however, may result in a higher premium or you might not be eligible for your low-kilometre policy anymore.
Can I reduce my kilometre limit if I’m driving less?
You can usually reduce your kilometre limit if you find yourself driving less than you expected to, but usually not until you renew your policy. Again, you’ll need to contact your insurance provider or update your policy details online. If your policy is nearing renewal, it’s often wise to compare your car insurance options to ensure you’re still getting good value for money.
Can I switch to a regular comprehensive car insurance policy at any time?
It’s usually straightforward to switch your car insurance policy at any time. Moving to a regular comprehensive policy with the same provider, however, may increase your premium. If you’re thinking of switching policies, compare your car insurance options first, rather than just renewing with your current provider.Â
By doing this, you could potentially save hundreds of dollars per year on your premium, or confirm your current provider is still offering you good value.
