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Young drivers are often regarded by car insurance companies as being more likely to have an accident due to their inexperience behind the wheel. This means if you have a young driver on your policy or you’re a young driver yourself, your premiums may be higher. If you don’t need to insure any young drivers, consider applying an age restriction to your policy or shop around for a comprehensive car insurance policy that offers discounts based on age.

The make and model of your vehicle is another factor that insurers use to calculate your car insurance premiums. For example, high-powered/performance vehicles may have higher premiums; as will a new car as opposed to a used one. Any modifications or accessories you have on your car may also be a consideration for how your insurance is calculated.

Generally, if a car is expensive to repair or replace, it’s more expensive to insure. If parts for your vehicle are cheaper and readily available, your car insurance premiums may cost less. For example, Toyota Corollas are common on the roads and parts are readily available, but a Peugeot 3008 isn’t as common so parts may be harder to find and therefore the insurance can be more expensive with all other considerations being equal.

It may seem surprising, but car insurance premiums will vary depending on your address in Australia. This is because some suburbs have higher crime rates than others and that may mean there’s a higher risk of your car being damaged or stolen in your car is parked in those suburbs. Where you park your car also plays a part in how car insurance is calculated. For example, cars parked in off-street carports, garages and secure parking bays may carry a lower risk than vehicles parked on streets or other unsecured parking spots.

With so many factors being considered when your premium is calculated, it’s important to inform your insurance company if your circumstances change, such as if you move to a new house. In some cases, these changes may even result in a lower premium if your new neighbourhood has a lower crime rate or a home with a lockable garage.

How you use your car and the purpose you use it for can make a huge difference to how your car insurance is calculated. For example:

• Low-kilometre drivers like retirees and inner-city dwellers may benefit from a cheaper insurance rate, since less time on the road generally means they’re less likely to get into an accident.
• If you use your vehicle for business purposes, you may attract a higher premium based on a higher risk as your car is on the road more often.
• Safe drivers may be able to avail of safe driver or no-claim discounts are incentives (which result in reduced premiums) that are applied if the owner and/or driver hasn’t made an at-fault claim for a set period.
• Your driving record, including any previous insurance claims, licence suspensions or loss of points, may affect your premiums.

When purchasing car insurance, disclose all the details about your driving and claims history. Doing so helps ensure that you’re covered correctly. If you fail to mention something that becomes relevant when you make a claim (like if you’ve made a car insurance claim before), it may impact the outcome of your claim

When you’re taking out car insurance, you may want to include optional extras to increase your cover. Roadside assistance, reduced or excess-free windscreen cover and accident hire car cover are examples of add-ons that typically increase car insurance premiums.

Your policy excess is the amount you pay to your insurer when you make an at-fault car insurance claim. On comprehensive policies, the higher your excess payment, the lower your premium tends to be. However, think carefully before setting your policy excess too high, as you don’t want to put yourself in a bind later on if you need to make a claim.

The only car insurance cover you must have by law is Compulsory Third Party (CTP) insurance or your state’s equivalent cover (e.g. Green Slip in NSW). CTP insurance is there to cover your legal liability for injuries and deaths in car accidents. It does not cover your car.

The type of car insurance cover you choose has an impact on your premium. In addition to Compulsory Third Party car insurance, there are different levels of cover you can take out.

• Third Party Property Damage insurance covers you for the cost of repairs, damages and replacements to other people’s property and vehicles in the event of an incident. However, your own car isn’t covered for any damages or losses except in very limited circumstances (e.g. if an uninsured driver damages your car).
• Third Party Fire and Theft insurance protects you in a similar way to Third Party Property Damage insurance but also covers damage to your vehicle caused by fire and theft.
• Comprehensive car insurance is the highest level of car cover. It covers you for accidental damage to your car (including collision damage, and vandalism) as well as any damage you cause to third parties. Depending on your insurer and the policy inclusions, comprehensive cover may provide further benefits for theft, fire and severe weather events like floods, storms and hail, as well as a hire car to drive if your car is stolen.

Always read the Product Disclosure Statement (PDS) for full details on inclusions and exclusions. The Target Market Determination (TMD) may also help you figure out if the cover is the right car insurance for your situation.

When it comes to car insurance, you may have the choice of insuring your car for its market value or an agreed value.

Market value reflects the value of your car at the time just prior to the incident. Since a car’s value typically depreciates, you probably won’t receive as much as you originally paid for it if you need to make a claim. However, a market value policy may be more affordable than an agreed value policy.

An agreed value is an amount your insurance provider agrees to cover your car for if it is written off and it may be different to the insurer’s market valuation of the vehicle. This amount will be listed on your Insurance Certificate and it is usually agreed at the start of your policy and then again at every renewal.  While this type of cover isn’t as impacted by market volatility, it’s less common and may be more expensive than a market value policy if the insured sum of your vehicle is higher.