I might’ve spent a little more money than I’d have liked over summer. Between Christmas, a friend's wedding and some downtime over New Year's, I lived my best life more than I normally would.
While I didn’t stretch my budget to the point that I put myself in a bad spot financially, another large bill would require me to dip into my offset account to cover it. That situation soon came to pass when my car insurance renewal notice arrived.
It’s something I’ve always chosen to pay annually, as it's cheaper than monthly or fortnightly payments, albeit with a bigger impact on your immediate cash flow.
The renewal trap
So, when my renewal notice arrived, it was for $737.34. At first, I thought, “That’s not too bad for comprehensive insurance, so I doubt I’ll be able to save much more than that”. However, that’s the trap that insurers want you to fall for. Loyalty doesn’t pay; in fact, with finance, insurance and utility providers, it’s the opposite. The best deals are usually reserved for new customers.
If you think my car insurance is cheap already, it’s also because of the vehicle's value. I drive a basic 2016 Mazda3, which is obviously worth far less than, say, a new Ford Ranger. The average comprehensive policy is costing $1,538 per year, according to our cost of owning a car data.
It takes less than five minutes to compare car insurance, and the worst outcome is that you find out the policy you’re on is good value. After a quick search, I found three different policies that were $100 less than my renewal.
In the end, I chose a comprehensive policy with Coles, which was $586 plus 10,000 Flybuys points. So, that keeps an extra $151.34 in my pocket, gives me some points that I’ll convert to Velocity points for a future holiday and doesn’t stretch my strained budget quite so far.
If you think, “Is $150 even worth all that much to me?”, consider that it only took me five minutes to compare my options. Most people wouldn’t turn down an hour's work for $150, let alone five minutes.
There’s no harm in switching, either. You don’t lose your no claim bonus or anything like that.
What else can I do to save on car insurance?
Just to reiterate, you need to compare every year. Insurers will offer discounts to new customers instead of rewarding loyalty.
Bump your excess up
Opting for a higher excess is one simple way to save on your policy. While you’d be worse off if you were to have an accident and make a claim, you’d save money if you enjoyed an accident-free year. When I was assessing my premium, adjusting my excess from $800 to $1,100 shaved another $70 off the policy.
Review the kilometres per year listed on your policy
The less you drive, the cheaper your car insurance typically is. Maybe you were previously working at a job further from home, or you’ve moved into a hybrid role. You might also be using another family vehicle more. Either way, if you’re driving fewer kilometres than what’s on your policy, you’re overpaying for car insurance.
That doesn’t mean you should be dishonest about how far you may drive, though, as that’ll land you in trouble if you have to make a claim.
Compare at least a week before renewal
When researching car insurance prices around Australia, I found that insurers would charge a higher premium for policies whose coverage started immediately. Compared to buying a policy that commences one week from the purchase date, the difference was $40 higher on average. So, while it’s easy to sit and stare at your renewal, a bit of punctuality can help you save.
Review driver ages
Another simple way to save on your car insurance is to limit the age of potential drivers. For example, if you’re the sole driver and are over 25, restricting the age of all drivers to 25 or over will reduce your policy’s cost substantially. In my case, the price difference between a 25+ age restriction and none was more than $200.
Get your basic policy details up to date
Here are some of the simple ways you can make sure all your policy’s details are correct each year:
- If you previously took out finance on your car, be sure to update your policy once you’ve paid it off.
- Check where your vehicle is kept. If you used to park your car on the street, but now primarily park in your driveway or garage, Savvy found that it could save you a few hundred dollars compared to street parking, especially in busier areas.
- Make sure you’ve got the correct years listed for your no claim bonus. Although insurers don’t reward loyalty, they do reward safe driving.
- Don't leave it to the last minute. Insurers are inclined to offer cheaper premiums for full-time workers, so if you’ve moved from casual work to a proper 9 to 5, your hip pocket will thank you.
Hopefully, these tips can help you cut down on your car insurance outlay. The easiest way to save is by comparing policies, but remember that keeping your details up to date, adjusting excesses and not leaving it to the last minute can help too.
If you’re in a money-saving mood, don’t stop with your car insurance. Between insurance and energy bills, Savvy found that there could be $2,344 worth of savings to be had.