Although some policies are more affordable than others, the overall cost of coverage is on the rise. Once you better understand the reasons behind the rising cost of car insurance, you may be able to use this knowledge to find more opportunities to save.

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Insurance Fraud

This is one of the causes of increased car insurance premiums. As long as fraud continues to be an issue, you can expect premiums to rise – even if only a little bit at a time. Unfortunately, there is nothing you can do about the approach that other drivers take with their insurance.

Why does this affect you and how much you pay for coverage? In short, it is the car insurance companies that take a financial hit when fraud is involved. In turn, they will typically charge all their customers more money to cover the risk of fraud.

Uninsured Drivers

Did you know that there are more uninsured drivers in the world today than ever before? This is a major problem in many countries, including here in Australia. With the number of uninsured drivers on the rise, car insurance companies are looking for ways to manage the financial problem uninsured drivers create.

The problem is this: uninsured drivers can be involved in driving accidents, and when this happens, somebody has to pay the bill. Typically, it falls to the insurer of other drivers with insurance involved in the accident – even if they are not at fault. That translates to higher premiums for those of us who do ensure we’re covered by car insurance.

Accidents on the Rise

Most drivers practice good safety while on the road. However, nobody is perfect and not every driver is cautious all of the time. For this reason, traffic accidents are becoming more common in Australia. Of course, a lot of this has to do with an increase in the number of licensed drivers on the roads overall.

When the number of driving accidents is on the rise – from minor fender benders to more serious collisions – insurers will tend to increase premiums as a means of mitigating their risk.

These are three reasons why car insurance premiums continue to rise, despite the fact that consumers may be facing tough economic times. While there are steps you can take to protect your own situation as a driver and as an insurance policyholder – such as staying safe on the road – there will always be a few elements that are beyond your control.

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However, what many car insurance shoppers don’t realise is that one route to lower car insurance rates may be as easy as adjusting their excess.

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Car Insurance Excess Explained

In car insurance terminology, “excess” refers to the amount that the policyholder is willing to pay in the event of claim filed on a non-compulsory policy, such as a comprehensive or fire-and-theft policy.

Here’s how excess works: Imagine that you are at fault in an accident in which your car is damaged, and the damage tallies up to $1500. Your car insurance excess is $500. You pay $500 toward the cost of repairs, and your car insurance company pays $1000.

How Your Excess Amount Affects Your Premium

Car insurers, like any other business, need to make money. The lower excess you choose, the more they will be responsible for paying in the event that you make a claim. That cost is offset in the form of your car insurance premium. The higher excess you choose, the less the car insurance company is responsible for paying when you make a claim. Not surprisingly, the higher excess you choose, the lower your premium tends to be.

How Excess Affects Different Car Insurances

When you choose a higher excess, your premium may be reduced, no matter what type of non-compulsory car insurance you have. Choosing a higher excess can make comprehensive car insurance policies more affordable, and allow you to add theft/fire to a third party liability policy for little additional cost.

Balancing Excesses and Premiums

Agreeing to take on more of the cost of any claims you file will make any non-compulsory car insurance policy more affordable, but that also means that you’ll need to have the cash on hand to cover your excess in the event that you need to file a claim. Consider depositing some of the savings you reap from choosing a higher excess into a savings account for unexpected financial needs such as car insurance claims.

Higher Excess, Lower Rate

By choosing a higher excess, you agree to take on more of the cost of any claims that you file yourself. Car insurance companies like it when you’re willing to pay more for your claims, and may reward you for your increased responsibility. If you need to save some money on your car insurance, compare rates on policies with a higher excess than you currently have. You may be surprised how much you can save.

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Like many drivers, you may keep valuables in your car from time to time. This could include a variety of items, from an upgraded speaker system to valuables that are usually kept at home – you never know what you may have in the trunk, glove box or back seat of your car at the time a thief decides to strike.

