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.

15% online discount on car insurance Receive 15% off car insurance when you purchase cover online.

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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.

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Virgin Car Insurance Virgin Car Insurance
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.

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Save up to 20% on AI Car Insurance Save up to 20% on car insurance when you purchase cover online.

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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

Name Product Name Agreed or Market Value New Car Replacement Pay Monthly At No Extra Cost Choice Of Repairer Roadside Assistance Hire Car After Theft
Market
Optional - If your car is written off in the first 3 years
No
No
No
Optional - Up to $50 a day until your claim is settled
Save 24% on your policy if you've been claim free for 3 years.
Agreed
Yes - If your car is written off in the first 2 years or is under 40,000 km
No
Yes
Optional
Yes - Up to $1,000 (Max 14 days)
Buy online and save 15%.
Agreed
Yes - If your car is written off or stolen in the first 2 years
No
Yes
Yes
Yes - Reasonable costs (Max 14 days)
Emergency roadside assistance included in Comprehensive policies.
Agreed
Yes - If your car is written off in the first 2 years
Yes
No
Optional
Yes - Up to $70 per day (Max 14 days)
Save up to 10% when you buy online.
Agreed
Yes - If your car is written off in the first 2 years or is under 40,000 km
No
Yes
Optional
Yes - Up to $1,000 (Max 14 days)
Save 15% when purchasing online. Eligible customers can earn 5,000 Velocity Frequent Flyer Points when purchasing a new policy by 31 Dec 2018. Excludes NT. T&CS apply.
Agreed
Yes - If your car is written off in the first 2 years
Yes
No
No
Yes - Up to $70 per day (Max 14 days)
Transforms your driving so it's 100% carbon neutral.
Agreed
Yes - If your car is written off in the first 2 years
Yes
Yes
No
Yes - Up to $100 per day (Max 30 days)
Buy online and save up to 10% on your policy.
Agreed
Yes - If your car is written off in the first year or is under 20,000 km
No
No
Optional
Optional - Up to $60 per day (Max 14 days)
Save up to 20% on car insurance when you purchase cover online.

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Andrew Munro

Andrew writes for finder.com, comparing products, writing guides and looking for new ways to help people make smart decisions. He's a fan of insurance, business news and cryptocurrency.

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