It’s one of those things that we begrudgingly hand over money for because, at the end of the day, it’ll never be as expensive as having to deal with a car crash without it. However, with car insurance premiums predicted to get even more expensive as 2016 goes on, here are some handy tips for how to save on car insurance premiums.
If you’re in the market for a car insurance policy, check out our comparison table below to preview a snapshot of the current market. Please note that this table has been sorted by our star rating (highest to lowest) and was formulated based on a male aged 30-39 years old seeking cover in NSW, without an extra driver under 25 years old.
10 tips on how to save money on car insurance:
- Young drivers increase the car insurance premiums
- Car modifications can increase your car insurance premiums
- More cylinders can increase your car insurance costs
- Shop around – because prices really do vary
- Buy online and save
- Urban areas translate to higher insurance costs
- Keep your car garaged
- Insurance policy add-ons also add to the price
- Get high-tech
- Higher excesses on car insurance can reduce premium cost
- Having a car alarm or immobilizer can lower your car insurance cost
- Pay by the month
- A low-kilometre car insurance policy
1. Young drivers increase the car insurance premiums
CANSTAR research has found that as soon as someone under the age of 25 is authorized to drive your car, your premium on the comprehensive car insurance policies looked at by CANSTAR could be expected to increase by an average of $380! Despite the fact that premiums for young drivers have appeared to drop in recent years, the fact remains that having a young driver on your policy will be more expensive than not having one. Many insurers offer hefty discounts on their premiums if you can declare that no one under the age of 25 will be driving your vehicle. Take advantage of it if you can, but if you do have a young driver that you want to be covered on the roads, there’s still hope for your wallet.
You could see if your teenage kids are willing to pay a portion of the policy costs in return for being insured on your family car insurance policy, which is a situation that benefits both parties; you’re not footing the whole bill for keeping your kid safe on the road, and your child doesn’t have to bear the (not insignificant) cost of their own car insurance policy.
2. Car modifications can increase your car insurance premiums
We know that some people want the fastest car possible, or the lowest ride, or the loudest engine. But the unfortunate fact of the matter is that Australian insurers tend to take a dim view of modifications. This means that while they won’t refuse or withdraw cover for your modified vehicle, they may increase your premiums or reduce the amount you’re covered for. But which modifications are insurers ok with?
According to the Australian and New Zealand Institute of Insurance & Finance, general insurers (eg. not a speciality car insurer like Shannons) will usually cover the following modifications:
Source: Australian and New Zealand Institute of Insurance & Finance
And here are the things that those same general insurers will tend not to cover:
Source: Australian and New Zealand Institute of Insurance & Finance
3. More cylinders can increase your car insurance costs
More cylinders (generally) mean more money needed to insure the vehicle in question. Insurers are generally going to prefer cars with less horsepower, which you can’t do much about if you already own your car; but it’s definitely something to think about if you’re currently in the market for a vehicle.
4. Shop around – because prices really do vary
Prices and value can vary significantly between insurers. For our most recent car insurance star ratings report we shadow shopped thousands of quotes across 53 insurers to determine the car insurers offering outstanding value, and while our definition of value isn’t solely based on the price of the policy, it’s definitely a factor. Be sure to get quotes from at least a handful of different insurers to make sure that you’re not paying more than you need to in the first place. Also make sure to see what features are being offered by different insurers; here’s a guide to what car insurance features Australians have been keen on lately.
5. Buy online and save
Increasingly, insurers are offering online savings to shoppers who obtain a quote and subsequently purchase their insurance policy online. Some insurers will offer as much as $50 cash off, while others offer a flat 10% discount. Regardless of how simple or complicated the insurance research process is for you, obtaining online quotes and purchasing online is the fastest way to compare insurers and save money.
Be warned, though. Just because an insurer offers an online discount doesn’t mean they’re the cheapest for you. Do your homework with our car insurance star ratings.
6. Urban areas translate to higher insurance costs
Regional areas tend to have cheaper like-for-like car insurance premiums as the traffic density is lower. However you’d need to consider whether saving on car insurance would be worth the additional fuel costs you’d incur by moving further away from metro areas, along with the exponential increase in wear and tear you’d see on your vehicle as a result of regularly driving further distances!
7. Keep your car garaged
Some insurance companies charge you less if your car is kept in a locked garage. What’s more, it’s less likely to get stolen (or hit if parked on the road), so you save on paying the excess.
8. Insurance policy add-ons also add to the price
Additional options in your insurance policy (for example, no-excess windscreen replacement) cost extra, so you do need to ask yourself whether the avialable bells and whistles are really worthwhile, and whether or not the individual components are worth the dollar values they each add to your policy. An easy way to figure out whether the various add-ons are worth it is to figure out what they’d cost if they weren’t covered on your insurance policy.
You can see here for more information about car insurance add-ons, and whether or not they might represent good value for money.
9. Get high-tech
It turns out that your smartphone might be a road to affordable car insurance! There are various smartphone apps and devices that may help you with saving on car insurance, and we’ve compiled a handy list of some of them here!
10. Higher excesses on car insurance can reduce premium cost
A higher excess on an insurance policy will generally translate into a lower premium for like-for-like cover. However a higher insurance excess also means that in the event of an accident, you’ll need to pay more if you opt to make a claim – so if you’re think about what excess to choose, you need to weigh up the cost/benefit of regular savings on car insurance versus the chance that you’ll need to cough up more in the event of an accident.
11. Having a car alarm or immobilizer can lower your car insurance cost
All improvements to security should help to lower your car insurance costs, including keeping your car parked in a locked garage overnight. If you don’t have a garage, parking in a driveway is generally considered a lower risk than parking on the road. It’s less likely that vandalism, theft or accidental damage will occur when you’re off the highway.
12. Pay by the month
Many insurers now give you the option to pay by the month. This could cost you extra but there are some insurers who offer pay by the month at no additional cost. Compare insurers and pick one that suits your needs. Paying by the month can help you budget, and you won’t receive a huge bill each year!
13. A low-kilometre car insurance policy
Many insurance policies will offer a cheaper premium if you drive less than 10,000km per year, so check how many kilometres you do each year and whether a low kilometer policy might apply to you. One way you can do this is by checking your service manual. This will usually have the date and the odometer reading for each service.
At the end of the day there’s no one all-encompassing secret about how to get cheap car insurance, but if you can make use of even just a few of the tips we’ve outlined above you might start saving on car insurance.
Canstar have shadow-shopped thousands of quotes from 53 insurers to determine the car insurers offering outstanding value. Click here to download our car insurance star ratings report.