10 tips for cheaper car insurance

Getting the best deal on car insurance is not always simple and straightforward.

For instance, you can change from comprehensive insurance to extended third-party, fire and theft for an older car that’s worth less than a couple of grand.

But you should take care that this is the right course of action in a rapidly changing used-car market.

If you decide to ditch comprehensive cover because you reckon your car’s not worth that much anymore, you may be doing yourself out of dough if you crash the car and it’s uneconomical to repair.

In recent years the value of used cars has been accelerating out of sight. So be aware, your car may be worth more than you think – and more to replace too.

That’s just one element of finding the right balance between saving some bucks on annual premiums and ensuring that you are getting the right level of cover as well.

For the exact same reason, agreed-value insurance is something to avoid in the current volatile market, even though it might save you money initially.

So here are some ideas that will keep insurance costs down, but with added words of advice that will ensure you don’t fall into the old ‘penny-wise, pound-foolish’ trap.

It’s always tempting to do the right thing by your kids and let them drive your car when they can’t afford their own.

And some insurers will charge the same amount for cover if the young driver is not the registered owner of the vehicle and not the principal driver.

But as soon as your child has a prang – even a light parking scrape – your premium will immediately soar if a third-party owner wants to collect on your insurance.

You can expect the annual premium to rise by 50 per cent or thereabouts. What’s more, the insurer won’t wait for the annual renewal, you can expect a pro rata bill in the mail (or directly debited from your credit card) as soon as the claim is submitted.

So choose carefully whether your child needs to be driving your car. But whatever you do, if your child is driving your car on a regular basis, make sure your insurer knows that.

It’s called material disclosure – disclosing or revealing to the insurer a ‘material’ fact that would affect how the insurer underwrites the risk.

The last thing you want is the insurer to deny the claim – and pay you and the third party nothing whatsoever because they feel you lied about the regular drivers covered by the policy.

This is important: Do not fib to insurance companies.

Saving money tips for car insurance
• Shop around and obtain quotes from brokers and online comparators
• Consider a higher excess for a lower annual premium
• Leave the kids to arrange their car and insurance
• Choose your car wisely, after checking parts prices
• Don’t buy muscle cars or sports cars
• Don’t park out in the street
• Put yourself through an advanced driver training course
• Join an enthusiast car club for discounted insurance benefits
• Buy and install anti-theft deterrents like an alarm

Every car sold in Australia – and quite a few brought in as grey imports – are evaluated by individual insurers or the Insurance Council of Australia – for the risk they represent.

Risk can be established based on a number of factors, including whether the car is attractive to hoons (see below). But the car can also be categorised according to the cost of repairs.

If a car costs a fortune for spare parts, or it is finished in a special paint that incurs higher costs to respray, you can expect your insurance premium to reflect that.

And don’t be fooled; some cars that cost little to buy can be expensive to repair.

So do your maths, if you’re working out whether to buy car A or B. Ring around the dealers and request quotes on the prices of front quarter panels, bonnet, bumper cover and headlight unit.

It might be quite illuminating.

Car insurers often charge considerably more for a high-performance car.

It’s not that the car in or of itself is necessarily a higher risk to the underwriter. It’s more likely that this car is at risk of drifting or dragging on public roads with a young bloke (usually a bloke) behind the wheel.

He has seen it done, but has little actual experience.

And leaving aside that consideration, the high-performance car is also more likely a target for theft.

While many newer cars come with immobilisers, it’s not unknown for thieves to break into a property and make off with a spare key – and the car – or just car-jack it in public.

Some of these vehicles are broken up and sold off for parts to amoral buyers who are casting around for cheap bits to modify their own car or replace a specific part that has surrendered to racetrack abuse.

Finally, a car that has been modified will cost more to insure because it may be prone to combust if the modifications haven’t been carried out comprehensively and sympathetically.

If the car burns down to the door sills while parked in a garage, the insurer will still have to pay out the owner.

So insurers are reluctant to cover vehicles like these – and to discourage this sort of customer, they charge accordingly.

