10 tips to save money on your car insurance

Finance Journalist · 17 November 2020
If you’re looking for ways to cut down costs and boost your savings, you might want to take a look at your car insurance.

Some Australians pay thousands of dollars each year for comprehensive car insurance. If you’re on a reduced income, working from home or driving less than usual at the moment, this cost may seem particularly expensive. Here are 10 simple tips that could save you some cash.

10 ways to save on car insurance

1. Buy online

Many car insurers in Australia offer discounts if you buy your insurance online rather than in person, as it generally costs them less to sell their policies this way. Some insurers offer a fixed dollar discount (such as $100 off), while others offer a percentage discount (such as 10% off your first year’s premium).

2. Choose a higher excess

Your excess is the amount of money you pay if you need to make a claim. The higher it is, the lower your premiums will generally be. Some insurers will let you change your standard excess level to make it higher or lower, while others will let you add a voluntary excess on top of your standard excess, which could further reduce your premiums in exchange for higher out-of-pocket costs come claim time. Increasing your excess won’t be for everyone, though, and you should weigh up whether you can afford to pay a higher excess amount if you do need to make a claim.

3. Pay annually instead of monthly

Some insurers charge lower premiums if you pay your insurance annually, rather than in monthly instalments. While this might not be the most straightforward option for those of us who budget month to month, it could be worth doing if you can afford the one-off payment. Alternatively, you might want to consider going with a provider who lets you pay monthly at no extra cost. About half of the insurers in Canstar’s database currently have this option.

4. Shop around

It’s a good idea to compare your car insurance options and see if you could get a better deal. Canstar compares dozens of comprehensive car insurance policies based on both price and features. This can help ensure you get a competitively-priced policy, while ensuring you have cover that suits your needs.

If you’re considering comparing car insurance policies, the comparison table below displays some of the policies currently available on Canstar’s database for a 30-39 year old male seeking cover in NSW without cover for an extra driver under 25. Please note the table is sorted by Star Rating (highest to lowest) followed by provider name (alphabetical) and features links direct to the providers’ website. Use Canstar’s car insurance comparison selector to view a wider range of policies.

You can compare a wider range of policies using Canstar’s car insurance comparison tables.

5. Keep your car secure

If your car is parked in a garage rather than out on the street, your premiums will typically be lower because insurers may see you as less likely to make a claim. You may also get a discount if your car has security features such as an immobiliser, an alarm and/or satellite tracking.

6. Drive safely

While it’s good to be a safe driver regardless, some insurers will also reward you with a discount for doing so. A number of insurers on Canstar’s database offer a ‘no claims bonus’ or ‘no claims discount’. This typically gives you a discount if you don’t claim on your insurance and the discount will increase each year you don’t claim (up to a limit).

7. Drive less

You could also save by driving your car less. This may be more achievable at the moment, with many of us still working from home and going out less than usual.

If you drive less than a certain distance per year (usually 10,000 kilometres), some insurers will offer you a discount on your premium. Another option could be to choose a ‘pay as you drive’ policy. These policies cover you up to a certain distance and are generally cheaper than regular policies for people who don’t drive often.

8. Consider bundling your policy with other products (if it makes sense)

Some insurers also offer a ‘multi-policy’ discount. This is a discount when you take out two separate types of policies with the one insurer. For example, car insurance with home insurance. However, before taking the plunge, it’s important to consider whether you would get better value and/or coverage by splitting up your policies across different insurers.

You can compare a range of insurance products with Canstar, such as home, health and life insurance. Canstar compares and rates policies based on both cost and features.

9. Insure your car for its market value

You can generally cover your car for either its ‘market value’ or ‘agreed value’. The ‘market value’ is how much your car would be worth on the open market at the time of a car insurance claim. It takes into account factors such as the car’s make, model, condition and mileage, so it can change over time. This is compared to the ‘agreed value’, which is a set value that has been agreed on by you and your insurer. It will generally be cheaper to insure your car for its ‘market value’, although it may not provide as much certainty as to how much your car is insured for.

10. Choose your extras carefully

Your premiums will also be more expensive if you add optional extras to your policy, such as windscreen cover, roadside assistance and hire car cover. Consider whether having extras is worthwhile for you. For example, you might want to look at how much it would cost you to buy the add-on coverage separately rather than as part of your policy.

As well as the above tips, it’s also worth asking your insurer directly whether they can offer you any additional discounts to help you save.

Cover image source: PHOTOBUAY (Shutterstock).

This article was reviewed by our Sub Editor Tom Letts and Finance Editor Sean Callery before it was updated, as part of our fact checking process.

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 insurancecar loanshealth insurancecredit cards, life insurance and home loans with Canstar. You can also check your credit score for free.