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How To Save on Car Insurance in Australia

6 minute read

By Chelsea Dolan

In Australia, Compulsory Third Party (CTP) insurance is mandatory for all registered vehicles.¹ Also known as green slip insurance, this financial protection is covered by the registration fee for automobiles in every state except New South Wales. If you live there, you pay for your CTP separately.

Green slip insurance provides basic coverage if you’re sued because you injure or kill someone in a car accident. If you get into an accident, a basic CTP policy will leave you paying for many costs out of pocket. Purchasing additional auto insurance can ensure that you don’t face financial hardship if your vehicle damages property, is stolen or needs repairs after an accident. By following these tips, you can save money on your auto insurance and get the peace of mind that comes from knowing you’re protected while on the road.

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Understand Types of Auto Insurance in Australia

When purchasing coverage beyond CTP, you can choose from three types of policies: third-party property, third-party property, fire and theft, and comprehensive.² Third-party property insurance pays to repair damage to other people’s cars and property that occurs due to an accident that was your fault.

Third-party property fire and theft insurance provides the same protection but will also replace your vehicle if it’s destroyed by fire or stolen. Comprehensive insurance pays for everything included in third-party property fire and theft coverage and will also pay to repair your vehicle no matter whose fault an accident was.

Choose the Coverage That’s Right for Your Needs

Buying the right type of auto insurance for your needs is the first step to saving money on your monthly premiums. Third-party property damage is generally a less expensive option, at an average of around $45 AU per month.³ Comprehensive insurance is the priciest coverage, at an average of approximately $135 AU per month.

Because you pay less, third-party property damage can be a good option if your car isn’t worth much or you can afford to pay for repairs out of pocket. If not, the extra protection of comprehensive insurance is likely to be advantageous.

Drive Safely To Reap Financial Rewards

Safe driving has its perks. If you drive carefully and have a record of safe driving, you can get a no-claims bonus with some comprehensive insurance plans.⁴ During the first year, this perk may give you a discount of up to 60% off the regular price. If you maintain a safe driving record, the discount will increase annually for a specified number of years. An auto insurer may cancel a no-claim bonus with no notice and increase your premium rate if you file a claim on your policy.

Increase Your Excess

When you file a claim with your auto insurer, your policy pays for a portion of the repairs and you pay for the remainder or excess out of pocket. The amount of excess you’re responsible for varies based on the policy. Typically, policies with higher excess amounts charge lower premiums. Opting for one can save you money every month. If you already have car insurance, you may be able to ask the insurer to increase your excess to lower your premiums now.

Check for Age Bracket Discounts

Auto insurers determine premium rates based on risk, and because younger drivers are less experienced, they typically pay more for auto insurance. Most insurance companies offer discounted rates for drivers 25 and over. Some offer a bigger discount for people 30 years old and up or a larger discount for those 50 and over. If you fall into one of these two categories, find out if your auto insurer is giving you an age-based discount. If not, you may wish to switch carriers to one that offers these deals.

Take Advantage of Theft Protection Discounts

Auto insurers may provide discounts if you can show that your car is protected against theft. Factory or aftermarket car alarms may get you a reduced monthly rate. GPS tracking systems that allow a vehicle to be easily retrieved in the event of a theft can also lead to lower insurance premiums.

Parking your vehicle in a secure garage or living in a neighbourhood with low crime rates can provide additional savings. An insurance agent may not mention these potential discounts, so be sure to ask about them when obtaining quotes.

Drive a Safe Vehicle

The features of the car that you drive impact the cost of your auto insurance. Features like anti-lock brakes, crash avoidance technology and backup cameras may qualify you for discounts. In addition, the make and model of your vehicle factor into premiums.

Owning a speedy sports car usually means paying higher insurance rates, while buying or leasing a vehicle that performs well in safety tests could save you money. When you’re in the market for a new car, call your insurance company to compare the costs of covering different vehicles so you’ll know how your purchase decision will impact your premiums.

Walk and Use Public Transportation When Possible

From the insurance company’s perspective, the more you drive, the more likely you are to have an accident. That’s why many insurance companies offer a low-mileage discount for drivers who aren’t frequently on the road. Using your car only when there’s no other viable transportation option may allow you to qualify for these discounts. Plus, you’ll save money on petrol, potentially reduce maintenance costs due to wear and tear and do your part to lower carbon emissions to benefit the planet.

Switch to Pay-as-You-Drive Insurance

If you drive infrequently, consider pay-as-you-drive car insurance. With this type of auto insurance, you promise to only drive a set number of kilometres per month or year, and the insurer gives you a dramatically discounted rate in return. Keep in mind that if you go over the allotted amount, you’ll end up owing the insurance company at the end of the year.

Not all auto insurers offer pay-as-you-drive plans. Huddle⁵, Real Insurance⁶ and AHM⁷ are examples of insurers that provide the coverage either as an individual product or an add-on to comprehensive insurance.

Bundle for Savings Bonuses

Many insurers sell more than just automotive protection. Often, they also offer home, landlord, life, pet, funeral, travel, bicycle and other types of policies. If you currently have or wish to purchase one of these policies, check to see if your auto insurer offers bundle packages. With a bundle, you get more than one type of insurance from a single company and receive discounts on each premium you pay. Typically, the more policies you bundle, the greater the savings.

Approach GAP Insurance with Caution

When you’re buying a vehicle, the dealer may offer you guaranteed asset protection (GAP) insurance.⁸ This type of insurance promises to pay for the difference between what your auto insurer will give you for a total loss and the payoff value of your automobile loan.

When your car is brand-new, GAP may be beneficial, but over time, the coverage is likely to unnecessarily increase your insurance costs. Dealers usually earn commissions when they sell GAP and may pressure you to sign up. Make sure to carefully consider the price and terms before taking out a GAP policy.

File Claims Only When Necessary

Filing claims normally results in an increase in car insurance premiums.⁹ As a result, you should always consider whether it’s better to pay out of pocket for minor repairs. For example, if a stone cracks your windscreen, the cost to replace it may be less than the potential increase to your monthly premiums.

Even paying to fix a small dent in another motorist’s bumper may be less expensive than raised insurance rates. Get an estimate for any work and evaluate whether you have the financial means to pay before you submit that claim.

Shop Around Before You Renew

If you simply allow your auto insurance to renew automatically every year, you may miss out on potential deals. When approaching your renewal date, obtain quotes from at least five to six different insurance providers to compare prices and features.

Ask the companies about the discounts outlined above to ensure you get the lowest possible price. If you find a better deal, let your current insurance company know. In some cases, they may match the premium or even undercut it to keep your business.

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