Driving to the future: Could safety save on premiums?

Driving to the future Could safety save on premiums?

By Amy Bradney-George
4 March 2009

New technology to help prevent drivers from falling in to micro-sleeps could reduce car insurance premiums in the future, according to car insurer Budget Direct.

Cars like the University of New South Wales’ (UNSW) $200,000 Subaru Liberty research vehicle have been designed to monitor driver focus on the roads. The car has additional cameras, monitors and incorporates programs such as ‘Smarteye’ and ‘Optalert’.

Operations Director for Budget Direct, James Lilley, said anything that helps drivers avoid accidents was of interest to them.

“Take for example car alarms and immobilisers – Budget Direct offer discounts for having these installed in your vehicle, so devices like ‘Smarteye’ and ‘Optalert’ which eliminates falling asleep at the wheel could certainly be taken into account.”

In 2008 there were 1463 people who lost their lives through accidents on the roads. While the road toll is lower than it has been in over 50 years, UNSW hopes their research will help reduce fatalities even further.

Cars with the technology to lower the likelihood of accidents due to tiredness will add another element of safety for both drivers and insurers to think about.

Lilley said there were a number of factors insurance companies would have to consider when looking at this type of technology and how it could affect insurance premiums.

“Obviously, any new device would need to be proven to drastically reduce or eliminate a cause,” he said.

As well as rigorous testing by the manufacturers, insurers would have to calculate the amount of claims that could be reduced by the technology.

Statistics from UNSW show that one in five road fatalities are linked to fatigue. So the more effectively this technology alerts drivers to their tiredness, the more potential there is to reduce insurance claims due to fatigue.

Once this happens insurers can start thinking about reductions to insurance premiums for people driving these cars. Cars that have added safety features could end up saving lives and money for people on the road.

But to reduce premiums, safety features would also have to show a significant improvement on current statistics, Lilley said.

“As an insurer, Budget Direct welcomes new technology that can reduce accidents and injury for motorists although these technologies can take years to be introduced and/or measured by the manufacturer.”

In the case of the Subaru’s Liberty, the Injury Risk Management and Research Centre (IRMRC) at UNSW will be using it to conduct a three year study of common driver errors contributing to road accidents.

The vehicle, which earned a five-star ANCAP (Australasian New Car Assessment Program) rating, is a good example of what safety features to look for in a new car.

The IRMRC highlighted equipment like symmetrical all-wheel drive, airbags, electronic throttle control, Vehicle Dynamic Control stability and ABS brakes as impressive features on their research vehicle that add to the overall safety.

Some of these features are relatively new to the market so if you’re thinking about getting a car with extra safety features, make sure they are acknowledged by your insurer to ensure a cheaper premium.

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Learn more about car insurance

Can I drive a new car without insurance?

It is illegal to drive a car in Australia without insurance. Most states require that you get your insurance in place before you drive the car off the dealership’s plot. So, the answer to whether driving a new car without insurance is no, it is not allowed.

The only time you can possibly legally drive an uninsured car is when you have to get the vehicle registered. You should drive straight to an inspection station or your state's vehicle registry. You must also make sure that you take the most direct or convenient route possible.

It is important to note that your compulsory third party insurance (CTP or green slip) isn’t valid until your car is registered.

Driving an unregistered or uninsured vehicle can have severe legal repercussions. If you are involved in an accident, and are driving an unregistered and uninsured vehicle, you will be personally liable to pay compensation to anyone hurt, as well as for damages. If you are caught driving a vehicle without insurance, you may be fined or even have your vehicle seized.


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.

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.