Car Crime

Thieves are not necessarily always looking to steal your car. Instead, they may simply want to break in and take whatever portable items you have inside the car. For this reason, you need to know whether your car insurance provides cover for the cost of such property that could be stolen from your car.

When you compare car insurance with an eye on coverage for property kept in your vehicle, you will find that different policies take different approaches. Along with this, you will see that the price may vary according to the extent of your cover.

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Is This Coverage Included?

With some policies, you may receive all the coverage you want for property left in your car. It’s always wise to read your entire policy – including all the details of what is and isn’t covered – before signing on the dotted line.

How Much Coverage am I Getting?

It is one thing to check whether property stolen from your car is covered by a given policy.  But you cannot expect an unlimited amount of coverage. Make sure you know the maximum cover limits, and compare this to the total value of any items you may leave in your car unattended.

Are There any Stipulations?

You may be surprised to find that there are stipulations attached to the type of property that is covered. As noted above, there may be a maximum payout. There may also be specified exclusions regarding the types of property for which you can claim, or there may be a specific definition of what counts as theft.

Home Insurance or Car Insurance?

While this is not always the case, some home insurance policies may cover your valuables even when they are not in your home. If you already have this kind of coverage, or you can get a better deal from your home insurance provider, then that’s another thing to consider during the comparison process.

When you compare car insurance for property stolen from your car, you will find that you have several options. Even if you don’t plan on keeping valuables in your vehicle, you may think it’s better to be safe than sorry. This is an often overlooked detail that is worth a bit of attention.

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Statutory Write-Offs

There are two types of write-off in the car insurance industry: statutory write-offs and repairable write-offs. Statutory write-offs are cars so badly damaged that there is no hope of repairing them.  Statutory write-offs since 1st May 2002 may not legally be re-registered, and the Vehicle Identification Number (VIN) can never be used again on another vehicle. These vehicles are often sold at state auctions for scrap and parts. Drivers with car insurance may receive a payment from their insurer up to the value of the vehicle.

What Defines a Statutory Write-Off?

Every state’s traffic authority decides its own criteria, which typically include significant structural damage, mechanical, suspension or engine damage.  Your insurer will typically rely on evidence from professionals or from photographs to determine whether the damage to your vehicle meets these criteria. If the car can’t be driven again, it will be written off and listed on the written-off vehicle register (WOVR) to help prevent criminals re-using the vehicle’s identity on another car.

Repairable Write-Offs

The second type of write-off is a repairable write-off. This means a vehicle that is damaged enough that towing and repairing it would cost more than the vehicle is worth.  If you have car insurance cover for your vehicle then your insurer will make a payment of either the car’s market value or agreed value, according to your policy’s terms.

The process of claiming for a repairable write-off is the same as that for a statutory write off, but your car’s repairable status will be noted on the WOVR. That means that your vehicle will be de-registered, and if the car is repaired it will need to be inspected before it can be re-registered.

It is rare for your insurer to help you to pay for repairs on a repairable write-off, due to the economics of the situation.

How much can I expect to receive?

You may be paid either the agreed value or market value of your vehicle, depending on your policy with your insurer. An agreed value is an amount stipulated in your policy’s terms and conditions clearly stating how much you will be paid if your car is written off. Both you and your insurer will have agreed to this value, so it would be difficult to argue later that it is unfair or too low.

The market value is how much you might reasonably expect to get for your vehicle if it was sold in Australia today. Because of depreciation, wear and tear, and so on, you will almost always get less than what you paid for your car. The exact amount can be hard to predict, since prices fluctuate and no two buyers are the same.

Having your car written-off after an accident can be a costly experience but knowing what the options are can save you time and money.

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Annual Car Insurance Payments

The old traditional car insurance payment option of a single annual payment is still available from many car insurers. When you opt for an annual car insurance premium, you pay the entire year’s car insurance cost in one lump sum. As cars have become more costly to insure, however, paying an entire year’s car insurance premium at one time has become difficult for some drivers, who simply can’t afford to pay hundreds or thousands of dollars all at once.

