Car Insurance Renewal
Your car insurance usually renews automatically – but if you want to pay less, consider switching.
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If your car insurance is set to lapse or renew, now is a good time to make sure you're not being overcharged. We've made it easy to compare policies so you can find out quickly if it's giving you the best value for money.
Our guide also covers if car insurance companies can deny renewal and how to avoid that.
What's in this guide?
How to renew your car insurance
Before it comes time for you to renew your policy, your insurer will send you out a renewal notice. This normally happens a couple of weeks before you're policy is due to end. On this notice, it'll let you know how much your premium is going to be for the next year.
How you go about renewing your policy will depend on the option you selected when you took out cover.
Renewal options
The steps involved in renewing your car insurance will vary depending on both how you choose to renew your policy and the options available through your insurer. Broadly you may:
- Auto renew. Many people these days choose to auto renew their policy, which means you're giving your insurer permission to renew your policy following your first insurer period, typically 12 months and continue to direct debit your premiums. If you chose to auto renew, then you don't have to do anything.
- Online. Most insurers allow you the option of renewing your policy online, be it through a member portal or through an expedited process where, for example, you enter your policy number, post code and banking details.
- Phone. If you'd prefer to renew your policy while speaking to a person, many insurers have representatives that can help you with the renewal process over the phone.
- BPAY. Your renewal notice will generally list your insurers iller code and your reference number, should you choose to pay for cover using online banking.
- In person. If your insurer has branches, you can head into their physical location and renew your policy.
At this time it's important to do two things.
First, you're going to want to have a look at how much your insurance is going up. Unlike with something like health insurance, your car insurer isn't going to send out a notice letting you know how much your premiums are going up.
The Treasury Department is currently looking into whether general insurers should be required to call out the percent premiums are going up on renewal notices but it's not a thing right now. What that means is you're going to have to get out your last bill and work out yourself how much more you'll be paying.
Second, now that you know how much more you're going to be paying, it's time to compare your options...
Is it better to renew your car insurance or find someone new?
Before re-upping with your current insurer or switching, you should consider:
- What you're paying for. This may seem obvious but you need to know just what your current policy covers in order to get a proper comparison.
- The price. Now that you know what you're covered for and how much you're going to be paying with your current insurer, you'll be able to do an apples to apples comparison at a price level.
- No claims bonus. If you've been with the same car insurer for a while, you might be getting a discount on cover if you haven't made a claim. While this discount may be transferable to another vehicle with the same insurer, in most cases it won't follow you if you switch companies.
- Other discounts. Some insurers offer discounts if you've bungled your home and auto insurance. If you're not already getting this type of discount, you might want to look at getting your car insurance with the same insurer as your home insurance if they offer a discount.
After working through the four points above you should have a pretty clear idea about whether or not your should stick with your current insurer or move to a new provider.
3 things you need to know before your next car insurance renewal
Finder analysed over a thousand car insurance quotes and we discovered 3 things that you need to know about car insurance renewal.
1. Cheap policies can be surprisingly good
You might think that paying more for a car insurance policy means that you'll get better coverage. Turns out that might not always be the case.
Our research found a huge discrepancy in feature scores (which looks at what features are offered as part of the policy) for two of the cheapest insurers on the market. One scored 7.72/10 with an average yearly cost of $929. The other? An average cost of $984 with a feature score of just 2.84/10.
Yeah, you read that right. That means that you could be paying more for a product that scored far worse than other policies in terms of its actual coverage on your car.
For example if the cheaper insurer, let's call them Insurer A, actually covers you for far more things, such as new car replacement, personal effects, offering the choice of agreed or market value, giving you the ability to adjust your excess, and offering online discounts. Compared to Insurance B which doesn't offer a choice of repairer, roadside assistance, personal effects, and only gives you the option of insuring you car on its market value.
See how these real life insurers compare below:
| Insurer A | Insurer B | |
|---|---|---|
| Choice of Repairer | Optional | No |
| Emergency accommodation, transport and repairs | Included | Included |
| Roadside assistance | Optional | No |
| Windscreen cover | Optional | Optional |
| New car replacement | Included | Optional |
| Personal effects | Included | No |
| Agreed or market value | Both | Market only |
| Accidental damage | Included | Included |
| Storm cover | Included | Included |
| Flood cover | Included | Included |
| Adjustable excess | Included | No |
| Discounts | 15% online discount | No |
How much is a feature worth?
So we already found out that cheaper policies aren't necessarily junk, but it's important to note that they may not cover you for everything that might happen to your vehicle
So what if you definitely want a policy that's more comprehensive and includes all the bells and whistles?
This is where Insurer C comes in. They were awarded a feature score of 8.53/10, which is almost a full point more than Insurer A. The catch? They racked in an average policy cost of $1630, compared to insurer A's $929.
For this extra $700, you actually only get 2 more features included as standard in their policy - windscreen cover and choice of repairer. They also had a higher limit for emergency accommodation, transport and repairs.
But are they worth the extra $700 a year? If these features are important to you, then yes. But if you just want to know you're covered if you get in an accident, it might not be better to opt for the insurer with the broadest coverage as they may push your prices up.
Figure out if you have any personal deal breakers that a policy needs to offer, then go forth and compare (a lot, if you can).
2. Sorry guys, but you really do have to pay more
If you're a man, you might have to pay a couple of hundred dollars extra for the same cover your sister or wife might get.
