Hacks to save on car insurance in Australia

Owning a car brings freedom, but this comes at a cost. Learn how to keep costs down with these hacks to save on car insurance in Australia!
5 Best Hacks to save on car insurance in Australia

Owning a car can make life so much easier and unlock the freedom to go anywhere your heart desires. With this being said, owning a car also comes with its drawbacks, and almost all of these drawbacks relate to money… Here are some of the costs associated with owning a car:

  • Fuel
  • Tolls
  • Registration & Licencing
  • Car Service
  • Repairs
  • Car insurance

Today we will be focusing on car insurance – a frustrating, yet important cost associated with owning a car. While it can be expensive, there are hacks to help you save on car insurance in Australia…

Is car insurance compulsory in Australia?

Before we reveal the hacks to save on car insurance, you might be asking “do I need car insurance?” Well, the answer is that in Australia, to legally drive on the road, you must at least have Compulsory Third Party (CTP) insurance. This form of insurance doesn’t cover your vehicle from damage or theft, instead, it acts as compensation in the case that a person/people are injured or killed in a car accident. It protects the person who caused the crash from being liable to pay compensation to the other party.

What types of car insurance are there?

  • Comprehensive – The most expensive for a reason, this type of insurance provides all-round cover including damage to your vehicle, damage to another vehicle, theft, fire/storm/flood damage. While comprehensive insurance is optional, CTP is still compulsory even if you have another type of insurance coverage. It is classed separately since it protects the individual and not the vehicle.
  • Third-party fire & theft – This covers you from damage to yours or somebody else’s vehicle as well as theft and fire damage, but nothing else.
  • Third-party property damage – This type of insurance only protects you from damage to your vehicle and somebody else’s and not from anything else.
  • Compulsory Third party (CTP) – As mentioned above, CTP insurance is a legal requirement in order to be registered to drive in Australia. This covers you from liability if a person is injured or killed as a result of a car accident that you were involved in. You are still required to have this form of cover regardless of what other types of insurance you might have.
Types of car insurance

What is the average cost of car insurance?

New South Wales has the most expensive car insurance on average out of all Australian states. According to ‘Compare the Market Bill Shock Tracker, Compare the Market. 2021’ annual car insurance in NSW costs an average of $1,440. Meanwhile, the average in QLD is the lowest at $1,028 annually.

Unsurprisingly, car insurance is also more expensive the younger you are. If you are within the 18-24 age bracket then you can expect to pay approximately $1,700 per year. Meanwhile, 25 – 64 years olds can expect to pay around $1,100 – $1,300. Over 65’s benefit from a significantly cheaper annual insurance cost of approximately $870.

Car insurance is also slightly more expensive on average for men in Australia. Being a ‘boy racer’ comes with a price tag! And while on the topic of boy racers, one car you might not be so keen on the prospect of buying is a Toyota Corolla, but maybe you’ll change your mind when you find out that it is the cheapest car to insure in Sydney!

So with all of this being said, our first hack to save on car insurance in Australia is… Get a new identity that says you are a 66-year-old woman, buy a Toyota Corolla and move to Queensland… No, all jokes aside, let’s dive into it!

Top 5 hacks to save on car insurance in Australia

1. Shop around each year

Sadly it doesn’t pay to be loyal in the car insurance market. Many insurers will increase premiums each year, which is why it’s always a good idea to shop around for the best deal every single year. This is easily done thanks to tools such as car insurance comparison sites. We recommend comparethemarket.com.au.

You’ll be sure to strike an enticing deal with a new provider and if you’re lucky, your current provider may fight to keep you by offering a lower price. While it might take a little time, it never hurts to assess your options, especially when that 30 minutes of shopping around could end up saving you hundreds of dollars!

shop around to save on car insurance

2. Up your excess

This is one of the ways to save on car insurance that can work both ways. If the excess on your insurance is higher, then your policy will be cheaper. With this being said, if your excess is higher and you have an accident and need to claim on your insurance then you will have to pay more. A car insurance policy is a planned expense, whereas getting into an accident is not planned and therefore having to fork out hundreds of dollars on your excess may not be possible since you might not have put money aside for emergencies.

However, many people go for years or even forever without having a single accident and in this case then a cheaper policy with a higher excess is a better deal. If you’re not confident in your driving then be sure to always go for a lower excess.

What is an excess? Let’s say you get into an accident and you were at fault; then you will need to pay an excess on top of your regular policy to cover a portion of the cost. For example, if your excess is $300 and the repair costs come to $1,000 then you will need to pay the $300 excess and your insurer will pay the rest.

3. Protect your No Claims Bonus at all costs!

The longer you go without claiming on insurance, the greater discount you will get each year thanks to your No Claims Bonus. Usually, the greater discounts start after going 5 years without making any claims. It is likely that you will need to have comprehensive car insurance for this to be effective, but not always. It’s always worth looking out for the no claims bonus policy when taking out an insurance plan, it can save you some serious money!

On the flip side to this, if you do claim on insurance, not only will you lose your no claims bonus, but you will also most likely experience a rise in your insurance policy cost the following year. Sometimes, if you have a crash and the repair costs aren’t too expensive then it is better to not claim on insurance and save your no claims bonus as this can be beneficial in the long run.

4. Drive less, save more

Are you just going to use your car here and there on short trips around the city? Do you need to use your car every day or could you take transport or car share some days? Consider this before taking out a policy and you can take advantage of significantly discounted rates on a ‘per kilometre’ car insurance plan. This is where you pay a price relative to how many kilometres you expect to drive in a year. A ‘pay as you drive’ plan is one of the best hacks to save on car insurance in Australia.

drive less save more on car insurance

5. Cut back on the extras

We’ve all done it before, we sign up for a phone plan or buy a new laptop and at the checkout, you are offered a number of special add-ons for just a bit more money. At the time we think yes I need this, I will use it every day, it sounds amazing… In reality, do we though? Unless essential, do not get reeled in by a long list of extra car insurance policy features that you do not need.

Some of these extras might include protection from theft of personal items which might get stolen from your car. Another is access to a hire car while your actual car is being repaired or being found if it was stolen. Others include roadside assistance, and windscreen damage cover among others. These all sound really enticing, but you have to be realistic and decide what is really important and what’s not.

Do you really need access to a hire car if you can take public transport or borrow your parents’ car? Do you really think that you’ll be that unlucky person to have your car broken into and your laptop stolen? Is your windscreen really ever likely to crack? Is the roadside assistance price they are offering even cheaper than you might be able to find separately elsewhere?

Get help

Have you read our tips and still require help? Bad Credit Loans Australia exists to support people with a bad credit rating in need of finance. If you need a loan to cover car-related expenses (or any other for that matter), then complete an online application form here.