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How can I calculate my car insurance premium?

How can I calculate my car insurance premium?

When it comes to insurance, every driver in Australia has a unique driving profile. Even drivers of a similar age living in the same neighbourhood may be paying entirely different premiums, or costs, for car insurance.

If you want to calculate your car insurance premium, consider looking up how your age, gender, car, and location, as well as the kind of policy and your insurance claims history, can impact the cost of car insurance. You may want to consider using an online car insurance premium calculator to understand how the premium varies with different factors before you decide on buying a suitable policy.

Why should I use an online car insurance calculator?

It can be difficult even for experienced drivers to keep track of everything likely to affect your car insurance premium. For instance, if you missed reporting a traffic ticket to your insurer, or forget to update your policy after modifying your car, that may reflect badly on your driving history and lead to your insurer charging you more for the policy. 

It may be useful to compare car insurance premium quotes online once in a while to remind yourself how other insurers compare, and see if any changes in your profile may get you a lower rate somewhere else.

Using an online car insurance calculator usually requires providing some personal information including your age, gender, postcode, car details, and information relating to your driving experience. You’ll also be asked for your policy type preference, which may be in addition to your CTP insurance if that is included in your vehicle registration.

For instance, if you drive an easy-to-replace car and aren’t too worried about damages to it or injuries to yourself, a third party property damage policy might suffice for you. You can also consider checking if going for market value coverage, and agreeing to cover a higher excess out of your savings results in a lower premium.

You may still need to speak to one or more insurers in order to finalise your policy and ensure you get the necessary coverage at an affordable price. But using the online car insurance premium calculator can guide you in understanding the details of your car insurance policy, and also help you frame the questions you may have for the insurer. Consider reading the insurer’s Product Disclosure Statement (PDS) to verify that the information suggested to you online matches with the insurer’s stated offerings. 

How much should I be paying for car insurance?

Depending on where you live in Australia, car insurance can cost you around $1,000 every year, but it can easily climb higher, based on the make, model, and age of your car and your preferred coverage. Again, if you’re younger than 25, you’ll likely be paying a lot more if you buy a policy in your name. 

  • For example, male drivers under the age of 25 who own a luxury vehicle in Sydney looking to buy a comprehensive car insurance policy may have to shell out as much as A$2,500 per year.

This can vary further if you live in an area which has a higher incidence of adverse events such as storms or riots. Choosing a policy that covers how you value the car, also known as  the agreed value, rather than the market value of the car can also cost you more. You may be able to lower your car insurance premium by agreeing to pay a voluntary excess, but that usually means you’ll end up spending more out of pocket in case you are held at fault for an accident.

Ideally, you should consider factoring in the cost of car insurance into your car purchase decision, and, if you do need to buy a car, choose a model that’s fairly well known and not too expensive to keep insurance costs low. For younger drivers, it may be wiser and less expensive to be added on to the insurance on the family car rather than buying insurance alone. If your car is at higher risk of vandalism or theft in your neighbourhood, you could add security features to ensure you don’t end up filing claims too often.

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This article was reviewed by Personal Finance Editor Alex Ritchie before it was published as part of RateCity's Fact Check process.



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