Car insurers have used inflation as an excuse to push up premiums this year and to increase their profits. So, if your car insurance premium has increased dramatically or even doubled, you're not alone. The good news is, there are still reliable ways for you to save money.
If you're looking for the best policy for the lowest price, use our tool to compare over 50 comprehensive car insurance policies. You'll save money and get better cover with car insurance policies recommended by CHOICE.
Unlike other insurance comparison websites, CHOICE doesn't get paid by any of the insurers we're comparing. CHOICE is nonprofit, so your membership fees help our fight for fair consumer rights, and empower you to get the best products.
1. Switch to a cheaper car insurer
Loyalty doesn't pay, unless you're a car insurer. Shopping around is the most effective way to save on car insurance. Not only do premiums vary widely between insurers, they also vary between new and old customers.
We call it the 'loyalty penalty': the insurers cash in on consumers who renew their policies without shopping around. So even if you have stayed with your insurers for years and years and are promised high loyalty discounts, shop around when your insurance is up for renewal.
In all states, average premiums for the most expensive policy are more than double the average premiums for the cheapest, so there are a lot of savings to be found.
The Australian Security and Investment Commission (ASIC) has recently cracked down on complex pricing practices by insurers that meant that promised loyalty discounts did not fully eventuate as they were applied to a higher base premium instead of on the lower base premium new customers paid.
2. Take out one of our recommended policies
The policies our experts recommend have superior cover, and they're often cheaper than average policies. When we compare car insurance we look at what cover a policy provides and how much it costs on average in a state or territory.
The best policies are recommended by our experts and they are the ones you should start with when shopping around. Compare car insurance.
3. Pay a higher excess if you can
The excess is how much you'll pay out of your own pocket when you make a claim. Choosing a policy with a higher excess will reduce how much you pay for your cover.
So if you can afford to pay more than the standard excess should you need to make a claim, then it could be a good idea. But consider all the excesses that could apply in case of a claim. For example, if you're under 25 and you're the at-fault driver, there's an added 'age excess' you'll have to pay on top of your policy excess. Read more tips for young drivers.
Choosing a policy with a higher excess will reduce how much you pay for your cover
Increasing the excess on your policy will not only lower your premium upfront, it might also protect you from future premium increases. How?
Well, when you make a claim that the insurer has to pay out, you may find your premium goes up when it's time to renew. Even claims for damages that are out of your control – such as windscreen claims, hailstorm, theft and collision with animals – commonly increase your premium.
But if you have a higher excess, you won't be putting small claims through your insurance, but rather paying for smaller repairs yourself. Not putting these through the insurer means you won't be penalised with higher premiums for making a claim.
4. Ask about a cheaper premium for driving less
Comprehensive policies with a 'drive less, pay less' approach limit your cover to a certain number of kilometres, for a cheaper premium.
If you know how much you're driving on average, mention this when you get a quote and use it to negotiate a cheaper premium. Some insurers offer a discount for low kilometres, they include:
- AAMI
- Apia
- Australian Seniors
- Budget Direct
- Coles
- GIO
- Suncorp
- Woolworths Everyday.
Insurers that don't advertise this may still offer a discount.
5. Get a discount
Car insurers offer a number of discounts:
- Online discount – Insurers like NRMA and AAMI give you a discount on your first year's premium if you take out your insurance online.
- Multi-policy discount – Many insurers give you a discount if you take out two or more policies with them, for example, GIO gives you a discount if you take out home, contents and car insurance with them.
- Annual payment discount – Insurers like Suncorp charge you less if you pay the annual premium upfront. If this isn't an option for you, look for an insurer that lets you make monthly payments without an extra cost. Insurers offering monthly payments at no extra cost include Allianz, CGU, National Seniors, NRMA and RAA.
- Nominated drivers – Insurers like Allianz give you a discount if you nominate specific drivers. Other insurers may give you a discount if you limit drivers to people over a specific age, this may be a good option for senior drivers. But beware: if someone else sometimes drives your car, a high unlisted driver excess can apply if they have an accident.
The insurer may also discount your premium depending on who your previous car insurer was. For example, we found Woolworths Everyday and Australian Seniors Insurance will quote you a cheaper premium if your previous insurer was Budget Direct. While GIO will quote you less if your previous insurer was their direct competitor, NRMA. Have you had a similar experience? Let us know in CHOICE Community.
Stock images: Getty, unless otherwise stated.