If you can make an annual car insurance payment, though, it’s typically still the cheaper way to pay. Many car insurance companies offer discounts for drivers who pay their insurance annually. If you’d like to save money by paying annually, you may want to start saving now for next year’s payment. Then, next year, funnel the money you would have paid in instalments into a savings account to have it ready for the next annual payment.

Quarterly or Twice-Yearly Premiums

Paying your car insurance premium quarterly or twice-yearly is less common nowadays than it used to be, but there are still a few insurers out there who offer these options. Paying twice-yearly may net you some savings on your premium, but usually not as much as paying annually.

Monthly Car Insurance Payments

As cars and car insurance become more costly, more car insurance companies have begun to offer monthly payment options for their customers, and this is now a common practice. While monthly payments are more convenient for many drivers’ budgets, they do come with some drawbacks.

Paying monthly means that if you miss a payment, or are overly late making a payment, your car insurance may be cancelled, leaving you without cover. In some cases, having a cancelled policy in your past may make it more difficult to find another insurer willing to take you on. Another drawback is that you often pay more for the convenience of paying monthly. The difference between making monthly or annual payments will vary from one insurance company to another, but can be substantial.

If paying monthly is important to you, you may be able to save yourself some money and have the peace of mind of knowing your payment is made on time every time by signing on for direct payments, which are taken out of your checking or savings account automatically. Some companies offer discounts for direct payment, and choosing this option means never worrying about getting the payment in on time — as long as you keep enough in your account to cover your payment, that is!

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Your insurance premiums can be affected by a number of factors connected to the classification of your vehicle. The dollar value of your vehicle is just the start. The size of your car can also affect your premiums, with larger cars often costing more to insure than small ones. A truck or a van may also cost more to insure than a standard car.

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Expensive Cars

Luxury cars with prestigious name badges such as Porsches typically involve higher premiums. Repairs tend to be more expensive than for average cars, and the cost of replacing such a vehicle would obviously be far higher, pushing up the cost of a possible claim and thus increasing the risk to the insurance company.

Prestige vehicles may also be more tempting targets for car thieves and vandals. Sports cars and cars which are designed for speed and high performance also attract significantly higher premiums as they are perceived as being at greater risk of being involved in an accident.

Modified Cars

Vehicles which have been modified may also be harder to insure. Modifications include major additions such as body kits and spoilers, but also less drastic changes like rims, woofers or tinted windows. These types of modifications may affect your premiums, and not every insurer will extend cover to modified cars. Consider the impact on your premiums, before committing to any major modifications to your vehicle or purchasing one which is already modified.

Specialist Car Insurance

There are insurance companies that specialise in vehicles like sports cars and modified cars. Such specialist insurers may offset the elevated risk by charging higher than usual premiums, by asking for higher excesses (an amount that you agree to pay towards every claim), or by limiting the maximum amount that you can claim. This may make them an expensive option, as your out-of-pocket costs on a claim may be very costly. Even so, they may be a viable alternative if you have a particularly exotic vehicle to insure.

Business Vehicles

A vehicle you use for work or business might require a different car insurance product than one for personal use, depending on your coverage needs and type of business and vehicle.

It’s vital that you are always up-to-date with your insurance company, both before and after insuring your car. Always keep them notified of any changes, such as a change of use or any modifications. If you neglect to mention important changes to your vehicle, your insurance company may refuse to pay out in the event of a claim.

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No matter if you are buying a new vehicle or one that is used, you should know that some cars cost more to insure than others. Fortunately, you have many options. From basic car insurance coverage to what some consumers might term “luxury” coverage, you need to know what the industry has to offer. Along with this, it is important to have an idea of what will work best for you and your budget.

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Basic Insurance is Legally Required

As you begin to speak with car insurance providers, you will find that some offer better coverage than others. The most basic level of insurance is the Compulsory Third Party cover that you must have to legally drive a vehicle on a public road in Australia.