According to the Australian Bureau of Statistics, men aged 15 years and over were more than three times as likely to die in motor vehicle accidents as women in 2016. With this in mind, it's not that surprising that men generally have to pay more for cover, even if you personally might be a safe driver.
| Women average policy cost | Men average policy cost | |
|---|---|---|
| Under 25 | $2,000.20 | $2,335.30 |
| Over 25 | $846.84 | $939.86 |
It's particularly bad news if you're a male under the age of 25. The average cost of a car insurance policy for a 20 year old woman was $2,000, whilst men had to fork over more, sitting at $2,335 on average for cover.
Statistically, men are more likely to be involved in a road fatality, with Budget Direct reporting that males made up 73% of all road fatalities in Australia from 2013-2018. This makes them the highest risk group to insure, so therefore they should also be the most expensive group to insure, given that insurance is a game of risk after all. The Australian Security and Investment Commission (ASIC) backs this, and has openly stated that "most insurance companies charge a higher premium for drivers under 25."
You might not be able to control how old you are, but you can decide who to take cover out with.
Men in particular (especially young ones) should review their policies frequently to make sure they aren't paying too much.
3. Where you live affects how much you'll pay
Car insurance costs in New South Wales are almost $700 more than Tasmania, even for the exact same driver.
The difference between states is huge, with policies in New South Wales costing over 60% more than the same one in Tasmania. Victoria isn't too far behind, being the second most expensive state to insure your car in.
Average car insurance cost
| State | Average policy price |
|---|---|
| NSW | $1,737 |
| VIC | $1,697 |
| WA | $1,194 |
| QLD | $1,134 |
| SA | $1,085 |
| TAS | $1,060 |
Note: We haven't included the Northern Territory in this list as many insurers don't offer cover there.
This drastic cost difference might not necessarily be due to bad drivers in NSW and Victoria. What's more likely is that you've got a higher risk of bumping into someone on the road because more people live in these states.
How can you find a good deal in your state?
A good rule of thumb is just because an insurer is cheaper in one state, it doesn't necessarily mean that they'll be cheap in yours. Bingle was found to be the cheapest option in New South Wales, but they didn't make the list in Queensland.
Here are the three cheapest insurers in each state.
If you've got a friend that lives in another state, what they find as a cheap policy will probably be wildly different to yours.
Before you renew, make sure you compare
How much should my car insurance go up at renewal time?
Since car insurance is such a personalised product in that it takes into account variables ranging from your age to where you park your car at night, there is no average percent that you should expect your premiums will go up.
As previously mentioned, while there are calls for greater transparency around premium increases it's currently on the consumers (ie you) to check how much more you'll pay.
Should you auto renew your policy?
I'm just going to say it, auto renewal is the devil.
That is not to say that your current insurer might not be the best option available to you but that it never hurts to explore your options.
Can a car insurance company refuse renewal or cancel your current policy?
A car insurance company can refuse to renew a policy at the insurer’s sole discretion, in line with any guarantees or policy terms it has written up about renewals. If it has promised 'guaranteed renewal' then there might be some stricter rules around it, but this will generally not be the case.
When it comes to cancelling the policy of an existing customer, an insurer can’t just cancel a policy whenever it wants. There are only a few situations where an insurer is allowed to do that.
So, when is an insurer allowed to drop you?
Insurers can generally refuse a renewal as desired, but can’t simply drop customers that easily. An insurance policy is a contract, and the insurance company can’t bail out of it unless the contract has been violated.
There are two main ways this might happen:
- Unpaid premiums: If your premiums go unpaid for a while, an insurer has the right to eventually cancel your policy. The exact lengths of time can be found in your policy.
- Dishonesty or violation of terms: If you are found to have lied on your application for the purpose of obtaining a lower premiums, made a false claim, committed insurance fraud, entered into the policy dishonestly (such as with a fake identity) or otherwise gone thoroughly against the terms and spirit of the contract, the insurer may cancel your policy.
Generally, as long as the premiums are all paid up, a customer has to step pretty far out of line to be dropped by a car insurance provider.
In that case, how much notice do insurers have to give you?
Car insurers must give you notice if your renewal is being declined or your policy cancelled.
This must be in the form of a written notification, provided at least three business days ahead of a declined renewal or cancellation.
Do insurers have to give a valid reason for denying renewal or cancelling a policy?
Insurers are not generally required to provide this information unprompted, but often will.
If you ask for a reason, insurers are usually required to provide it. Similarly, insurers are typically obligated to provide details of their dispute resolution process if requested.
Why might a renewal be declined?
There are many reasons a renewal might be declined. Typically, it’s some variation on you being a statistically riskier driver than you were when you took out the policy.
Typically these will manifest as higher premiums first, but eventually an insurer might simply consider the risk unreasonable.
A suddenly declined renewal could be any or any combination of risk factors an insurer considers, including:
- Entering a new age bracket
- Getting speeding tickets
- DUI
- Having too many at-fault accidents
- Making too many claims
- Missing too many premium payments
- Adding modifications that affect car performance, or significantly affect its value
How to avoid being dropped by an insurer
The best way to avoid having a policy cancelled is to not commit insurance fraud, to be honest on your applications and claims and to keep up with premium payments.
Making sure your renewal is accepted can be more difficult. Where possible, try to:
- Only making claims when you need to
- Drive carefully
- Follow the road rules
- Drive a sensible car
- Keep up with premium payments
Research from Roy Morgan reveals that a whopping 78% of Aussies renewed their general insurance policies without looking at any other companies. Only 15% of us are actually looking at alternative companies before we hand over our hard-earned cash.
With that in mind, it's easy to fall into these traps above and end up paying more.
If you think you're paying too much, you probably are. Compare car insurance policies every renewal notice.
Picture: GettyImages
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