If you drive less does your car insurance cost less?

If you drive less does your car insurance cost less?

December 9, 2010

On average it is estimated that a typical car travels 15,000km each year. However if you drive less than this how does the price of your comprehensive car insurance compare to someone who drives more?

RateCity found that some insurers do charge higher costs if you drive more. However, this depends on the car insurance provider and whether they ask you to enter or choose the average amount of kilometres you travel.

Using the driver profile of a 32-year-old single male driving a 2005 Toyota Corolla with a level-one no-claim bonus, RateCity compared quotes between seven car insurance companies (Ibuyeco, Virgin Money, Budget Direct, Cashback, Ozicare, Allianz and CGU) when driving less than 10,000km and driving over 35,000km per year.

The results showed that some companies charge more and some don’t such as Ibuyeco estimated nearly $65 more to insure a car that drives more (over 35,000km) per year.

Allianz estimated that if the same driver profile drove 1001km or more per week (maximum of up to 52,052km per year) they would pay almost $44 more each year, than if they drove between zero to 50km per week (maximum 2600 per year).

RateCity also discovered that CGU rewards drivers that travel less than 10,000km per year by offering an additional premium to choose from at a reduced price. The “nominated driver low-kilometre” price quoted was nearly $165 less than the standard nominated driver regardless of the amount of kilometres travelled.

Cut your kilometres and your premium
If you want to cut back on the cost of your car insurance premium by reducing the distance you drive, here are some ways to help you achieve this:

  • Consider alternative methods of transport such as car pooling or public transport, including the train, tram or the bus. Alternatively, ride a bicycle which will keep you in shape and help the environment at the same time.
  • Cut the amount of time in the car by driving to the local train or bus station or somewhere you can park the car and either walk, train or bus it in for the remainder of the trip.
  • Reduce your car insurance premium and compare car insurance online to find one that costs you less no matter how often you drive.

While car insurance can cost you more if you drive a lot, it doesn’t have to if you take the time to look at the alternatives.



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Learn more about 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.

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.


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.