How can I calculate my car insurance premium?

Every insurer has its own metrics and algorithms for calculating your car insurance premium. Every driver in Australia has a unique driving profile, so even drivers of similar ages living in the same neighbourhood may pay entirely different car insurance premiums. But you can take out some of the guesswork by taking stock of your specific situation and comparing car insurance calculations. 

How car insurance premiums are calculated

To estimate how much you may need to pay for car insurance, you’ll need to look at the same key factors and circumstances as insurance companies, including: 

• Your age
• Your gender
• The make, model and year of manufacture of the vehicle
• Your location
• The excess you agree to pay
• The type of policy you are considering such as third-party or comprehensive.
• Optional extras (if applicable)
• Any insurance claims history 

Even if a car insurer doesn’t offer a car insurance premium calculator online, you can typically apply for an obligation-free quote to get an idea of what their car insurance may cost you. Comparing car insurance quotes from several different insurers could help you calculate the potential cost of premiums. It may also help to work out if any changes to your profile may get you a lower rate somewhere else, such as an additional year of not making a claim. Keep in mind that getting car insurance quotes may require providing some personal information.

Alternatively, you could compare car insurance online to get a better idea of what a range of insurers offer. You may still need to speak to one or more insurers to finalise your policy and ensure you get the necessary coverage at an affordable price. Consider reading the insurer’s Product Disclosure Statement (PDS) to verify that the information suggested to you online matches with the insurer’s stated policy coverage. 

How much should I be paying for car insurance?

Depending on where you live in Australia, car insurance can cost you upwards of $1000 every year, but it can easily climb even higher, based on the make, model, and age of your car and your preferred coverage. 

There are so many different factors that can affect the cost of car insurance premiums that it is worthwhile taking the time to compare a range of options based on your personal circumstances with different insurers. For example, insuring a car for an agreed value rather than its market value may cost you more, depending on the sum you and the insurer agree on. The cost of your car insurance premium can vary further if you live in an area which has a higher incidence of adverse events, such as flooding or crime.

If you’re a younger Australian below the age of 25, you’ll typically pay a lot more if you buy a policy in your name. This is because younger drivers are statistically more likely to get into accidents, and insurers therefore place them into a higher risk category. 

You may be able to lower your car insurance premium by agreeing to pay a higher excess. But this means you’ll end up spending more out of pocket if you are in an accident and need to make a claim.

By understanding the key elements that influence your car insurance premium, you can make informed decisions about calculating your best balance of coverage and costs. Remember to regularly review your policy to ensure it still meets your needs and remains competitive in the ever-changing car insurance market.