How can I reduce my car insurance premium?

5 easy ways to save on your car insurance premiums.

Your car insurance premiums may increase, but that doesn’t necessarily mean you have to pay more. There are many ways to lower your car insurance premiums and spend less on your cover.

This guide takes you through the steps, starting with a $1,500 a year policy and cutting costs to make it more affordable.

1. Online discounts

This is a good starting point because it’s a major cost-cutter that begins as soon as you sign up. Online signups are almost like self-service, making it cheaper for insurers and giving them more room to offer discounts.

Save 15% on the Virgin Car Insurance Price Saver Policy

Save 15%* - Buy Virgin Car Insurance Price Saver online and save now. Terms and conditions apply.

Save up to 10% when you buy Real Car Insurance online

Online applicants save 5% on first year premiums, and up to an additional 5% off to exclude drivers under 25. Minimum premiums may reduce savings discount.

Woolworths Car Insurance Price Beat - Over 25 Only

Get a quote and if you're 25 or over and if it is not cheaper than your current comparable renewal notice, Woolworths will beat it.

How much we’ve saved so far

Let’s add a 25% discount to the initial cost. You’ll often be able to save even more, but 25% is a realistic amount.

Starting price$1,500
Online discounts-25%

2. Savings to look for when you apply

These options might be thought of as the essentials because they’re a vital part of both your cover, and your costs.

  • Remember to restrict drivers: Narrow your policy by specifying exactly who will be driving the car. If you’re the only driver then you may be able to pay less simply by specifying that no-one under the age of 25 or 30 will get behind the wheel. If you do not restrict or nominate drivers, and know that no-one under age will be driving your car, then there’s a good chance you are paying more than you need to.
  • Choose your extras individually: Comprehensive policies sometimes come bundled with a wide range of extras, even if you didn’t want them all. Review extras and remove those you do not need.
  • Adjust your excess: Many providers will let you adjust your own car insurance excess. Choosing a lower excess might seem preferable, but it also means higher premiums. If you can afford to do so, picking a higher excess can cut premiums significantly.

How much we’ve saved so far

Between restricting drivers, carefully choosing extras and opting for a slightly higher excess, it’s easy enough to cut at least 15% off the cost compared to default policy options.

Starting price$1,500
Online discounts-25%
Policy options-15%

3. Key savings: Discounts you can find in your policy

You can generally find these key savings no matter which insurer you opt for.

  • No-claim bonus: The amount you save with a no-claim bonus depends on the insurer and your location, but can be in the ballpark of 70%. This is an increasing discount based on how long you’ve gone without making a car-insurance claim, typically capping out after five or six years. By avoiding claims, and looking for options that let you maintain your no-claim bonus in the event of no-fault claims, you can cultivate a serious discount.
  • Multi-policy discounts: Typically around 5-15% off, this is a discount awarded to people that already have other policies with the same insurer. Depending on your provider, it may apply only to the second policy you take out, or to all of them. It can be worth looking out for this, and considering how it affects your total costs when comparing policies.
  • Loyalty rewards: Many insurers will offer loyalty rewards for long-time customers. These may take the form of discounts, gifts, free extras or other bonuses. You can keep your no-claim bonus when switching car insurance providers, but won’t get to keep any loyalty bonus.

How much we’ve saved so far

These discounts can vary widely, but almost everyone can access them in some way to keep costs down. For this example, we’ll assume that you’re not getting any loyalty bonus, but are getting a 10% multi-policy discount, and a (frankly disappointing!) 10% no-claim bonus that you can improve on later.

Starting price$1,500
Online discounts-25%
Policy options-15%
No-claim bonus and multi-policy discounts-20%

4. The ongoing savings: Managing your car and driving habits

You can apply a lot of savings before picking up a policy, and can keep applying them afterwards through a bit of sensible management.

  • Plan your drives: Overall, the less time you spend on the road the less at risk you are, and the less likely you are to need to make a claim. Plan trips for shorter distances, especially if it can help you save with a drive less pay less, or pay as you drive type policy that lowers prices for people who don’t drive much.
  • Check your security: Car alarms, immobilisers, locked garages and other security measures can save you money. If you have any relevant security it’s worth checking whether an insurer will give you a discount for them. If you don’t have any relevant security, it might be worth considering the cost of installation against the cost of car insurance.
  • Take a driver safety course: A widely available, if not common, type of discount. Some insurers will offer moderate savings to eligible policyholders who pass a driving course. For example, under 25s can get 10% off AAMI comprehensive car insurance by passing their skilled drivers course.

