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Is Car Insurance Expensive In Australia
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If you’ve received a renewal notice for your car insurance, which has nearly doubled in the past year, you’re not alone.
Insurance prices in Australia rose 16.4 per cent in March 2024, the biggest annual increase in 23 years, according to Australian Bureau of Statistics inflation data for March 2024.
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In the insurance industry, rising natural catastrophe and claims costs pushed up premiums across all product lines, from home and contents to motor insurance.
However, auto insurance premiums are the most talked about expense among consumers, with prices doubling and even tripling over the past 12 months.
“Last year my full car insurance was $1,500 and just this year they renewed me for $2,250 for the same car and the same conditions,” one insurance customer shared on Facebook.
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Unfortunately, even if you have a perfect driver’s license and your circumstances haven’t changed, you may still receive a notice to renew your car insurance in 2024. Here’s why:
In short, car insurance has become more expensive because cars have become more expensive to buy and therefore more expensive to repair.
“Machines are now much more sophisticated and sophisticated; the small pieces that could once be recognized by dashboard systems now require validation and testing of sophisticated sensors used in navigation and safety systems,” said a spokesperson for the Insurance Council of Australia (ICA).
Inflation has also increased the cost of repairs, meaning insurers have to cover more when customers make claims.
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“The cost of industrial insurance claims has increased by 43 per cent between 2017 and 2023, double the rate of inflation over the same period,” added an ICA spokesman.
We’re also driving more than ever, which increases our chances of accidents, and climate change means we’re also at greater risk of a natural disaster, such as a wildfire or flood.
“Vehicle premiums are currently on the rise as the cost of cars becomes more expensive to replace, inflation and supply chain issues drive up repair labor and parts prices, as well as rising capital costs for insurers.
According to comparison website Canstar, the average cost of car insurance in Australia is $2,184 for women under 25 and $2,437 for men under 25. The average for other age groups is $1,733 for 25-29 year olds and $1,312 for 30-year-olds. : $49 and $1,006 for those over 50.
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For electric car buyers, it’s worth noting that the difference in comprehensive car insurance prices can be up to 40.1% compared to petrol cars.
“On average, someone could pay about $690 less for an annual car insurance policy for a petrol car than if they had an electric car,” says Adrian Taylor, CEO of Compare Market General Insurance and car insurance expert.
“These higher prices may be due to factors such as the complex technological components of electric vehicles that are more expensive to replace or repair, as well as the lack of specialists who can currently perform these repairs. However, as more and more service providers and auto shops meet these requirements, we expect those costs to likely decrease.
Don’t expect your loyalty to be rewarded.If you get a big renewal notice, shop around and buy from other insurers.
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If you find a lower price for the same coverage, you can send it to your current insurer to see if they’ll lower your premium or jump ship.
According to Roy Morgan, around 2.6 million car insurance policies switched to another provider in the 12 months to October 2023.
Obviously, driving well will keep your premiums low, but so will leaving the car at home when possible.
It may seem counterintuitive, but some insurers offer lower premiums to rs who rarely use their car, so be sure to let your insurer know if this applies to you.
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“It is not unusual for insurers to charge a higher premium for renewal policies than for new customers,” Steve Mickenbacker, group head of financial services at financial services comparison website Canstar, said earlier.
Use the same parameters you used for your current policy to see if your insurer is just charging more and hoping you don’t notice.
If you manage to get them, be sure to call them and reference your new offer to shorten the renewal notice.
If you have new members in your family, limit them to just one car so you don’t have to pay for multiple family car coverage.
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If you can park your car on the street but keep it in a garage in a designated area, do it.
Companies like Parkhound put you in touch with people who have rental cars near you.The reduction in your insurance costs can offset the cost of renting a safe space.
If running costs are killing you infrequently or only for short distances, it may make sense to increase your excess to reduce the premium.
Of course, this means your upfront costs are higher in the event of an accident, so weigh that risk against the benefit of a cheaper premium.
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“The car is getting to a point where the premium hasn’t come down enough relative to the price of the car,” Mr. Mickenbecker said previously.
“Never mind third-party fire and theft, though. Even if you’re driving a $5,000 car, you could still crash into a Ferrari.”
Some cars, such as electric cars, luxury cars, sports cars or large cars, are more expensive than others.
Like playing premium, choosing market value insurance instead of negotiated value is an easy way to lower your running costs, but if your car is written off, you could end up with a lower payout.
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“By insuring your car at market value, you will be reimbursed for reasonable replacement costs based on the market value of your car,” explains insurer Budget Direct.
“On the other hand, fixed value car insurance means just that – you are paid the amount your insurer is willing to insure your car for, regardless of how much your car wears out over the course of the policy written or stolen and you do not return, then you know exactly how much money you will receive.
“Market value car insurance will likely be cheaper in terms of the premium you pay, but the market value of your car at the time of loss or damage is usually less than what you originally paid for it.”
Alternatively, if you can’t afford a large down payment, consider paying monthly to keep costs more manageable.
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If you have a large supplier, it may be worth switching to a smaller supplier as they can often offer a more competitive price.
Finder’s 2024 Car Insurance Awards found Bingle to be Australia’s cheapest car insurer, with comprehensive cover costing just $862 a year on average.
In the ‘low price’ category, Rollin’s car insurance, which was particularly good for young people, and Hume were runners-up.