As lockdowns ease, car insurance costs will rise. But why?
The cost of car insurance can vary a lot. Here's why now could be a great time to be in the market for a new deal.
"Lockdown restrictions easing will inevitably result in more claims and an increase in premiums." That's the view of Don Shields, an insurance boss with more than 4 decades of industry experience.
"Increases have temporarily been offset by reduced claims due to COVID, as lots of workers work from home, and travel is restricted," he explained.
Shields, who owns Geelong Insurance Brokers, said more drivers being on the road was just one reason for an uptick in costs. Price increases could also be linked to the cost of parts creeping up.
He pointed out that "disruption due to shipping and manufacture is affecting availability, and increasing the average cost of repairs," adding:
"Direct brands will often try to minimise the claims costs by insisting on customers using their preferred repairer network."
Shields also noted a general increase due to the increasing frequency of catastrophes impacting the cost of reinsurance. Essentially, reinsurance is a type of cover that's bought by insurance companies to protect themselves against insolvency.
What action should I take on my car insurance?
Aussies pay $984 on average per year on car insurance – and 1 in 5 don't think they're getting good value for money.
Recent Finder data looked at the average cost of 35 different car insurers. We found a stark difference in prices. While one insurer's average cost for a comprehensive plan was $628, another's was as high as $3,479 – a whopping difference of $2,851.
Gary Ross Hunter, car insurance expert at Finder, commented:
"If you're driving less because of COVID restrictions, there may be some opportunities to pay less for your car insurance."
"For example, Youi offered a 15% premium discount to customers in NSW and Victoria impacted by COVID restrictions. So, it could be worth picking up the phone and seeing if you can get a discount on your current terms."
Hunter added: "If your renewal date is approaching – regardless of whether you've been impacted by lockdown – then now could be the time to act and get in the market for a competitive deal on your insurance."
Compare car insurance now and see how much you can save.
