Ways to save money on car insurance

The first and most obvious way to keep down the rising cost of car insurance in Australia is to be regarded as a safe driver and not get into an accident or cause damage or loss to your vehicle or anyone else’s.

However, being a safe driver is only half the battle as it doesn’t account for other drivers on the roads and their behaviour, which could heighten your risk of collision. In terms of saving money on your premiums, maintaining a good driving record and claims history will typically mean lower car insurance premiums, as you would likely be considered a better risk when compared to drivers who don’t have this. Having a no claims bonus rating may also help you save money on car insurance.

If you’re a young or beginner driver, taking a defensive driving course to make yourself a better and safer driver and less of a risk to your insurer could reduce your insurance costs with some insurers.

You may have the option of paying your insurance bill up front in one, annual lump sum or through monthly instalments. Paying your premium annually can save money on car insurance. Your insurer may charge added fees if you pay in instalments.

For many insurers, nominating who will drive your car could reduce your premiums or additional excesses that may apply.

Conversely, adding a motorist who has a bad driving record, a history of claims or a criminal driving conviction could increase your premium.

An ‘unlisted driver excess’ may apply if someone who isn’t listed on your policy and lives with you is driving during an incident that leads to an insurance claim.

Restricting young drivers (typically under 25 years) from getting behind the wheel could decrease your insurance costs, as a driver under 25 may be regarded as a higher risk by insurers and the premiums could then be considerably more expensive.

Some insurers offer the choice of restricting drivers up to the age of 40 on your policy. Speak to your insurer for any age restrictions options that are available on your policy.

Many policies give you the option of paying for add-on benefits to increase your coverage. If you want to save money on car insurance, consider whether these insurance extras are worth keeping on your policy.

An example of a car insurance extra could include a hire car after an accident. While this extra provides more coverage, it will also likely increase your premium.

If the amount you’re paying in comprehensive cover outweighs the benefits you’re receiving then perhaps you may like to consider dropping down to either Third Party Fire and Theft or Third Party Property Damage levels of insurance cover.

You could consider removing roadside assistance from your policy if you’re already covered through the warranty on your car or an external service to save money on your premiums

Car insurance companies will sometimes offer a specific type of policies if you don’t drive much throughout the year. This is known as a ‘low kilometre’ policy. Similar policies are also called ‘pay-as-you-drive’, ‘pay-by-kilometre’ or ‘drive-less-pay-less’ insurance. For most auto insurance companies, these products also offer comprehensive coverage.

The difference between ‘low kilometre’ and ‘pay-as-you-drive’ products can come down to driving under a set number of kilometres per year (e.g. 10,000) with a low kilometre policy; an additional excess may be charged if you go over this limit. On a pay-as-you-go policy, you may be charged based on the actual number of kilometres driven.

If you don’t drive your car to work every day, or if you work close to home, these types of policies could save you money on car insurance.

The idea behind these is the less you drive, the less likely you are to get into an accident, and therefore the insurer is inclined to offer a lower premium. (To know more about how premiums are assessed, please visit our page on how car insurance is calculated.)

The excess is the amount you pay to your insurance provider when you make a claim. Opting for a higher excess will usually result in lower premiums, but some insurers may only offer this on their comprehensive car insurance policies.

If you’re a safe driver paying a higher excess could be better in the long run than paying a higher premium every year, either in monthly instalments or as an annual lump sum.

Changing your policy provider or your coverage options could result in significant savings on your car insurance. It can be useful to get several car insurance quotes after 12 months.

If you live somewhere with an option to store your vehicle in a locked garage or basement carpark, it can be worth taking advantage of this as (depending on your policy and insurer) it could result in cheaper insurance.

These tips on how to save money on your car insurance rates are simply a guide to help you seek out opportunities to save. For full details on anything mentioned above, it’s worth going through your policy’s Product Disclosure Statement (PDS) to check the inclusions and exclusions before you make changes to your car insurance policy.