5 Ways To Lower Your Car Insurance Premium


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A lot of us are feeling the pinch this year, especially after the economic effects of COVID. It’s natural to want to look at where you can save money. Though you might be tempted to cancel your car insurance, it’s an unwise financial move that could end up costing you thousands in the event of an accident. Instead, perhaps it’s time to look at ways to lower your car insurance premiums.

Here’s some industry info that might save you money on your car insurance each month.

How are car insurance premiums calculated?

Car insurance premiums are calculated on an individual basis, through a process known as underwriting. When you get quotes for car insurance and you’re asked about your driving history, car type, and where you live and work, this is all part of the underwriting process.

Insurance companies use underwriting to determine your risk profile. This means that they decide how likely you are to make claims against your insurance. They then base your premiums on that. If you’re deemed high risk, your insurance premiums will cost more.

Each insurance company has their own underwriting process. While the basics remain the same, some companies might weight different underwriting factors more heavily than others. This is the reason why you might get a great deal with one insurance provider, but your best friend gets better prices with a different one.

So if you want to lower your car insurance premium, you need to improve your risk profile. How do you do that? Let’s take a look.

Five Ways To Lower Your Car Insurance Premium

You might not be able to put all of these five points into action. However, if you can make yourself a lower-risk driver, then you’ll reap the benefits in terms of cheaper premiums.

1. Drive safely!

One of the major factors in your insurance premium is your previous driving history. If you’ve been crashing into things every second month and making lots of claims for repairs, you’ll be paying a lot in car insurance.

Though you won’t see an immediate drop in your premium, vowing to drive carefully and safely will pay off in the long run when it comes to insurance premiums. Often, insurers will even offer discounts for drivers who are claims-free over a certain period of time.

Plus, good driving is something you should be striving for anyway. We all want to be able to use the roads as safely as possible.

safe driving can result in lower car insurance premiums

2. Increase your excess to lower monthly insurance premiums

Increasing the amount of excess you commit to paying in the event of a claim can be an effective way to reduce your premium.

Obviously, this is a decision that needs to be weighed up carefully. Though you’ll save upfront, you’ll need to shell out a higher amount if you do need to lodge a claim after an accident or theft. If you’re not worried about the potential cost, it might work for you.

Remember that there are often other excesses to consider too. For example, some insurers apply an age excess, unlisted driver excess, and more. Before deciding to increase your excess to lower your car insurance premium, get to know more about car insurance excesses. First, read our understanding your car insurance excess payment article. Your product disclosure statement will outline what applies and what doesn’t with your chosen insurer.

While we’re talking excess payments, we’ll toot our own horn that PD Insurance’s comprehensive car insurance covers windscreen repair (not replacement) for free. So, if you’re with us you won’t have to pay any excess – and there’ll be no effect to your premium – for damage to your vehicle’s windscreen if it’s damaged in an incident we cover and it’s repaired rather than replaced. Beep beep!

3. Go for a cheaper, safer, or less powerful car

If you’re considering trading in your car or downsizing, you should know that your car has a huge impact on your car insurance premiums. If you want to lower your car insurance premiums, a “low risk” car is the one you want.

This means that a reliable car with a small engine, good ANCAP safety rating, and which isn’t brand-spanking new will attract a lower premium.

The cost to repair or replace your car is also taken into consideration when calculating your insurance premium. A lower value car and one which isn’t costly to repair is also likely to save you money on your monthly premiums. Speaking of affordability, check out our tips on getting cheap car insurance in Australia.

small car means lower car insurance premiums

4. Be selfish about your car

If you needed an excuse to keep your beloved car all to yourself, we’re giving you one. Being the exclusive driver on your policy can save you a lot on your premium, especially if the other drivers you wanted to add are high risk.

Unlucky for those hopeful teenagers. Now they can’t drive your car, and nor can your reckless friend or family member. You know, for insurance reasons. Definitely not because you love having everything set up exactly the way you like it and being able to store high-value items (like TimTams!) in a safe place where nobody else can get them.

If you do end up lending it to someone, read our blog on what happens if an unlisted driver crashes your car.

5. Shop around, and revisit your policy

When you’re looking to lower your car insurance premium, it helps to revisit your current policy. Go over your personal and car details on it to see if anything has changed. Ask your insurer about the different implementing the four ways above will make.

Your insurance needs might have changed, or lifestyle factors might mean that your premiums need to be recalculated. If you move to a new job or home, garage your car somewhere different, or you’ve been without a claim for a long time then notify your insurer. Even your car depreciating in value might make a difference.

It makes sense to have a premium reassessment when your circumstances change and/or you think you might be a lower risk driver. Ideally, you should phone your car insurer to have your premium reviewed on a yearly basis. You should definitely ask for a review after your 25th birthday.

Want competitive, affordable car insurance?

PD Insurance offers great value, award winning car insurance. With a flexible excess, additional benefits, and more, you might be saving valuable dollars. Get a quote and find out.

Plus, making a comprehensive car insurance claim with PD Insurance is a hassle-free, easy process.

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