Your car is one of the biggest financial and emotional investments you’ll ever make. You’ve likely spent thousands to acquire it and adore it for giving you the freedom to live as spontaneously (or not) as you like. You want to protect that spend and ensure your loving feeling continues, right? Logic has probably led you to wondering how to save money on car insurance…
Simple. Read our ultimate guide.
After buying a vehicle you usually don’t know how you lived without it. Taking out car insurance is a great way to ensure your driving downtime is as short and as inexpensive as possible when the unexpected happens.
Already have insurance? It’s important to regularly research the market to make sure your current cover is still best for you. Doing so could save you a substantial amount of money. A few small tweaks and you could reduce your car insurance premium by hundreds of dollars.
The Guide: Saving Money on Your Car Insurance
With more than 10 years in the Australian market, PD Insurance has lots of experience with motorists from all walks of life with all types of vehicles. Here we share ways that everyone can use to potentially save on car insurance:
- Tailor insurance cover to your circumstances
- Consider the real policy value
- Choose the right excesses
- Take advantage of car insurance discounts
- Weigh up agreed value vs market value
- Circle back – review annually to save
1. Tailor Insurance Cover to Your Circumstances
At PD, there are tens of thousands of possible combinations for the answers our customers give when we are calculating their insurance premium (ie. the cost of a car insurance policy). Plenty of potential to save your hard-earned cash.
Insurers weigh different factors/answers differently. For example, some take into account the number of kilometres you drive per year while others don’t. Some factor in where you garage your car and some don’t.
That’s why it’s so important to shop around. Your circumstances won’t change between phone calls or web sessions with different insurers, but the way you ‘rate’ in each’s calculations will.
And while you’re answering all those questions, take a breath and remember that the insurers who ask more questions in their quote process are the ones likely to provide more discounts. The greater the insurer’s knowledge of you, the better they understand your personal situation and car usage, and therefore your overall risk factor… all of which impact the premium.
Common factors that affect insurance pricing
There are many factors that may affect the pricing of your insurance policy. Some of the most common include:
- The type of vehicle you own – insurers refer to research data around accidents and faults as well as ANCAP safety ratings to decide how a car rates
- How much damage it already has – the more damage your car has, the more likely it will affect the structure of your car
- Your personal circumstances – research shows that certain people are more likely to be in an accident, eg. women aged over 25 years are less likely than single males aged 20 years old
- Your claims history – the higher the number of claims you’ve had to make over time the more likely you are to make more, so this will affect your premium
- Each party’s driving history – every driver listed on the policy will have their driving history (and personal circumstances) examined. The more demerits and fines in your past, the more likely you are to repeat that behaviour and be a riskier driver. Think twice about sharing your car as it may end up cheaper for you to ditch your co-driver
2. Consider the Real Policy Value
Answering the question of ’how to save money on car insurance’ goes much further, as you’ll see throughout this article. But first, when doing your research always consider the value of the policy to your unique situation.
Some insurers have more expensive premiums because they contain a plethora of bells and whistles. We’re talking items that you will rarely ever claim for, such as cover for valets who drive your car or cover for sports gear in the car.
On the flipside, some insurers split it out into basic cover and car insurance add-on products, to give consumers even more control over the variables that affect their insurance premium.
Ask yourself – what exactly do you need in your cover? Don’t pay a premium for inclusions you’ll probably never activate. Find a balance between what you definitely need and very likely won’t, then chew over what the policies you’re comparing are really worth to you.
3. Choose the Right Excesses
If you’re ever at fault in an accident, calling on your car insurance to cover the repair bill will see you pay your insurer a basic excess for those repairs. They then cough up the rest to have your car fixed and get you back on the road. If you’re not at fault in most cases the other party pays the excess instead (as long as you can provide their contact details to the insurer).
Your basic excess is agreed on when you first take out your policy – you have control over choosing from the range of limits offered by your insurer. The higher the excess the lower your insurance premium. Taking a short-term perspective, keeping it low is seriously appealing, but if you do actually have to make an a car insurance claim down the track you’ll need to contribute more.
Did you know there’s such a thing as an unlisted driver excess?
With some insurers, if your car is driven by someone not listed on their policy and they have an accident you’ll be up for an unlisted driver excess payment. Other insurers simply expect you to nominate all drivers on your policy (which can give them the confidence to offer you a lower premium) or they won’t cover the accident.
If your chosen insurer does have an unlisted driver excess you might be tempted to keep your co-driver off the policy. Learners and younger drivers are especially expensive on an insurance premium. Before your decision, contemplate whether the risk is worth the gain.
4. Take Advantage of Car Insurance Discounts
Insurers offer all kinds of incentives to entice motorists to become their customers. At PD Insurance we offer a range of car insurance quote discounts you might not even realise exist.
How to save on car insurance? Look at the discounts! Ours include:
- Exclusive driver discount – if you’re the only driver of your car
- Claims free discount – if you’ve had no claims in the last five years
- Early shopper discount – if you get a car insurance quote with us before your existing policy expires
- Paid in full discount – if you pay for your annual policy upfront rather than via monthly installments
Taking advantage of one or more discounts from car insurance providers can save you some serious dollars. The time spent researching the market can easily be outweighed by the money you end up retaining.
5. Weigh Up Agreed Value vs Market Value
Still want more answers on how to save money on car insurance? But wait there’s more… When you’re inputting your details to the insurer they will ask if you want to insure your vehicle for its market value or its agreed value.
Market value is the amount your car would cost if it was bought (used) on the open market today. Agreed value is just that – agreed. If you request an agreed value that is lower than your vehicle’s market value your insurance premium will drop. Enticing, but it can be a gamble.
How low are you willing to go? Or are you happy to ensure you will be back on the road in the comfort you’re used to, if you ever have an accident?
6. Circle Back – Review Annually to Save
Your situation changes all the time – your age, car, driving history, co-drivers, address, and so on. If you’ve been with your insurer for a long time, how will they know your circumstances are now different if you haven’t reassessed things with them? That you’ve undergone changes that could lower your premium?
For example, you may have started out with an insurer and at the time enjoyed three years without a claim. Now, you’re five years into no-claim territory and eligible for a five year no-claim discount. With a lot of insurers, the no-claim years don’t automatically accumulate in their data management system and apply a discount when a milestone is reached.
Always update your insurer as your personal situation develops. Take your insurance into your own hands and see if you can do any better year after year.
Even the smallest change in circumstances can lead to a significant premium change. Your wallet might thank you for it.
Over to You: How to Save Money on Car Insurance
Do you have any suggestions on how to save money on car insurance? Any tips to share with others?