Car insurance premium increases explained
Expert tips for saving money on your car insurance premiums
Our car insurance expert, Adrian Taylor, has helpful tips that could lower your car insurance premiums.
Adrian Taylor
Executive General Manager – General Insurance
Limit the drivers who use your car
Some insurers let you set an age restriction on who is insured to drive your car, which can help lower your premium if you restrict young drivers.
Only pay for what you need
Why pay for optional extras if you don’t need them? Consider your circumstances before adding cover to your standard car insurance policy.
Consider what’s worth claiming on your car insurance
Premiums may increase with every claim you make, so consider if you really need to claim through your insurer for small bumps, dents or other issues that could be easily fixed.
Review your cover every year
Just because you’ve been with the same insurer for many years, it doesn’t mean you’re still getting the best deal. It often pays to compare since insurance premiums are constantly changing.
Think about adjusting your policy excess
Opting for a higher policy excess could keep the cost of your premium down. Just make sure this is an amount you can afford, as you may be asked to pay this higher excess if you need to make a claim.
Understanding car insurance premium increases
Why does car insurance go up every year?
There are several reasons why car insurance premiums may increase every year in Australia, including:
- Inflation. It’s common for premiums to increase in the insurance industry to reflect the price of cars, vehicle parts and repairs.
- Costs to the insurer. Just as the cost of living for individuals increases, so does the cost of running a business. This may be reflected in higher premiums.
- Increase in natural disasters. If there’s been a high number of floods, bushfires, storms, cyclones or other extreme weather events, your car insurance premium may increase the following year – even if you didn’t claim.
- More risk to insurers. If there’s been an increase in car crime, traffic volumes or even degradation of road surfacing, these factors can all increase the risk to the insurer. As such, they may raise insurance prices to protect themselves.
Why do car insurance premiums differ between insurance providers?
Car insurance works like other products you buy; two brands could be selling the same product but offer different prices for it. Car insurance premiums are typically based on factors unique to each company, including:
- General business and claim costs
- Insurance risk statistics
- Claim history of customers.
Since prices can vary depending on the insurer, it’s important to read the relevant Product Disclosure Statement (PDS) to understand the cover that’s being provided. The Target Market Determination (TMD) may also help you figure out if a product is right for your circumstances.
Why has my car insurance gone up?
Several factors can affect how much you pay for insurance, including (but not limited to):
- Changes in personal circumstances. Moving to a suburb with a higher crime rate or even parking your car on the street instead of parking in a garage could result in higher premiums.
- Purchasing extras. If you’ve added car insurance extras (such as a hire car or roadside assist), they may come at an additional cost.
- Your driving and claims history. If you’ve previously made car insurance claims, your premiums will generally cost more than if you had a clean record.
- Other drivers on your policy. You can insure multiple drivers for your car, but insurers will consider the risks of insuring these other drivers when calculating your premium.
- Driving frequency. The more often you drive your car, the higher your premium is likely to be. So, if you’ve increased the amount you’re driving your car, your premiums may be adjusted accordingly.
How will a car insurance claim affect my premium?
If you cause a motor vehicle accident and need to claim, your insurance premium may increase to reflect your higher risk rating. It could also affect your no claim bonus rating, which is based on your driving history.
Meet our car insurance expert, Adrian Taylor
As a General Insurance expert with over 13 years’ experience in financial services, Adrian Taylor is passionate about demystifying car insurance for consumers, so they have a better understanding of what they’re covered for. Adrian’s goal is to make more information available from more insurers, to make it easier to compare and save.