Beyond your CTP, you may be looking for a low level of car insurance that allows you to save money. In this case, you might consider  “third party property damage only” coverage. This is far from a comprehensive policy but, if nothing else, this will give you some protection against the costs you might legally owe if you cause damage to someone’s car or property in a driving accident.

Where do You Live?

The part of Australia that you live in will dictate the legal minimum car insurance coverage you must hold, and how drivers obtain this cover.

In South Australia, for example, the legally required third party personal injury insurance is included with your licence registration fee.

On the other hand, there are other parts of the country, such as New South Wales and Queensland, where a different system is used. There, every driver must purchase compulsory third party coverage separately from their vehicle registration. You have the right to choose which insurer to buy from, and their CTP or Green Slip rates are regulated by the government.

Remember, this is only basic coverage. You may choose to buy a more comprehensive vehicle insurance to ensure that you are protected against the costs of other events such as damage to vehicles and property.

Comprehensive Car Insurance Options

With thousands upon thousands of cars on the road, the last thing you want to do is take risks while driving. However, even if you are extremely careful, you never know what the drivers around you are going to do. For this reason, you may be considering comprehensive car insurance. Typically, this means that you are getting extensive coverage for a range of common car related incidents, though your compulsory third party insurance will still be used to cover injuries to other road users.

Tip: when requesting quotes, start by looking at the highest level of coverage. If this ends up being too expensive, you can cut back the coverage bit-by-bit until you reach a price point that you are comfortable with.

Whichever type of car insurance you need, make sure to compare a few quotes before you make up your mind.

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Here are a few simple questions to ask yourself. The answers will help to make your car insurance comparison easier and more useful.

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What Cover Do You Need?

When you’re comparing policies, it’s important to reflect on what kind of cover you’re likely to need. If you’re in an accident that involves damage to someone else’s car (in insurance terms, “third party property”), you may be liable for the cost of repairs. Major repairs, especially to luxury cars, can cost thousands of dollars.

A fire or theft involving your own car could also leave you out of pocket. Legal costs are another potential expense — if you find yourself in court over a traffic incident, you could face a big bill at the end. A comprehensive car insurance policy that covers accidental damage, fire, theft and third party property claims may give you peace of mind.

Depending on your budget and the level of risk, it may be worth opting for a more inclusive policy that covers expenses like these.

What Car Are You Insuring?

Other factors that you’ll need to consider include the kind of vehicle you drive. When you’re comparing car insurance policies, check to see if there are any exclusions that may affect you.

Some insurers have different rates for cars that have been modified, for example; if you have (or plan to get) rims, tinted windows or other modifications, your car insurance quotes may be higher. Some companies don’t insure extensively modified or unusual vehicles at all. Any car insurance comparison for a modified or imported car will need to take this into account.

How Old Are You?

Age can be an important factor when it comes to the price of insurance. Older drivers may benefit from lower rates and some insurance products are designed especially to attract such drivers. If you’re in the young driver age bracket, don’t despair — you can still find some appealing car insurance deals. Compare rates from companies who specialise in insuring younger drivers to see if they are better than the car insurance rates from other companies.

Check Your Excesses and Limits

Look at excesses (the amount that you agree to pay out of your own pocket if you make a claim) and upper limits (the maximum your insurance company may pay you in the event of a claim). Higher excesses and lower limits may translate into lower premiums, but also into lower insurance pay-outs if you do need to claim.

How’s Your Driving?

The no claims bonus system is another element you should consider when comparing policies: many insurers reward customers whose driving history is clear with reduced rates and a no-claims bonus for those who don’t make a claim on their insurance. Factor this into your decision when you’re comparing products, and check whether you may be eligible for any discounts.

