Some questions to consider when looking for auto insurance

You may have noticed the price you pay for car insurance is different from what your friends or your parents pay.

Insurance premiums are calculated based on many different factors, including personal characteristics like your age, gender and location. They are also based on car-related information, such as the make, model and age of the car, the distances you drive and your history of accidents or insurance claims.

Understanding how each of these factors affects your premium is important, as is knowing how you can potentially reduce your premium. The following factors affect how much you may pay for car insurance and are worth considering when making a car or auto insurance comparison.

How old are you?

Many Aussies start driving in their teens, and by the time they hit 21, they may even own a car.

However, in those first few years of driving, car insurance may be more costly. Drivers under the age of 25 tend to pay more for insurance because they fall into a higher risk category from an insurer’s point of view. This is due to their inexperience and their statistical likelihood of being in an accident.

Car and auto insurance companies typically see drivers older than 25 as more experienced and, as a result, may charge lower car insurance premiums. This trend may continue until the driver reaches their late sixties when premiums start rising again to account for age-related driving issues.

What is your gender?

While younger drivers tend to pay more for insurance, male drivers under 25 may have to pay an even higher car and auto insurance premium. Again, this relates to their risk profile: insurers charge more for groups they think may carry more risk of an insurance payout. Given younger male drivers are more likely to be involved in car accidents, they are not as safe a bet from the insurer’s point of view.

Where do you live?

Even where you live can affect the price you pay for insurance. For example, if you live in an area with a high rate of car theft, insurers may charge you a higher premium, especially if you don’t take precautions such as installing security devices or regularly parking in a garage. They may also look at whether you live in a region prone to natural disasters like floods, storms or bushfires. Drivers in these areas may need to look at more comprehensive insurance options to ensure they are covered if a natural disaster occurs.

How replaceable is your car?

Drivers of classic or customised cars may need a different level of coverage to those driving a common car that’s easier to replace. For example, some drivers of classic cars prefer buying car insurance policies that cover an agreed value which they can negotiate beforehand with the auto insurance provider. 

How much do you drive?

Some drivers are always in their car, while others only drive weekends. Sometimes insurers take this into account when they design their policies. For example, some insurers offer a ‘pay as you drive’ policy for those who don’t drive much. It’s worth considering whether or not this could make auto or car insurance cheaper.

How many drivers are listed on your auto insurance policy?

If you share a car, you may have to add your fellow drivers to your policy. This can affect how much you pay. For instance, if you share with a younger driver you may have to pay an under-21 driver excess or inexperienced driver excess.

Have you checked for discounts or other ways of keeping your premium low?

Insurance is a competitive market and there are often discounts available. For example, some drivers may be eligible for a no-claim discount if they have no history of accidents. Some insurers will also give you a discount if you buy the policy online. Finally, some insurers will negotiate a lower auto insurance premium for drivers who have added extra security to their car. 

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