Several factors contribute to car insurance cost, including the type of coverage you’re after, your age, gender, driving record, and the market value of your vehicle, among others. Depending on who you ask, the average car insurance cost in Australia ranges from $950 to $1,220.
Comprehensive Car Insurance vs Third-Party Insurance
All motorists must have Compulsory Third Party (CTP) insurance, also known as Greenslip cover. This insurance is needed so you can legally drive on the road. CTP is included when you register your vehicle, except in New South Wales, where you should purchase the insurance separately.
However, CTP is not comprehensive as it only covers legal liability if you have caused bodily injury to other individuals. If you collide with another vehicle or property or your vehicle is damaged by fire or stolen, CTP does not provide cover. Accidents that are not your fault will not cover you, as well.
To be covered in case of damage to another person’s property, you need third-party insurance. This is not the same as CTP because you can buy it from any provider. Meanwhile, you can purchase another type of third-party insurance that offers broader coverage for theft, fire, and property damage.
Comprehensive insurance, on the other hand, covers repair expenses for both your and another party’s vehicles in case of collision. This insurance is helpful because it provides coverage even if you are at fault. As the name suggests, it is a comprehensive type of insurance since it covers theft, fire and flood damage, and vandalism.
How Much Will You Pay for Car Insurance?
Car insurance premiums, or the amount you pay yearly for car insurance, differ vastly from one insurer to another. Insurance companies have their specifications defining the cost of car insurance for a certain individual. Here is a more in-depth look at the factors that affect car insurance premiums:
- Age of the Driver/Owner: Premiums increase or decrease depending on age. If you’re under 25, your insurance cost may be higher due to the higher excess imposed on younger drivers. That’s because statistics show this age range is involved in more road accidents.
- Age of the Vehicle: If you just bought a new car, expect a spike in your car insurance premium. Meanwhile, vehicles at least two years old, particularly those whose value depreciated considerably, may not cost too much on insurance. On average, a car less than two years old will cost $1,381 to insure, whilst a 6 to 8-year-old car’s premium may be around $1,155. For vehicles owned for 11 years or older, premiums can drop to $950.
- Gender of the Driver/Owner: Men pay higher premiums than women. Insurance companies typically perceive men as the riskier gender, perhaps because male drivers engage in dodgy behaviour more than females.
- Your State or Territory: According to independent research, NSW has the highest car insurance premium whilst Western Australia drivers pay the least, averaging $88-$89 monthly or $1,056 yearly.
- Your Driving Record: If you had claimed insurance before or were involved in an accident, insurers will raise your premium.
Optional extras also increase your insurance cost. For example, you may want roadside assistance included in your car insurance policy. This addition will drive up the insurance premium.
How to Save on Your Car Insurance
Knowing the factors that affect the total cost of your car insurance will help you plan for this particular expense. Here are eight tips that will successfully reduce your car insurance premium:
1. Compare and Research Your Car Insurance Options
Before you shop and buy, be sure to put in the time and effort to compare your options. There are numerous insurers and products available, so choose smartly. The most affordable does not necessarily mean the best choice. The easiest way to compare is through comparison sites where you can see the insurance products and providers, including the conditions, features, and costs.
2. Pay Annually
You typically have two ways to pay for car insurance: a lump sum payment covering the next 12 months (annual payment) or 11 or 12 monthly instalments. Many drivers opt for the monthly option, thinking they pay less. In reality, they are taking out a 12-month loan, which means interest is owed, further increasing the total amount to pay for the insurance.
In an annual payment, you can pay either by debit or credit card. Meanwhile, monthly payments will generally require you to make an initial payment. You may have to set up a direct debit to pay for the remaining months. If you miss a month, your cover could be stopped, and your credit score might suffer, as well.
So, if you’re looking to save on car insurance premiums, the better way is to pay yearly.
3. Keep Your Car Safe and Secure
Anti-theft devices instantly lower your premium. So, invest in a car lock and dash cam to help you save. Parking your car in your home, rather than on the street where it’s exposed to high heat or in your office building, can also reduce insurance costs.
4. Go for a Higher Excess
Aside from the car insurance premium, you will need to pay the excess. We recommend adjusting it to a higher level to access a cheaper premium. Don’t forget to ensure your excess is within your means when it is time to make a claim.
5. Be a Smart Driver
By smart, we mean careful. You have a new car, and you’re excited to see the Western Australian outback. Remember that you don’t own the road, which has several rules you need to follow to keep yourself and other people safe. The safer you drive, the lower the probability of getting into an accident. This effectively lowers your insurance cost.
6. Maintain Your Car
Invest in quality accessories like car seat covers, dash mats, and console covers to keep your car in top condition. Lucky for you, you don’t have to search for these items because we have them all in one place. Shop for car accessories that not only lower your car insurance cost but also extend the vehicle’s longevity.
7. Be Wise When Choosing Optional Extras
Policies have insurance extras, which you may initially think are worth the cost. However, many of them may remain unused for several years. If you haven’t used any of them, it may be time to ditch those extras. For example, roadside assistance may be useful at first glance. However, in some cases, it is less expensive if you take it out separately.
8. Try to Avoid the Temptation of Modifying the Vehicle
Modifications are thrilling to car owners, but insurers don’t take them kindly. Mods like custom paintwork, racing harnesses, and turbo engines will increase your premium. However, certain modifications may be covered, such as bicycle racks, driving lights, tow bars, leather seats, and sunroofs.
Car insurance costs will differ depending on your unique circumstances. Talk to insurers or even hire a broker to find the best product that suits your needs and budget.