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Lower Car Insurance Rates for Women

Did you know that women drivers may be offered a lower car insurance premium than otherwise equivalent male drivers? This may not sound fair, and in fact it has been banned in some countries, but it is found in the Australian car insurance industry. The reason for this is quite simple: women are statistically lower risk drivers. Men are considered more likely to drive fast or take other risks while on the road, and therefore may be charged a higher premium.

Consider Your Choice of Car

This does not pertain solely to women, but is something that female drivers may want to keep in mind. The type of vehicle that you drive may have an effect on your premium. If you are worried about saving money on the cost of coverage, you may want to carefully consider the type of car that you purchase.

Typically, smaller cars with smaller engines are cheaper to insure. Along with this, the value of your car influences how much you are likely to pay for coverage. Are you going to purchase a brand new sports car, or a used compact car? As you can imagine, the compact car may be much cheaper to insure.

Don’t be Talked Down To!

Have you ever heard the saying that car salesmen love to deal with women drivers? It may be sexist, but the truth behind this is that some women still don’t know much about the automotive industry. The same thing may hold true with car insurance. If an insurance salesperson can charge you more by recommending cover you may not really need, then a lack of knowledge about vehicle insurance may let you down.

To avoid buying anything you don’t need, it makes sense to contact more than one car insurance company as well as reading up on the subject. Then, review all of the information, while also considering the quality of customer service you received from each insurer.

Shopping online for quotes gives you the chance to complete the comparison process on your own and without any outside pressure. Once you have all the information, you can then shortlist the companies that you are interested in doing business with.

As a female driver, there are both pros and cons of buying car insurance. On one hand, your premium may be less than a male driver of the same age and history. On the other side of things, don’t let a lack of knowledge about vehicle mechanical jargon or insurance policy wording hold you back; a little research will help you find your way.

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Imported cars are manufactured to meet the standards of their country of origin. This may make insurance rates much higher. Imported cars may also need to be modified in order to meet legal requirements in Australia before they can hit the road. This makes it harder for insurers to determine their value because there are fewer other vehicles in Australia to which a given imported car can be directly compared.

Imported car insurance may also be higher than domestic car insurance because many imported cars may be capable of higher speeds. With accidents deemed more likely to occur in a faster vehicle, this means such cars may present a higher insurance risk. Imported cars are often popular with younger drivers, which can impact premiums. Because younger drivers are statistically more likely to have an accident, their insurance may cost more. Repairs may also cost more if the required parts have to be imported.

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How to Compare Car Insurance for Imported Cars

Imported car insurance may also be harder to find because not all insurance companies insure imported cars. Don’t panic though! Here are 4 tips to use that will help you compare car insurance for imported cars:

1. Choose an imported car with lower performance gains. These are usually cheaper to insure.
2. Reduce the risk of theft by keeping your car in a garage. Installing a quality alarm system in your garage is also a great idea. If you keep your car well secured, your premiums may be lower.
3. Shop around to compare insurance rates, because they can vary greatly. Keep in mind that even if insurance companies cover imported cars, they will have restrictions on the cover provided. Some companies may have age limits for cover for drivers of imported cars. Others may allow only certain slight modifications to be made to the car, and may decline to insure a heavily modified vehicle.
4. Always drive safely, because your driving record will be relevant to your car insurance rates.

Trouble Finding Cover?

After researching insurance companies and their policies, you should have found some that insure imported cars. In addition to ensuring that you meet their eligibility requirements, you’ve checked that the price is right and the cover meets your needs. You’re thinking, “so far, so good,” right? Don’t get excited too quickly because there may be a catch. The catch is that some insurance companies cannot cover certain types of imported cars.

If you are faced with this problem, don’t worry. Keep searching and you will find the perfect company to insure your car soon enough. You could even ask the insurer who declined to cover your imported car whether they can recommend an alternative insurer for your needs.

Here is a useful tip to follow when you speak with insurance companies: Find out at the start of the discussion if they will be able to insure your imported car. If you do this, it will save you and the insurance company lots of time. If they are unable to insure your car, you will find out immediately and can then start looking for another company.

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