5 Ways to Reduce Your Car Insurance Premiums

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?
A simple decision really.  Why bother with comprehensive car insurance cover if the value of the car is not great?  You may wish to consciously self-insure your own car, only paying to insure against the risk of third party property damage, just in case you run into that Rolls Royce…

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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  Importantly there may be some unpublished claims handling guidelines or even unwritten conventions that may be applied to any one insurance claim.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.

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Learn more about car insurance

Can you insure your car for 6 months?

Most Australian insurers won’t offer you a 6-month car insurance policy, so you may need to buy a policy that covers your car for damages and cancel it after six months. You will need to purchase comprehensive car insurance to protect your car from accidental damage, theft, vandalism, or natural disasters.. 

Consider checking whether your 6-month comprehensive car insurance will cost more if you pay monthly or six-monthly premiums instead of a one-time annual premium. Another question to ask the insurer is whether you’ll need to pay administration or cancellation fees when you cancel the policy.

Alternatively, you can look for a suitable ‘pay as you drive’ car insurance policy, which usually offers you the coverage of a comprehensive car insurance policy but only requires you to pay for the distance driven. Such a policy may not be the ideal 6-month car insurance plan as it is based on how much you drive rather than for how long. If you need to drive a lot, you may end up paying more than you’d pay for regular car insurance. 

Does insurance cover a stolen car if keys were in the car?

A car insurance policy that covers the theft of your car, such as third party fire and theft insurance, usually covers a stolen car, even if the keys were in the car’s ignition.

However, your insurer may deny the claim if you live in an area where there have been several car robberies reported recently. They will see you leaving the keys in the car as a case of negligence. In such cases, your insurance provider may even expect you to have installed anti-theft security measures in your car. 

You may need to confirm whether or not you left your keys in your car, and if they had been stolen or misplaced, before filing your car insurance claim. The loss or theft of your car keys may be covered by a comprehensive car insurance policy, but usually as an optional item.

If you can confirm that your car keys were stolen, mention this in your claim as this will help establish that your car was not stolen as a result of your negligence.