How much we’ve saved so far

Depending on the insurer and the policy, you might reasonably expect a difference of more than 5% in your premiums by taking advantage of policy management options. We’ll assume that you’re only getting 5% off thanks to passing an insurer’s driver safety course.

Starting price$1,500
Online discounts-25%
Policy options-15%
Key discounts-20%
Policy management-5%
Total discounts-65%
Final price$525

We’ve managed to cut our premiums down to about a third of what they were, with only some of the easier-to-find discounts. The bulk of this was from the key discounts and the online discounts, and it’s important to check whether your quoted prices already include these or not.

5. The most important discount: Shopping around

Cutting your costs is very doable, but keeping the prices low is another challenge. If your car insurance premiums rise over time, it’s particularly important for you to shop around and keep an eye out for preferable options.

It is also important to note that just because you are eligible for discounts with a given insurer, that doesn’t necessarily mean you’re getting them. Check the terms and conditions carefully, and make sure you’re actually getting the savings you are entitled to.

Remember, you can get in touch with your insurer at any time if you think your premiums are getting unaffordable or unreasonable, and it can be worth explaining that you’ve found a preferable option elsewhere and are ready to walk.

For this reason, online policy comparisons are an important tool in your kit for managing car insurance premiums. If you’re thinking of switching car insurance, it might be worth picking up some competing quotes first.

Compare car insurance quotes from these Australian brands

Details Features
Comprehensive
Comprehensive
Low-cost, straightforward car insurance aimed at safe drivers
  • Costs of towing and storage
  • Lifetime guarantee on all repairs
  • Emergency repairs, travel and accommodation
  • Optional zero-excess cover for windscreen and window glass
Get Quote More info
Comprehensive
Comprehensive
15% discount for comprehensive policies purchased online
  • New-for-old replacement
  • Trailer damage up to $1,000
  • Up to $500 for personal effects damaged in collision
  • Discounts for restricting policy to drivers of a certain age and over
Get Quote More info
Comprehensive
Comprehensive
Buy online and save up to 10%. Price-beat guarantee for drivers aged over 25
  • Essential repairs and towing costs up to $500
  • Loss or damage while your car is in transit
  • Cover can be increased or reduced at any time if your circumstances change
  • Optional extras: roadside assistance, excess-free windscreen cover and hire car
Get Quote More info
Comprehensive
Comprehensive
24/7 roadside assistance included in your comprehensive policy
  • Emergency fuel, replacement of flat tyre and battery service
  • Modifications like personalised plates, towbar and tinting covered
  • $1,500 to cover the cost of counselling sessions after a claim
  • Cover for work equipment carried inside vehicle and contents of caravan
Get Quote More info
Comprehensive
Comprehensive
Save up to 10% when you buy online (T&Cs apply). Pay by the month at no extra cost.
  • Cover for accidents, fire, storms, theft, and damage to car
  • New car replacement in first 24 months
  • Guarantee on repairs for approved repairers
  • Up to $1000 lock and key replacement cover
Get Quote More info
Price Saver (Comprehensive)
Price Saver (Comprehensive)
Save 15% when purchasing online. Eligible customers can receive 5,000 Velocity Frequent Flyer points before 31 December 2017
  • New-for-old replacement
  • Receive an alert by SMS if hail is predicted
  • Personal effects up to $500 after collision and theft
  • Optional 24/7 roadside assistance
Get Quote More info
Comprehensive
Comprehensive
Premium product, without the premium price
  • Up to $20m in legal liability cover, plus protection for your car
  • Discount options for low km’s driven
  • New for old car replacement
  • No fees for monthly payments of policy cancellations
Get Quote More info
Comprehensive
Comprehensive
Buy online and save up to 10% on your policy
  • $25,000 cover for accidental death
  • $500 cover for emergency repairs
  • Cover for legal costs
  • Temporary cover on replacement vehicle - 14 days
Get Quote More info
Comprehensive - Elegant Cover
Comprehensive - Elegant Cover
Save up to 20% when you buy online
  • Up to $500 for personal effects damaged in a collision
  • Cover for modifications and accessories
  • Loss or damage while your car is in transit
  • Option of full reimbursement for replacing windscreen and window glass
Get Quote More info

Get the latest car insurance news

Andrew Munro

Andrew writes for finder.com.au, comparing products, writing guides, sniffing out deals and looking for new ways to help people get the most out of their money.

Was this content helpful to you? No  Yes

Related Posts

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, read the PDS or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms and Conditions and Privacy Policy.
Ask a question