How you can save on car insurance

Consumer group Choice has found that by shopping around, motorists can save up to $1500 a year on their comprehensive car insurance.

After surveying 21 insurance companies Choice found big cost savings on policies. Some of the average savings found by choice were:

  • Up to $1500 a year for a young driver.
  • $1030 for a family with a young driver.
  • $495 for an adult driver.
  • $440 for an older driver.

Pay As You Drive car insurance

It was also found that drivers aged 25 years and older could also make big savings by driving less under new Pay As You Drive policies.

The name says it all - the less you drive the bigger the discount. If the actual kilometers covered is less than estimated in the coming year Pay As You Drive allows you to roll over kilometers you have left or they will refund you part of the premium.

If you go over the limit, you will be required to pay extra. The trick is to pay the extra before you have driven all the kilometers you have already paid for. So if you forget to top up, you will only have third-party fire and theft cover for the rest of the year.

Pay As You Drive calculates premiums differently to other insurers and does not use a no-claim bonus system.

There are a number of different types of car insurance:

  1. Compulsory third party (CTP or green slip insurance) is the most basic cover and every car must have it. It provides essential cover against claims for compensation if you injure or kill someone in a motor accident. If your car is not worth much you may think taking out CTP is enough. However it doesn't cover you for damage caused to other people's property (if you are unlucky enough to run into an expensive car.)
  2. Third party property is the least expensive option. It covers you for the damage you may cause to another car and may include limited cover for damage caused to your car by an uninsured driver.
  3. Third party property, fire and theft also covers you if your car is stolen or burnt.
  4. Comprehensive car insurance is the best cover option but also the most expensive. It includes the cost of crash repairs or replacing your car, even if you are at fault.

When buying car insurance you need to:

  • Check your renewal notice against the online quote, it will often be cheaper.
  • Remember a no-claim bonus can reduce your premium by 70 per cent. (You need to have had up to six claim free years to be entitled to the maximum no claim bonus.)
  • Nominate certain drivers or restrict the use of your car to drivers older than a certain age. (E.g. 25)
  • Discounts - for example if you have another policy with the same company, you are a long-term customer.
  • Remember to shop around for car insurance!
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Published on January 1-th, 2009 in Insurance
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.
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Important Information

Not all providers in the market are included in the comparison.

Any information or advice contained on this website is general in nature and has been prepared without taking into account your objectives, financial situation or needs.

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