4 insurance tips to drive down the cost of your car cover

Aussie drivers should review their car insurance or consider switching. (Source: Getty) (Samantha Menzies)

This is part two of a three-part series on insider tips and tricks to combat the escalating cost of insurance. Read part one on how to cut the cost of your home and contents insurance, and part three on a cheaper health insurance strategy.

Aussie drivers are facing car insurance premium hikes as the cost of living crisis continues to put strain on our finances. But the good news is there are a few ways to slash those costs without ditching your insurance, or your car, altogether.

Here are four ways to park expensive car insurance premiums.

Also by Nicole Pedersen-McKinnon:

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• Savings apps and hacks: How to slash costs with cash back

• 5.5% savings rate: Where to find the highest interest in 11 years

Step 1: Increase your excess

Like with any insurance, the higher your excess, the lower your premiums will be. Some insurers will just let you up the standard excess; others will let you add a voluntary excess above the standard amount. Either way, if you raise the amount you’re willing to put in to make a claim, your insurance outlay will go down.

Step 2: Get the type right

There are three basic options for car insurance:

1. Comprehensive insurance – this covers damage made to other vehicles and also damage to your vehicle itself. You will have the choice of a payout, if your car is written off, based on:

• The agreed value, if you want a higher guaranteed amount

• The market value, if you are willing to accept the prevailing replacement cost

2. Third party property insurance – this type of insurance covers damage to other vehicles and property, but not your own.

3. Compulsory third party (CTP) insurance - this is a compulsory insurance which forms part of your registration and covers injury or death as a result of an accident you may be liable for. It does not cover damage to any vehicle or property.

But agreed value is expensive, and the value of your car (usually) falls each year. While the shortage of imported cars during the pandemic caused an increase in second-hand car prices, which saw insurers pay out accordingly, a recent uptick in supply and tighter financial times mean that your potential payout will now be less.

In this case, it might be worth dropping to far cheaper third party cover as you come up with a strategy to replace your vehicle… then starting at the insurance top again for a time with ‘agreed value’ comprehensive cover.

Step 3: Update your usage

Your address is crucial to the price of your vehicle premiums. That’s flat-out crime related. If you’re a good driver, with no claims, you’ll often get a ‘no claims’ bonus or discount. But how you use and where you keep your car also makes a difference to your insurance premiums.

If you don’t already, could you house your car in a locked garage? Does it have security features like an immobiliser or satellite tracking? Could you drive less to qualify for limited kilometre discounts? All these would also help to bring your car insurance premium down.

Step 4: Ask for a discount

Stick your hand up for leniency, and be prepared to switch to a more competitive insurer if you don’t get a discount. You could also ask if your insurer is prepared to offer a discount if you take out more than one type of insurance with them - it’s possible to get a multi-policy discount of as much as 15 per cent.

Also remember that new customers of many insurers enjoy introductory bonuses like fixed dollar discounts or a percentage off the first year’s premium, so switch insurers and you will also be able to save.

In part three of this series on insider tips and tricks to combat the escalating cost of insurance, Nicole shares her personal insurance victory and how to put in place a cheaper but vital health safety net to protect you and your family.

Nicole Pedersen-McKinnon is the author of How to Get Mortgage-Free Like Me, available at www.nicolessmartmoney.com. Follow Nicole on Facebook, Twitter and Instagram.

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