Muscle cars and sports cars might be more affordable to someone with a good driving record and living in a suburb of unimpeachable repute.

A car left out on the street is always more vulnerable to a careless third-party driver, to vandalism or to theft.

If your car is slightly exotic or valuable to thieves, the insurer may even demand you park the car undercover, or refuse to take your business.

And let’s face it, some parts of town are not as morally righteous across the board as other parts. Or your high-end car may be targeted precisely because you live in a ‘good suburb’ and you leave the vehicle out in the street.

Insurers have actually established that the risk of paying a claim for a vehicle parked on the street is quantifiably higher than in the case of a car that is parked off the street (and preferably undercover).

That lower level of risk is reflected in the affordability of the premium – the annual charge for insurance cover.

Of course, keeping a car garaged doesn’t only reduce the risk for the insurer, it keeps your car looking pristine for longer, so you save having to respray the body after a few short years.

Reduce damage from ultraviolet radiation, bird droppings and hail. Your car will love you for it, as will your insurer.

If you are a safer driver on the road – and can prove it with an advanced driver training certificate – you may be considered a lower risk to an insurer.

Not all insurers necessarily subscribe to this thinking, but the more enlightened ones do.

If you’ve been indoctrinated into maintaining situational awareness at all times and know exactly how to respond to an unfolding emergency, there’s a very real chance that you’ll be an appealing prospect to an insurer.

That may translate to a discount, even for younger drivers.

It’s not unknown for car clubs to arrange a bulk discount for their members. You join the car club and sign up for one of these policies, enjoying the lower-priced premiums that go with the membership deal.

More often than not, the car club will arrange the cover through a specialist underwriter, one that has judged classic or historic cars to be lower risk perhaps, or is prepared to accept that the risk might be higher in this sector of the market where some drivers are concerned, but the risk they pose is offset by drivers who are older and more cautious.

Most modern cars are equipped with an immobiliser, but an alarm system remains a relative rarity.

Nevertheless, insurers do reward policyholders (the customer) who have fitted an alarm. And if a car dates back before July 2001, when immobilisers became compulsory, it may be vulnerable to theft.

If so, aftermarket retailers can supply immobilisers that will make your classic/historic car just as hard to nick as something more modern.

If you should need to have an alarm or immobiliser fitted, get a professional to do the job.

Still on the subject of older cars, theft can take many forms, so you might consider lock nuts for your precious alloy wheels, and an aftermarket steering wheel lock.

These can be listed on your insurance proposal – your application form for insurance coverage – to convey to the insurer that you’re careful and cautious about keeping your car.

For any insurer, the cost of processing claims is a significant factor in the company’s cost of doing business.

A Rolls-Royce or Bugatti written off can be expensive for the insurance company – although much of that loss will be covered by reinsurance, which is an insurance policy for the insurer.

But thousands of $700 or $800 repairs for parking biffs each year can be expensive too.

If an insurance company can reduce the cost of labour in the workplace by offering a $1000 excess instead of a standard $600 excess – and 30 per cent of policyholders opt for the higher excess – it could save the insurance company the cost of one or two extra clerks in the claims department, or an additional claims assessor.

It’s easier for the insurance company to hold out the carrot of lower premiums for the policyholder than explain that the vehicle could be repaired out of the owner’s own cash reserves for less than what the increased premiums will cost the owner over the next five or six years.

There are numerous insurance brokers who will find you the best deal they possibly can, but in the age of online comparison sites, such as iSelect or Compare the Market, there are even more options available.

And it’s so much easier now than it was in the era pre-dating the internet.

If you’re concerned that your no-claims bonus won’t be transferable, have no fear. Your new insurer will usually check your history with your previous insurer.

The important point to bear in mind is that insurance is not the sort of service where you should cut costs unless you can tell where it won’t matter.

Chances are that shopping around will save you far more than most of the other tips listed here.

And finally, it is in your best interest to review all insurance policies at regular intervals. Insurance is not something that you set and then forget.

When you do that you risk being caught out from changes to policy and changes in your own life.

Related: What sort of car insurance is right for you?
Related: Seven things you need to know about usage-based car insurance