By Ross Lee
14 January 2009
Some things such as your age and gender cannot be changed to obtain cheaper car insurance, but there are many things possible for lowering your annual premium expenses. Here are our five top suggestions:
Comprehensive or Third Party Only?
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No Turbos Please – We’re Insurers!
Presuming you do require comprehensive cover, fundamentally each car model has its own risk profile to insurers. An exotic sports car may be very expensive to insure, while a locally-built sedan with comparable power (but not overtly “sporty”) may command only a modest premium.
Safe Driving History – the NCB
Many motorists know that up to 60% can be saved off the base premium by working one’s way down year by year from Rate 6 to “Rate 1 No Claim Bonus (NCB)”. Importantly there may be some unpublished claims handling guidelines or even unwritten conventions that may be applied to any one insurance claim. This may impact on the NCB, so on any claim, it is best to check the situation with your own insurer. Often, for any claim where recovery is not possible, the NCB will be penalised 2 points on renewal. So among other things, think carefully about making that claim, because in addition to your excess payment (which may be considerable in some circumstances) you may also lose 20% of NCB and perhaps also, the opportunity to improve your NCB 10% that year.
Multiple Policy Discounts
To utilise economies of scale, insurers will often apply cumulative discounts to encourage taking out all your insurances with the same company. This is commonly referred to as a “bundle” or “package” when it comes to insurance policies. Look for an insurer that covers not only general but also life insurance products and wants all your business. You may require not only insurance for one car, but perhaps a second one in the family, home building, home contents, special valuables, income protection, life and/or trauma insurance.
Post Code and Car Model
This is mostly relevant to the theft component of premium calculation for insurance actuaries. If you own a car that is popular with thieves (including older models of Holden Commodore, Ford Falcon and Hyundai Excel) then you may have trouble even obtaining insurance if you live in a suburb that statistically is known for car stealing. Insurers will often freely publish information for the top 10 of both post code and car model on car theft. Equally, you may be rewarded in cheaper premiums if you have a good working car alarm fitted (making sure it is always armed when unoccupied).
A typical business vehicle may well have twice the usage of the equivalent personal use car. Being on the road say twice as much would suggest twice the risk of a collision. If you are using the car just to get to and from work, then check with the insurer that it is acceptable to have the car insured as private use and keep the extra premium money in your pocket.
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This article was written by Ross Lee, insurance lawyer and General Manager of the Insurance Hub - a leading insurance information website for buying, claiming and dispute resolution on car insurance, home insurance, and small business insurance.